Economic Inquiry

We use peer assessments as a tool to allocate joint profits in a real-effort team experiment. We find that using this incentive mechanism reduces team performance. More specifically, we show that teams composed of acquaintances rather than strangers actually underperform in a context of peer evaluations. We conjecture that peer evaluations undermine the inherently high level of intrinsic motivation that characterizes teams composed of friends and possibly exacerbate negative reciprocity among partners. Finally, we analyze the determinants of peer assessments and stress the crucial importance of equality concerns...

Governments, over much of the developed world, make significant financial transfers to parents with dependent children. For example, in the United States the recently introduced Child Tax Credit (CTC), which goes to almost all children, costs almost $1 billion each week, or about 0.4% of GNP. The United Kingdom has even more generous transfers and spends an average of about $30 a week on each of about 8 million children—about 1% of GNP. The typical rationale given for these transfers is that they are good for our children and here we investigate the effect of such transfers on household spending patterns...

Common explanations for the generally negative relationship between education and ethnic endogamy include (1) education makes immigrants and their children better able to adapt to native culture thereby eliminating the need for a same-ethnicity spouse and (2) education raises the likelihood of leaving ethnic enclaves, thereby decreasing the probability of meeting potential same-ethnicity spouses. This paper considers a third option, the role of assortative matching on education. If education distributions differ by ethnicity, then spouse-searchers may trade similarities in ethnicity for similarities in education when choosing spouses...

This paper uses a unique survey designed by the authors to compare migrant children who enter New Zealand through a random ballot with children in the home country of Tonga whose families were unsuccessful participants in the same ballots. We find that migration increases height and reduces stunting of infants and toddlers, but also increases BMI and obesity among 3- to 5-yr-olds. These impacts are quite large even though the average migrant household has been in New Zealand for less than 1 yr. Additional results suggest that these impacts occur because of dietary change rather than direct income effects...

Using a representative sample of children all born to unwed parents drawn from the Fragile Families and Child Wellbeing Study and a potential outcome approach to account for self-selection into marriage, we investigate whether marriage after childbearing has a causal effect on early child development. Comparing children with similar background characteristics and parental mate-selection patterns who differ only in terms of whether their parents marry after childbirth, we find that marriage after childbirth significantly increases a child's early cognitive performance but there is no evidence that it affects child asthma risk or behavioral outcomes...

This paper studies the impact of HIV/AIDS on per capita income and education. It explores two channels on how HIV/AIDS affects income that have not been sufficiently stressed by previous literature: the reduction of the incentives to stay in school due to shorter expected longevity and the reduction in productivity of experienced workers. In the model, individuals live for three periods, may get infected in the second period, and with some probability die of AIDS before reaching the third period of their lives...

I formulate a simple and parsimonious evolutionary model that shows that because most species face a possibility of dying because of external factors, called extrinsic mortality in the biology literature, it can simultaneously explain (a) why we discount the future, (b) get weaker with age, and (c) display risk-aversion. The paper suggests that testable restrictions—across species, across time, or across genders—among time preference, aging, and risk-aversion could be analyzed in a simple framework .

In this paper, we compare potential and realized cost savings from hospital mergers. Our approach isolates changes in realized cost savings due to different output mixes from systematic changes due to time and also provides a measure of the potential cost savings due to scale economies. Our findings suggest that economies of scale are present for merging hospitals and they realize these cost savings immediately following a merger. However, we also show that over time, cost savings from the merger decrease and the proportion of hospitals experiencing positive cost savings declines...

The growing literature on poverty traps emphasizes the links between multiple equilibria and risk avoidance. However, multiple equilibria may also foster risk-taking behavior by some poor people. We illustrate this idea with a simple analytical model in which people with different wealth and ability endowments make investment and risky activity choices in the presence of known nonconvex asset dynamics. This model underscores a crucial distinction between familiar static concepts of risk aversion and forward-looking dynamic risk responses to nonconvex asset dynamics...

Individuals with higher personal rates of time preference will be more likely to smoke. Although previous studies have found no evidence of a relationship between smoking and rates of time preference, analysis of implicit rates of time preference associated with workers' wage fatality risk trade-offs indicates that smokers have higher rates of time preference with respect to years of life. Current smokers have an implied rate of time preference of 13.8% as compared to 8.1% for nonsmokers. Current smokers who are blue-collar workers have rates of time preference with respect to years of life of 16...

I find evidence of a negative association between gasoline prices and body weight using a fixed effects model with several robustness checks. I also show that increases in gas prices are associated with additional walking and a reduction in the frequency with which people eat at restaurants, explaining their effect on weight. My estimates imply that 8% of the rise in obesity between 1979 and 2004 can be attributed to the concurrent drop in real gas prices, and that a permanent $1 increase in gasoline prices would reduce overweight and obesity in the United States by 7% and 10%...

We develop and estimate a model of market demand for a new pharmaceutical, whose quality is learned through prescriptions by forward-looking physicians. We use a panel of antiulcer prescriptions from Italian physicians between 1990 and 1992 and focus on a new molecule available since 1990. We solve the model by calculating physicians' optimal decision rules as functions of their beliefs about the new pharmaceutical. According to our counterfactuals, physicians' initial pessimism and uncertainty can have large, negative effects on their propensity to prescribe the new drug and on expected health outcomes...

This paper analyzes whether schooling increases intelligence measured by intelligence quotient (IQ). We use a longitudinal dataset where the individuals have conducted IQ tests both at ages 10 and 20. We estimate the effect of schooling on IQ at age 20 conditional on IQ at age 10 and other measures of early cognitive ability to account for selection into noncompulsory schooling. Ordinary least squares estimates indicate that 1 year of schooling increases IQ by 2.9–3.5 points (about 0.2 SD deviations), and instrumental variables estimates are similar...

This study uses the High School and Beyond data (1980–1992) to examine the importance of educational and fertility expectations in explaining the achievement gap of adolescent mothers for over 5,500 young women from different socioeconomic backgrounds. Using a non-parametric local propensity score regression, the study finds that the economic disadvantage associated with having a child in high school is particularly large in poor socioeconomic environments; however, this disadvantage is a result of preexisting differences in the educational and fertility expectations and is not because of a diminished capacity of the socioeconomic environment to mediate the effect of an unplanned childbirth...

This article presents a new rationale for imposing restrictions on child labor. In a standard overlapping generation model where parental altruism results in transfers that children allocate to consumption and education, the Nash-Cournot equilibrium results in suboptimal levels of parental transfers and does not maximize the average level of utility of currently living agents. A ban on child labor decreases children's income and generates an increase in parental transfers bringing their levels closer to the optimum, raising children's welfare as well as average welfare in the short run and in the long run...

This paper discusses (a) the role of cognitive and noncognitive ability in shaping adult outcomes, (b) the early emergence of differentials in abilities between children of advantaged families and children of disadvantaged families, (c) the role of families in creating these abilities, (d) adverse trends in American families, and (e) the effectiveness of early interventions in offsetting these trends. Practical issues in the design and implementation of early childhood programs are discussed.

No abstract text is available yet for this article.

Should laissez faire prevail as to the private-market supply of the AIDS antibody test? Applying a recent theorem from the economics of property rights, this paper determines that the answer is negative, and shows that the optimal policy regarding the AIDS antibody test differs according to whether individuals are at low risk or high risk. Next, using the same economic theory, this paper finds that rules guaranteeing strict confidentiality of the AIDS test result are unjustified. They also are unjustified on traditional legal grounds...

No abstract text is available yet for this article.

The physician/patient relationship is a paradigm for any expert/client relationship. The physician both diagnoses the patient's illness and recommends a treatment. This dual role gives the physician incentive to recommend treatments whose costs outweigh their medical benefits. These socially inefficient treatments correspond to the notion of "physician-induced demand." The level of inducement chosen by the physician is shown to depend on the price and potential medical benefits of treatment and the relative diagnostic skills of physician and patient...