Master’s Seminar Empirical Economics:
Modelling the Behavior of Individuals and
Firms
Benedikt Heid and Steffen Sirries
Chair of Empirical Economics
July 14, 2015
1
General Issues
The master’s seminar Empirical Economics addresses master students of
Business Administration, Economics, Philosophy & Economics, and Internationale Wirtschaft und Governance. Advanced interested bachelor students
may also participate.
The main theme of this seminar will be the econometric modelling of the
behavior of individuals as well as firms. Both consumers and firms face
economic choice problems every day: what to consume, how much to save,
how much to invest, how many workers to employ, whether to adopt a new
technology, whether to have a child, whether to switch your mobile phone
contract, how much to charge for a product, to apply for which job, etc.
Importantly, these choices are influenced by certain economic variables like
prices, taxes, etc.
In the seminar, students will get an overview of a broad range of topics as
well as methods which aim to determine the quantitative impact of these
variables on economic choices of agents.
As always, the seminar will focus squarely on how to estimate these econometric models and how to interpret their corresponding parameter estimates.
1
Producing and interpreting econometric results are key job-market skills for
every economist, especially for policy advice.
To practice this key skill for applied economists, the seminar will discuss
several empirical policy-relevant questions related to the determinants of individual choices. The main goal of every seminar paper is to reproduce the
regression estimates in published studies of the economic behavior of firms
and individuals and to interpret clearly these estimates in the form: “Raising the income tax by 1 percent will decrease hours worked by XX percent.”
In order to derive the clear interpretation of the estimation results, a detailed exposition and explanation of the used estimators
both during the presentation and in the written seminar paper is
a prerequisite.
Specifically, the seminar does not put its emphasis on the economic questions
discussed in scientific papers but on the methods used to answer these questions. Its primary goal is to offer students the possibility to get to know and
discuss these empirical methods.
The following list of topics is not exhaustive and own proposals of students
are welcome. However, every proposal by students should be clearly outlined, must have an empirical part and data have to be publicly available.
Proposals of students which do not clearly indicate the availability
of data needed for the analysis cannot be accepted.
If you write a master thesis at another chair and you are confronted with a
method or an empirical problem, it is possible to write your seminar paper
about your method respectively your empirical problem.
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Requirements
In order to participate in the seminar, interest in and good knowledge of
empirical economics is expected.
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3
Assessment
The course grade will be based on the following:
• Active seminar participation (including attendance at the compulsory
introduction).
• Presentation (20 minutes), followed by a discussion of around 10 minutes.
• Written assignment (maximum 5,500 words).
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Target Group
The seminar addresses students from the following degree courses:
• Betriebswirtschaftslehre (MA) eligible as“Vertiefungsmodulbereich Empirische Wirtschaftsforschung (V EWF)”.
• Economics (MA) eligible as “Individueller Schwerpunkt”.
• Philosophy and Economics (MA) eligible as “Elective Seminar”.
• Internationale Wirtschaft und Governance (MA) eligible as “Individuelle Spezialisierung”.
Additionally, interested bachelor students may participate.
Students of “Internationale Wirtschaft und Entwicklung” who
want to use this seminar for their study program as seminars IW
or E, respectively, have to choose topics related to the specific
specialization IW or E. Please contact us during the introduction
meeting, see below.
For further questions regarding the eligibility of the seminar please contact
the corresponding lecturer of the respective courses and/or your study program manager.
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5
Organisation
The seminar will be blocked and take place on December 11th and 12th,
2015. The slides for your presentation have to be handed in two days before
the presentation. After your presentation, you write your term paper based
on the discussion and the suggestions collected during the presentation. The
date of submission of the term paper will be March 31th, 2016 (of course an
earlier submission is possible at any time).
Interested students have to sign up with Benedikt Heid via email to
[email protected]. Please use “Seminar WS 2015/16” as
your email subject. Applications are requested before October 18th, 2015.
Please indicate
• your study program
• your student ID (“Matrikelnummer”)
• your previous knowledge in statistics and empirical economics
• three topic suggestions, ranked according to preference
Additionally there is a compulsory introduction to the seminar on October
20th, 2 pm (c.t.), 2015, in which the course content and open questions will
be discussed and topics will be allocated to students.
The language of the course is English, hence your slides and your presentation should be in English. The assignment can be written in German or
in English, respectively (the literature is in English). For more details concerning the formal requirements of the written assignments please see the
stylesheet available in German (Hinweis zur Formatierung von Seminar- und
Abschlussarbeiten) and in English (Formal requirements for seminar papers
and bachelor’s/master’s theses at the Chair of Economics VI: Empirical Economics).
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6
Topic Suggestions
In the following, we list some papers which are suitable for the seminar and
were data for reproduction are available or can easily be collected. We mention for each topic the main estimation methods used, which again highlights
the focus of the seminar on the methods.
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6.1
How Many Firms Are Enough for Competition?
Method: OLS, mean absolute deviation estimator, ordered logit
Literature: Bresnahan Timothy F. and Peter C. Reiss (1991), Entry and
Competition in Concentrated Markets, The Journal of Political Economy,
99(5), pp. 977-1009.
Abstract: This paper proposes an empirical framework for measuring the
effects of entry in concentrated markets. Building on models of entry in atomistically competitive markets, we show how the number of producers in an
oligopolistic market varies with changes in demand and market competition.
These analytical results structure our empirical analysis of competition in
five retail and professional industries. Using data on geographically isolated
monopolies, duopolies, and oligopolies, we study the relationship between the
number of firms in a market, market size, and competition. Our empirical
results suggest that competitive conduct changes quickly as the number of
incumbents increases. In markets with five or fewer incumbents, almost all
variation in competitive conduct occurs with the entry of the second or third
firm. Surprisingly, once the market has between three and five firms, the
next entrant has little effect on competitive conduct.
Notes: Focus on either the mean absolute deviation estimator or the ordered logit.
6
6.2
Distance to Headquarters and Performance of Establishments
Method: duration model, probit model, probit instrumental variables
Literature: Kalnin and Lafontaine (2013), Too Far Away? The Effect of
Distance to Headquarters on Business Establishment Performance, American
Economic Journal: Microeconomics 5(3), pp. 157-179
Abstract: In the population of over 1.7 million Texan sales-tax collecting
business establishments, we show that greater distance to owner headquarters
is associated with shorter establishment longevity. For the lodging industry,
where we have revenue data, increases in distance to headquarters due to
HQ-moving owners or acquisitions are associated with reductions in revenues
per room. We argue that this detrimental distance effect is robust and causal,
arising even when we control for the potential endogeneity of HQ distance
using instrumental variable and matched pair analyses. We interpret this as
evidence of monitoring and local information asymmetry problems for distant owners.
Notes: Focus on the estimation of the duration model or the Probit instrumental variables model.
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6.3
Bounded Rational Consumers
Method: fixed effects; treatment effect estimation
Literature: Sexton, Steven (2015),Automatic Bill Payment and Salience
Effects: Evidence from Electricity Consumption, The Review of Economics
and Statistics 97(2), pp. 229-241
Abstract: The introduction of automatic bill payment (ABP) programs in
2005 eliminated the need for consumers to view recurring bills. If those enrolled in ABP programs offered by utilities and other service providers forgo
inspection of their recurring bills, then price salience declines, prices perceived
by boundedly rational agents fall, and consumption increases. This paper
considers the impact of such programs on consumer demand and welfare and
empirically tests whether enrollment in such programs increases demand. Results show ABP enrollment increases residential electricity consumption by
4.0% and commercial electricity consumption by as much as 8.1%. Enrollment in programs designed to smooth seasonal variation in monthly utility
bills of low-income customers results in 6.7% greater electricity use.
Notes: If the data set becomes too large for your computer, use a smaller
sample.
8
6.4
Consumer Learning in Telecommunication Markets
Method: bivariate probit (for Bachelor students); dynamic discrete choice
model (for Master students)
Literature: Miravete, Eugenio and Ignacio Palacios-Huerta (2014), Consumer Inertia, Choice Dependence, and Learning from Experience in a Repeated Decision Problem, The Review of Economics and Statistics 96(3), pp.
402-417
Abstract: Understanding when and how individuals think about real-life
problems is a central question in economics. This paper studies the role of
inertia (inattention), state dependence, and learning. The empirical setting
is a tariff experiment, when optional measured tariffs for local telephone calls
were introduced unanticipatedly. We find that consumers tend to align their
choices of tariff and telephone use levels correctly. Despite low potential
savings, mistakes are not permanent, as individuals actively engage in tariff
switching in order to reduce the monthly cost of telephone service. Ignoring
unobservable heterogeneity and the endogeneity of past choiceswould have
reversed these results.
Notes: Bachelor students should only focus on the estimation of the bivariate probit model in Stata. Master students should try to replicate the
results of the GMM estimator in Scilab.
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6.5
Collusive Behavior between Firms
Method: instrumental variables (Bachelor students), switching regression
model (Master students)
Literature: Gan and Hernandez (2013), Making Friends with your Neighbours? Agglomeration and Tacit Collusion in the Lodging Industry, The
Review of Economics and Statistics 95(3), pp. 1002-1017
Abstract: Agglomeration is a location pattern frequently observed in service
industries such as hotels. This paper empirically examines whether agglomeration facilitates tacit collusion in the lodging industry using a quarterly
data set of hotels in Texas. We jointly model a price and occupancy rate
equation under a switching regression model to identify a collusive and noncollusive regime. The estimation results indicate that clustered hotels have
a higher probability of being in the potential collusive regime than isolated
properties in the same town. The identification of a collusive regime is also
consistent with other factors considered to affect the sustainability of tacit
collusion.
Notes: While Bachelor students can restrict themselves to replicate the
IV results, Master students should focus on the estimation of the switching
regression model.
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6.6
Firm Investment Decisions and Subsidies
Method: regression discontinuity design
Literature: Sa A. Bui, Steven G. Craig, and Scott A. Imberman (2014),
Are Incentives for R&D Effective? Evidence from a Regression Discontinuity
Approach, American Economic Journal: Economic Policy 6(4), pp. 100-134.
Abstract: This paper evaluates a unique R&D subsidy program implemented in northern Italy. Firms were invited to submit proposals for new
projects and only those which scored above a certain threshold received the
subsidy. We use a sharp regression discontinuity design to compare the investment spending of subsidized firms with that of unsubsidized firms. For
the sample as a whole we find no significant increase in investment. This overall effect, however, masks substantial heterogeneity in the program’s impact.
We estimate that small enterprises increased their investments—by approximately the amount of the subsidy they received—whereas larger firms did
not.
11
6.7
Fertility Decisions (E)
Method: panel data methods
Literature: Allen Treb (2015), The Promise of Freedom: Fertility Decisions
and the Escape from Slavery, Review of Economics and Statistics 97(2), pp.
472-484.
Abstract: This paper evaluates a unique R&D subsidy program implemented in northern Italy. Firms were invited to submit proposals for new
projects and only those which scored above a certain threshold received the
subsidy. We use a sharp regression discontinuity design to compare the investment spending of subsidized firms with that of unsubsidized firms. For
the sample as a whole we find no significant increase in investment. This overall effect, however, masks substantial heterogeneity in the program’s impact.
We estimate that small enterprises increased their investments—by approximately the amount of the subsidy they received—whereas larger firms did
not.
12
6.8
Decisions of Health Care Providers
Method: Tobit model, GMM
Literature: Mian Dai and Xun Tang (forthcoming), Regulation and Capacity Competition in Health Care: Evidence from U.S. Dialysis Markets,
Review of Economics and Statistics.
Abstract: This paper studies entry and capacity decisions by dialysis providers
in the United States. We estimate a structural model where providers make
continuous strategic choices of capacity based on their private information
about own costs and knowledge of the distribution of competitors’ private
information. We evaluate the impact on the market structure and providers’
profits under counterfactual regulatory policies that increase the costs or reduce the payment per unit of capacity. We find that these policies reduce the
market capacity as measured by the number of dialysis stations. However,
the downward sloping reaction curve shields some providers from negative
profit shocks in certain markets. The paper also has a methodological contribution in that it proposes new estimators for Bayesian games with continuous
actions.
13
6.9
Firm Reactions to Environmental Taxes (E)
Method: Berry logit, GMM, Matlab
Literature: Junji Xiao and Heng Ju (2014), Market Equilibrium and the
Environmental Effects of Tax Adjustments in China’s Automobile Industry,
Review of Economics and Statistics, 96(2), pp. 306-317.
Abstract: This paper explores the effects of consumption-tax and fuel-tax
adjustments in the Chinese automobile industry. Applying the model and
simulation method of Berry, Levinson, and Pakes (1995), we conduct a comparative static analysis of equilibrium prices and sales, fuel consumption, and
social welfare before and after tax adjustments. For the first time, we compare the progressivity of both taxes. Our empirical findings suggest that the
fuel tax is effective in decreasing fuel consumption at the expense of social
welfare, while the consumption tax does not significantly affect either fuel
consumption or social welfare.
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6.10
When to Adopt a New Technology: Evidence
from the Neolithic Era (E)
Method: OLS (Bachelor), Spatial Autoregressive (SAR) model (Master)
Literature: Quamrul Ashrad and Stelios Michalopoulos (forthcoming), Climatic Fluctuations and the Diffusion of Agriculture, Review of Economics
and Statistics.
Abstract: This research examines the climatic origins of the diffusion of Neolithic agriculture across countries and archaeological sites. The theory suggests that a foraging society’s history of climatic shocks shaped the timing of
its adoption of farming. Specifically, as long as climatic disturbances did not
lead to a collapse of the underlying resource base, the rate at which huntergatherers were climatically propelled to experiment with their habitats determined the accumulation of tacit knowledge complementary to farming.
Consistent with the proposed hypothesis, the empirical investigation demonstrates that, conditional on biogeographcal endowments, climatic volatility
has a hump-shaped effect on the timing of the adoption of agriculture.
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6.11
Determinants of Emotional Responses (E)
Method: ordered probit model
Literature: Naci Mocan (2013), Vengeance, Review of Economics and Statistics, 95(3), pp. 969-982.
Abstract: This paper investigates the extent of vengeful feelings and their
determinants using data on more than 116,000 individuals from 66 countries.
Country characteristics as well as personal attributes of the individuals influence vengeful feelings. The magnitude of vengeful feelings is greater for
people in countries with low levels of education, low-income countries, and
interrupted democracies. Personal education has an impact on vengeful feelings in lower-income countries. The results suggest that some puzzles about
individual choice can best be explained by considering the interplay of personal and economic factors.
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6.12
The Economics of Ryanair (IW)
Method: Tobit, panel IV
Literature: Naci Mocan (forthcoming), Combined Effects of Capacity and
Time on Fares: Insights from the Yield Management of a Low-Cost Airline,
Review of Economics and Statistics.
Abstract: Based on two strands of theoretical research, this paper provides
new evidence on how fares are jointly affected by in-ight seat availability
and purchasing date. As the capacity-based theories predict, it emerges that
fares monotonically and substantially increase with ight occupancy. After
controlling for capacity utilization, our analysis also supports time-based
theories, indicating a U-shaped temporal profile over a two-month booking
period, as well as a sharp increase in fares in the two weeks prior to departure.
17
6.13
Firm Responses to Fair Trade (E, IW)
Method: OLS regression (topic only for Bachelor students)
Literature: Alain de Janvry, Craig McIntosh, and Elisabeth Sadoulet (forthcoming), Fair Trade and Free Entry: Can a Disequilibrium Market Serve as
a Development Tool?, Review of Economics and Statistics.
Abstract: The Fair Trade (FT) coffee initiative attempts to channel charity
from consumers to poor producers via increased prices. We show that the
rules of the FT system permit this rent to be eliminated due to free entry and
costly excess certification of output. Using data from an association of coffee
cooperatives in Central America, we verify that expected producer benefits
are close to 0 when we take into account the output that is certified but not
sold as FT. Our results illustrate how free entry undermines the attempt at
extending charity via a price distortion in an otherwise competitive market.
18
6.14
Firm Behavior under Putin (E)
Method: Tobit model
Literature: Randolph Luca Bruno, Maria Bytchkova, and Saul Estrin (2013),
Institutional Determinantes of New Firm Entry in Russia: A Cross-Regional
Analysis, Review of Economics and Statistics, 95(5), pp.1740-1749.
Abstract: We investigate how the regional institutional environment—in
particular, the political environment—affects Russian new firm entry across
regions, industries, firm size classes, and time. We find that entry rates in
Russia are explained by natural entry rates and the institutional environment.
Industries that are characterized by low entry barriers in developed market
economies are found to have lower entry rates in regions subject to greater
political fluidity, as in the case of gubernatorial change. We also find that
higher levels of political fluidity and democracy increase relative entry rates
for small-sized firms but reduce them for medium-sized or large ones.
19
6.15
Occupation Choice (IW)
Method: Probit, OLS, IV, Multinomial choice (if wanted)
Literature: Krishna Patel and Francis Vella (2013), Immigrant Networks
and their Implications for Occupational Choice and Wages, Review of Economics and Statistics, 95(4), pp.1249-1277.
Abstract: Occupational shares of various ethnic groups have grew tremendously in regional U.S. labor markets from 1980 to 2000. Using U.S. Census
data, we examine the extent to which this growth is attributed to network
effects by studying the relationship between the occupational choice of recently arrived immigrants with those of established immigrants from the same
country, We find strong evidence of network effects. First, new arrivals are
choosing the same occupations as their compatriots, a decision that is operating at the regional level. Second, individuals who choose the most common
occupation of their compatriots enjoy a large and positive earnings effect.
20
6.16
Labor Demand of Firms and Labor Market Regulation (E)
Method: OLS, IV, differences-in-differences
Literature: Achyuta Adhvaryu, A. V. Chari, and Siddharth Sharma (2013),
Firing Costs and Flexibility: Evidence from Firms’ Employment Responses
to Shocks in India, Review of Economics and Statistics, 95(3), pp.725-740.
Abstract: A key prediction of dynamic labor demand models is that firing
restrictions attenuate firms’ employment responses to economic fluctuations.
We provide the first direct test of this prediction using data from India. We
exploit the fact that rainfall fluctuations, through their effects on agricultural productivity, generate variation in local demand within districts over
time. Consistent with the theory, we find that industrial employment is more
sensitive to shocks where labor regulation is less restrictive. Our results are
robust to controlling for endogenous firm placement and vary across factory
size in a pattern consistent with institutional features of Indian labor law.
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6.17
Choices of Young Men (E)
Method: OLS (topic only for Bachelor students)
Literature: Lena Edlund, Hongbin Li, Junjian Yi, and Junsen Zhang (2013),
Sex Ratios and Crime: Evidence from China, Review of Economics and
Statistics, 95(5), pp. 1520-1534.
Abstract: Since the introduction of the one-child policy in China in 1979,
many more boys than girls have been born, foreshadowing a sizable bride
shortage. What do young men unable to find wives do? This paper focuses
on criminality, an asocial activity that has seen a marked rise since the mid1990s. Exploiting province-year level variation, we find an elasticity of crime
with respect to the sex ratio of 16- to 25-year-olds of 3.4, suggesting that male
sex ratios can account for one-seventh of the rise in crime. We hypothesize
that adverse marriage market conditions drive this association.
22
6.18
Consumption Behavior (E)
Method: OLS, Logit model
Literature: Manoj Mohanan (2013), Causal Effects of Health Shocks on
Consumption and Debt: Quasi-Experimental Evidence from Bus Accident
Injuries, Review of Economics and Statistics, 95(2), pp. 673-681.
Abstract: Endogeneity between health and wealth presents a challenge for
estimating causal effects of health shocks. Using a quasi-experimental design, comprising exogenous shocks sustained as bus accident injuries in India,
with controls drawn from travelers on the same bus routes one year later, I
present new evidence of causal effects on consumption and debt. Using primary household survey data, I find that households faced with shock-related
expenditures are able to smooth consumption on food, housing, and festivals, with small reductions in educational spending. Debt was the principal
mitigating mechanism households used, leading to significantly larger levels
of indebtedness.
23
6.19
Collusive Behavior of Neighbors
Method: IV, Switching Regression Model (topic suggested for master students)
Literature: Li Gan and Manuel A. Hernandez (2013), Making Friends with
Your Neighbors? Agglomeration and Tacit Collusion in the Lodging Industry,
The Review of Economics and Statistics 95(3), pp. 1002-1017
Abstract: Agglomeration is a location pattern frequently observed in service
industries such as hotels. This paper empirically examines whether agglomeration facilitates tacit collusion in the lodging industry using a quarterly
data set of hotels in Texas. We jointly model a price and occupancy rate
equation under a switching regression model to identify a collusive and noncollusive regime. The estimation results indicate that clustered hotels have
a higher probability of being in the potential collusive regime than isolated
properties in the same town. The identification of a collusive regime is also
consistent with other factors considered to affect the sustainability of tacit
collusion.
24
6.20
Individual Location Choice and Real Wages
Method: OLS Estimation, Fixed effects, IV
Literature: Enrico Moretti (2013), Real Wage Inequality, American Economic Journal: Applied Economics 5(1), pp. 65-103
Abstract: While nominal wage differences between skilled and unskilled
workers have increased since 1980, college graduates have experienced larger
increases in cost of living because they have increasingly concentrated in cities
with high cost of housing. Using a cityspecific CPI, I find that real wage differences between college and high school graduates have grown significantly
less than nominal differences. Changes in the geographical location of different skill groups are to a significant degree driven by city-specific shifts in
relative demand. I conclude that the increase in utility differences between
skilled and unskilled workers since 1980 is smaller than previously thought
based on nominal wage differences.
25
6.21
Immigration, Offshoring, and American Jobs (IW)
Method: OLS, IV (2SLS), (data work involved)
Literature: Gianmarco I. P Ottaviano, Giovanni Peri and Greg C. Wright
(2013): Immigration, Offshoring, and American Jobs, American Economic
Review, 103(5), p. 1925-1959
Abstract: Following Grossman and Rossi-Hansberg (2008) we present a
model in which tasks of varying complexity are matched to workers of varying skill in order to develop and test predictions regarding the effects of
immigration and offshoring on US native-born workers. We find that immigrant and native-born workers do not compete much due to the fact that they
tend to perform tasks at opposite ends of the task complexity spectrum, with
offshore workers performing the tasks in the middle. An effect of offshoring
and a positive effect of immigration on native-born employment suggest that
immigration and offshoring improve industry efficiency.
26
6.22
The Migration Decision, Income and Immigration Policy (IW, E)
Method: Discrete Choice Model, Fixed Effects Estimation
Literature: Francesc Ortega and Giovanni Peri (2013), The Effect of Income
and Immigration Policies on International Migration, Migration Studies 1
(1), pp. 1-28.
Abstract: This paper makes two contributions to the literature on the determinants of international migration flows. First, we compile a new dataset
on annual bilateral migration flows covering 15 OECD destination countries
and 120 sending countries for the period 1980-2006. We also collect data on
time-varying immigration policies that regulate the entry of immigrants in
our destination countries over this period. Second, we extend the empirical
model of migration choice across multiple destinations developed by Grogger and Hanson (2011) by allowing for unobserved individual heterogeneity
between migrants and non-migrants. Our estimates show that international
migration flows are highly responsive to income per capita at destination.
This elasticity is twice as high for within-EU migration, reflecting the higher
degree of labor mobility within the European Union. We also find that tightening of laws regulating immigrant entry reduce rapidly and significantly
their flow.
27
6.23
Strategic Choices of Competing Churches
Method: GMM, Matlab
Literature: Adam D. Rennhoff and Mark F. Owens (2012), Competition
and the Strategic Choices of Churches, American Economic Journal: Microeconomics 4 (3), pp. 152-70.
Abstract: We examine how the decisions of churches are impacted by the
decisions of rival churches. Using a novel dataset, we estimate a model of
strategic interaction, which accounts for the location and denomination of
churches. We focus on a church’s decision of whether to provide a weekday
child care program. Empirical evidence indicates that churches compete more
strongly with same-denomination churches than with different-denomination
churches. These effects diminish with distance.
28
6.24
Immigrants’ Labor Supply Decision (E, IW)
Method: OLS, permutation test
Literature: Arash Nekoei (2013), Immigrants’ Labor Supply and Exchange
Rate Volatility, American Economic Journal: Applied Economics 5 (4), pp.
144-64.
Abstract: Are an immigrant’s decisions affected in real time by her home
country’s economy? I examine this question by exploiting exchange rate variations as exogenous price shocks to immigrants’ budget constraints. I find
that in response to a 10 percent dollar appreciation, an immigrant decreases
her earnings by 0.92 percent, mainly by reducing hours worked. The exchange rate effect is greater for recent immigrants, married immigrants with
absent spouses, Mexicans close to the border, and immigrants from countries
with higher remittance flows. A neoclassical interpretation of these findings
suggests that the income effect exceeds the cross-substitution effect. Remittance targets offer an alternative explanation.
29
6.25
Teacher’s Retirement Decision
Method: Linear Probability Model, IV
Literature: Kristine M. Brown and Ron A. Laschever (2012), When They’re
Sixty-Four: Peer Effects and the Timing of Retirement, American Economic
Journal: Applied Economics 4 (3), pp. 90-115.
Abstract: This paper examines the effect of peers on an individual’s likelihood of retirement using an administrative dataset of all retirement-eligible
Los Angeles teachers for the years 1998-2001. We use two large unexpected
pension reforms that differentially impacted financial incentives within and
across schools to construct an instrument for others’ retirement decisions.
Controlling for individual and school characteristics, we find that the retirement of an additional teacher in the previous year at the same school increases
a teacher’s own likelihood of retirement by 1.5-2 percentage points. We then
explore some possible mechanisms through which this effect operates.
30
6.26
Calories and Consumers’ Purchase Decisions
Method: OLS, FE
Literature: Bryan Bollinger and Phillip Leslie, and Alan Sorensen (2011),
Calorie Posting in Chain Restaurants, American Economic Journal: Economic Policy 3 (1), pp. 91-128.
Abstract: We study the impact of mandatory calorie posting on consumers’
purchase decisions using detailed data from Starbucks. We find that average calories per transaction fall by 6 percent. The effect is almost entirely
related to changes in consumers’ food choices—there is almost no change in
purchases of beverage calories. There is no impact on Starbucks’ profit on
average, and for the subset of stores located close to their competitor Dunkin
Donuts, the effect of calorie posting is actually to increase Starbucks’ revenue. Survey evidence and analysis of commuters suggests the mechanism
for the effect is a combination of learning and salience.
31