Good Economics for Hard Times

by Abhijit V. Banerjee

  78 Leonardo Bursztyn, Bruno Ferman, Stefano Fiorin, Martin Kanz, Gautam Rao, “Status Goods: Experimental Evidence from Platinum Credit Cards,” Quarterly Journal of Economics 133, no. 3 (2018): 1561–95, https://doi.org/10.1093/qje/qjx048.

  79 Alberto Alesina, Stefanie Stantcheva, and Edoardo Teso, “Intergenerational Mobility and Preferences for Redistribution,” American Economic Review 108, no. 2 (2018): 521–54.

  80 Ibid.

  81 Ibid.

  82 Anne Case and Angus Deaton, “Rising Midlife Morbidity and Mortality, US Whites,” Proceedings of the National Academy of Sciences, December 2015, 112 (49) 15078-15083; DOI:10.1073/pnas.1518393112; Anne Case and Angus Deaton, “Mortality and Morbidity in the 21st Century,” Brookings Papers on Economic Activity, 2017.

  83 Tamara Men, Paul Brennan, and David Zaridze, “Russian Mortality Trends for 1991–2001: Analysis by Cause and Region,” BMJ: British Medical Journal 327, no. 7421 (2003): 964–66.

  84 Anne Case and Angus Deaton, “Mortality and Morbidity in the 21st Century,” Brookings Papers on Economic Activity, 2017.

  85 Alberto Alesina, Stefanie Stantcheva, and Edoardo Teso, “Intergenerational Mobility and Preferences for Redistribution,” American Economic Review 108, no. 2 (2018): 521–54.

  86 Emily Breza, Supreet Kaur, and Yogita Shamdasani, “The Morale Effects of Income Inequality.” Quarterly Journal of Economics 133, no.2 (2017): 611–63.

  87 David Autor, David Dorn, Gordon Hansen, and Kaveh Majlesi, “Importing Political Polarization. The Electoral Consequences of Rising Trade Exposure,” NBER Working Paper 22637, September 2016, revised December 2017.

  CHAPTER 8. LEGIT.GOV

  1 “Revenue Statistics 2018 Tax Revenue Trends in the OECD,” Organisation for Economic Co-operation and Development, December 5, 2018, accessed June 18, 2018, https://www.oecd.org/tax/tax-policy/revenue-statistics-highlights-brochure.pdf.

  2 Emmanuel Saez and Gabriel Zucman to Elizabeth Warren, January 18 2019, http://gabriel-zucman.eu/files/saez-zucman-wealthtax-warren.pdf.

  3 Ben Casselman and Jim Tankersly, “Democrats Want to Tax the Wealthy. Many Voters Agree,” New York Times, February 19, 2019, https://www.nytimes.com/2019/02/19/business/economy/wealth-tax-elizabeth-warren.html.

  4 Abhijit Banerjee, Esther Duflo, and Stefanie Stantcheva, “Me and Everyone Else: Do People Think Like Economists?,” MIMEO, Massachusetts Institute of Technology, 2019.

  5 Cited in Conservatives Betrayed: How George W. Bush and Other Big Government Republicans Hijacked the Conservative Cause, by Richard A. Viguerie (Los Angeles: Bonus Books, 2006), 46.

  6 Emmanuel Saez, Joel Slemrod, and Seth H. Giertz, “The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review,” Journal of Economic Literature 50, no. 1 (2012): 3–50.

  7 Isabel Z. Martinez, Emmanuel Saez, and Michael Seigenthaler, “Intertemporal Labor Supply Substitution? Evidence from the Swiss Income Tax Holidays,” NBER Working Paper 24634, 2018.

  8 Emmanuel Saez, Joel Slemrod, and Seth H. Giertz, “The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review,” Journal of Economic Literature 50, no. 1 (2012): 3–50.

  9 Abhijit Banerjee, Esther Duflo, and Stefanie Stantcheva, “Me and Everyone Else: Do People Think Like Economists?,” MIMEO, Massachusetts Institute of Technology, 2019.

  10 Ronald Reagan, Inaugural Address, Washington, DC, 1981.

  11 Alberto Alesina, Stefanie Stantcheva, and Edoardo Teso, “Intergenerational Mobility and Preferences for Redistribution,” American Economic Review 108, no. 2 (2018): 521–54.

  12 Anju Agnihotri Chaba, “Sustainable Agriculture: Punjab Has a New Plan to Move Farmers Away from Water-Guzzling Paddy,” Indian Express, March 28 2018, accessed March 4, 2019, https://indianexpress.com/article/india/sustainable-agriculture-punjab-has-a-new-plan-to-move-farmers-away-from-water-guzzling-paddy-5064481/.

  13 “Which States Rely Most on Federal Aid?,” Tax Foundation, accessed April 19, 2019, https://taxfoundation.org/states-rely-most-federal-aid/.

  14 An often-cited stock quote of Milton Friedman, who was an inspiration to generations of economists, especially those on the right, popular on twitters and found in all quote repositories said: “The great achievements of civilization have not come from government bureaus.” He went on to add: “Einstein didn’t construct his theory under order from a bureaucrat.” The choice of the example is odd. Einstein was a bureaucrat (in the Swiss Patent Office) when he did his early research, and had he not actually delivered what he delivered, he would be a prime example of waste in government. Milton Friedman Quotes, BrainyQuote.com, BrainyMedia Inc., 2019, accessed June 18, 2019, https://www.brainyquote.com/quotes/milton_friedman_412621.

  15 Abhijit Banerjee, Rema Hanna, Jordan Kyle, Benjamin A. Olken, and Sudarno Sumarto, “Tangible Information and Citizen Empowerment: Identification Cards and Food Subsidy Programs in Indonesia,” Journal of Political Economy 126, no. 2 (2018).

  16 Karthik Muralidharan and Venkatesh Sundararaman, “The Aggregate Effect of School Choice: Evidence from a Two-Stage Experiment in India,” Quarterly Journal of Economics 130, no. 3 (2015): 1011–66.

  17 Luc Behaghel, Bruno Crépon, and Marc Gurgand, “Private and Public Provision of Counseling to Job Seekers: Evidence from a Large Controlled Experiment,” American Economic Journal: Applied Economics 6, no. 4 (2014): 142–74.

  18 Mauricio Romero, Justin Sandefur and Wayne Sandholtz, “Outsourcing Service Delivery in a Fragile State: Experimental Evidence from Liberia,” working paper, ITAM, accessed June 18, 2019, https://www.dropbox.com/s/o82lfb6tdffedya/MainText.pdf?dl=0.

  19 Finlay Young, “What Will Come of the More Than Me Rape Scandal?,” ProPublica, May 3, 2019, accessed June 18, 2019 https://www.pro publica.org/article/more-than-me-liberia-rape-scandal.

  20 Oriana Bandiera, Andrea Prat, and Tommaso Valletti, “Active and Passive Waste in Government Spending: Evidence from a Policy Experiment,” American Economic Review 99, no. 4 (2009): 1278–1308.

  21 Abhijit Banerjee, Rema Hanna, Jordan Kyle, Benjamin A. Olken, and Sudarno Sumarto, “Tangible Information and Citizen Empowerment: Identification Cards and Food Subsidy Programs in Indonesia,” Journal of Political Economy 126, no. 2 (2018): 451–91

  22 Abhijit Banerjee, Esther Duflo, and Stefanie Stantcheva, “Me and Everyone Else: Do People Think Like Economists?,” MIMEO, Massachusetts Institute of Technology, 2019.

  23 Alain Cohn, Ernst Fehr, and Michel Andre Marechal, “Business Culture and Dishonesty in the Banking Industry,” Nature 516: (2014) 86–89.

  24 Reman Hanna and Shing-Yi Wang, “Dishonesty and Selection into Public Service: Evidence from India,” American Economic Journal: Economic Policy 9 no. 3 (2017): 262–90.

  25 Sebastian Baufort, Nikolaj Harmon, Frederik Hjorth, and Asmus Leth Olsen et al., “Dishonesty and Selection into Public Service in Denmark: Who Runs the World’s Least Corrupt Public Sector?,” Discussion Papers 15–12, University of Copenhagen, Department of Economics, 2015.

  26 Oriana Bandiera, Michael Carlos Best, Adnan Khan, and Andrea Prat, “Incentives and the Allocation of Authority in Organizations: A Field Experiment with Bureaucrats,” CEP/DOM Capabilities, Competition and Innovation Seminars, London School of Economics, London, May 24 2018.

  27 Clay Johnson and Harper Reed, “Why the Government Never Gets Tech Right,” New York Times, October 24, 2013, accessed March 4, 2019, https://www.nytimes.com/2013/10/25/opinion/getting-to-the-bottom-of-healthcaregovs-flop.html?_r=0.

  28 Bertrand Garbinti, Jonathan Goupille-Lebret, and Thomas Piketty, “Income Inequality in France, 1900–2014: Evidence from Distributional National Accounts (DINA),” Journal of Public Economics 162 (2018): 63–77.

  29 Thomas Piketty and Nancy Qian, “Income Inequality and Progressive Income Taxation in China and India, 1986–2015,” American Economic Journal: Applied Economics 1 no. 2 (2009): 53–63, DOI: 10.1257/app.1.2.53.

  30 World Inequality Database, accessed June 19, 20
19, https://wid.world/country/india/ and https://wid.world/country/china/.

  31 Luis Felipe López-Calva and Nora Lustig, Declining Inequality in Latin America: A Decade of Progress? (Washington, DC: Brookings Institution Press, 2010), 1–24.

  32 Santiago Levy, Progress Against Poverty: Sustaining Mexico’s PROGRESA-Oportunidades Program (Washington, DC: Brookings Institution Press, 2006).

  33 Dozens of studies have documented various aspects of the Progresa experiment. The first working paper was Paul J. Gertler and Simone Boyce, “An Experiment in Incentive-Based Welfare: The Impact of Progresa on Health in Mexico,” working paper, 2003. The studies of this and subsequent experiments are summarized in Conditional Cash Transfers: Reducing Present and Future Poverty, ed. Ariel Fizsbein and Norbert Schady, accessed on April 19, 2019, http://documents.worldbank.org/curated/en/914561468314712643/Conditional-cash-transfers-reducing-present-and-future-poverty.

  34 World Inequality data base, accessed on June 18, 2019, https://wid.world/country/colombia, https://wid.world/country/chile, https://wid.world/country/brazil.

  CHAPTER 9. CASH AND CARE

  1 Quote by Laticia Animas, who heads the new program. Benjamin Russell, “What AMLO’s Anti-Poverty Overhaul Says About His Government,” Americas Quarterly, February 26, 2019, accessed April 17, 2019, https://www.americasquarterly.org/content/what-amlos-anti-poverty-overhaul-says-about-his-government.

  2 David Raul Perez Coady and Hadid Vera-Llamas, “Evaluating the Cost of Poverty Alleviation Transfer Programs: An Illustration Based on PROGRESA in Mexico,” IFRPI discussion paper, http://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/60365/filename/60318.pdf. See also Natalia Caldes, David Coady, and John A. Maluccio, “The Cost of Poverty Alleviation Transfer Programs: A Comparative Analysis of Three Programs in Latin America,” World Development 34, no. 5 (2006): 818–37.

  3 Florencia Devoto, Esther Duflo, Pascaline Dupas, William Parienté, and Vincent Pons, “Happiness on Tap: Piped Water Adoption in Urban Morocco,” American Economic Journal: Economic Policy 4 no. 4 (2012): 68–99.

  4 Maria Mini Jos, Rinku Murgai, Shrayana Bhattacharya, and Soumya Kapoor Mehta, “From Policy to Practice: How Should Social Pensions Be Scaled Up?,” Economic and Political Weekly 50, no. 14 (2015).

  5 Sarika Gupta, “Perils of the Paperwork: The Impact of Information and Application Assistance on Welfare Program Take-Up in India,” Harvard University, November 2017, accessed June 19, 2019, https://scholar.harvard.edu/files/sarikagupta/files/gupta_jmp_11_1.pdf.

  6 Esther Duflo, “The Economist as Plumber,” American Economic Review: Papers & Proceedings 107, no. 5 (2017): 1–26.

  7 Amy Finkelstein and Matthew J. Notowidigdo, “Take-up and Targeting: Experimental Evidence from SNAP,” NBER Working Paper 24652, 2018.

  8 Diane Whitmore Schanzenbach, “Experimental Estimates to the Barriers of Food Stamp Enrollment,” Institute for Research on Poverty Discussion Paper no. 1367-09, September 2009.

  9 Bruno Tardieu, Quand un people parle: ATD, Quarte Monde, un combat radical contre la misère (Paris: Editions La Découverte, 2015).

  10 Najy Benhassine, Florencia Devoto, Esther Duflo, Pascaline Dupas, and Victor Pouliquen, “Turning a Shove into a Nudge? A ‘Labeled Cash Transfer’ for Education,” American Economic Journal: Economic Policy 7, no. 3 (2015): 86–125.

  11 These key numbers are summarized in Robert Reich’s review of two books on the UBI https://www.nytimes.com/2018/07/09/books/review/annie-lowrey-give-people-money-andrew-yang-war-on-normal-people.html and can also be found in the books themselves. Annie Lowrey, Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World, 2018, and Andrew Yang, The War on Normal People: The Truth About America’s Disappearing Jobs and Why Universal Basic Income Is Our Future, 2018.

  12 George Bernard Shaw, Pygmalion (London: Penguin Classics, 2013).

  13 Map Descriptive of London Poverty 1898–9, accessed April 21, 2019, https://booth.lse.ac.uk/learn-more/download-maps/sheet9.

  14 “Radio Address to the Nation on Welfare Reform,” Ronald Reagan Presidential Library and Museum, accessed March 20, 2019, https://www.reaganlibrary.gov/research/speeches/21586a.

  15 Ibid.

  16 For the reader who wants more, this literature is summarized in several books: James P. Ziliak, “Temporary Assistance for Needy Families,” in Economics of Means-TestedTransfer Programs in the United States, vol. 1, ed. Robert A. Moffitt (National Bureau of Economic Research and University of Chicago Press, 2016), 303–93; Robert Moffitt “The Temporary Assistance for Needy Families Program,” in Means-Tested Transfer Programs in the U.S., ed. R. Moffitt (University of Chicago Press and NBER, 2003); Robert Moffitt, “The Effect of Welfare on Marriage and Fertility: What Do We Know and What Do We Need to Know?,” in Welfare, the Family, and Reproductive Behavior, ed. R. Moffitt (Washington, DC: National Research Council, National Academy of Sciences Press, 1998).

  17 Sibith Ndiaye (@SibithNdiaye), “Le Président? Toujours exigeant. Pas encore satisfait du discours qu’il prononcera demain au congrès de la Mutualité, il nous précise donc le brief! Au boulot!,” tweet, June 12, 2018, 3:28 p.m., accessed June 19, 2019, https://twitter.com/SibethNdiaye/status/1006664614619308033.

  18 “Expanding Work Requirements in Non-Cash Welfare Programs,” Council of Economic Advisors, July 2018, https://www.whitehouse.gov/wp-content/uploads/2018/07/Expanding-Work-Requirements-in-Non-Cash-Welfare-Programs.pdf.

  19 Shrayana Bhattacharya, Vanita Leah Falcao, and Raghav Puri, “The Public Distribution System in India: Policy Evaluation and Program Delivery Trends,” in The 1.5 Billion People Question: Food, Vouchers, or Cash Transfers? (Washington, DC: World Bank, 2017).

  20 “Egypt to Raise Food Subsidy Allowance in Bid to Ease Pressure from Austerity,” Reuters, June 20, 2017, accessed June 19, 2019, https://www.reuters.com/article/us-egypt-economy/egypt-to-raise-food-subsidy-allowance-in-bid-to-ease-pressure-from-austerity-idUSKBN19B2YW.

  21 Peter Timmer, Hastuti, and Sudarno Sumarto, “Evolution and Implementation of the Rastra Program in Indonesia,” in The 1.5 Billion People Question: Food, Vouchers, or Cash Transfers? (Washington, DC: World Bank, 2017).

  22 Abhijit Banerjee, Rema Hanna, Jordan Kyle, Benjamin A. Olken, and Sudarno Sumarto, “Tangible Information and Citizen Empowerment: Identification Cards and Food Subsidy Programs in Indonesia,” Journal of Political Economy 126, no. 2 (2018): 451–91.

  23 Reetika Khera, “Cash vs In-Kind Transfers: Indian Data Meets Theory,” Food Policy 46 (June 2014): 116–28, https://doi.org/10.1016/j.foodpol.2014.03.009.

  24 Ugo Gentilini, Maddalena Honorati, and Ruslan Yemtsov, “The State of Social Safety Nets 2014 (English),” World Bank Group, 2014, accessed June 19, 2019, http://documents.worldbank.org/curated/en/302571468320707386/The-state-of-social-safety-nets-2014.

  25 Abhijit V. Banerjee, “Policies for a Better Fed World,” Review of World Economics 152, no. 1 (2016): 3–17.

  26 David K. Evans and Anna Popova “Cash Transfers and Temptation Goods,” Economic Development and Cultural Change 65, no. 2 (2917), 189–221.

  27 Abhijit V. Banerjee, “Policies for a Better Fed World,” Review of World Economics 152, no. 1 (2016): 3–17.

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

  29 Ercia Field, Rohini Pande, Natalia Rigol, Simone Schaner, and Charity Troyer Moore, “On Her Account: Can Strengthening Women’s Financial Control Boost Female Labor Supply?,” working paper, Harvard University, Cambridge, MA, 2016, accessed June 19, 2019, http://scholar.harvard.edu/files/rpande/files/on_her_account.can_strengthening_womens_financial_control_boost_female_labor_supply.pdf.

  30 Abhijit Banerjee, Rema Hanna, Gabriel Kreindler, and Ben Olken, “Debunking the Stereotype of the Lazy Welfare Recipient: Evidence from Cash Transfer Programs,” World Bank Research Ob
server 32, no. 2 (August 2017) 155–84, https://doi.org/10.1093/wbro/lkx002.

  31 Abhijit Banerjee, Karlan Dean and Chris Udry, “Does Poverty Increase Labor Supply? Evidence from Multiple Income Effects,” MIMEO, Massachusetts Institute of Technology, 2019.

  32 David Greenberg and Mark Shroder, “Part 1: Introduction. An Overview of Social Experimentation and the Digest,” Digest of Social Experiments, accessed March 25, 2019, https://web.archive.org/web/20111130101109/http://www.urban.org/pubs/digest/introduction.html#n22.

  33 Philip K. Robins, “A Comparison of the Labor Supply Findings from the Four Negative Income Tax Experiments,”Journal of Human Resources 20, no. 4 (Autumn 1985): 567–82.

  34 Orley Ashenfelter and Mark W. Plant, “Nonparametric Estimates of the Labor Supply Effects of Negative Income Tax Programs,” Journal of Labor Economics 8, no. 1, Part 2: Essays in Honor of Albert Rees (January 1990): S396–S415.

  35 Philip K. Robins, “A Comparison of the Labor Supply Findings from the Four Negative Income Tax Experiments,” Journal of Human Resources 20, no. 4 (Autumn, 1985): 567–82.

  36 Ibid.

  37 Albert Rees, “An Overview of the Labor-Supply Results,” Journal of Human Resources 9, no. 2 (Spring 1974): 158–180.

  38 Damon Jones and Ioana Marinescu, “The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund,” NBER Working Paper 24312.

  39 Randall K .Q. Akee, William E. Copeland, Gordon Keeler, Adrian Angold, and E. Jane Costello, “Parents’ Income and Children’s Outcomes: A Quasi-Experiment Using Transfer Payments from Casino Profits,” American Economic Journal: Applied Economics 2, no. 1 (2010): 86–115.

  40 Vivi Alatas, Abhijit Banerjee, Rema Hanna, Matt Wai-poi, Ririn Purnamasari, Benjamin A. Olken, and Julia Tobias, “Targeting the Poor: Evidence from a Field Experiment in Indonesia,” American Economic Review 102, no. 4 (2012): 1206–40, DOI: 10.1257/aer.102.4.1206.