Michael Gelman, who is going into his 5th year of the Economics PhD program, is the 2014 recipient of the F. Thomas Juster Behavior Research Award. This award is given out biannually by the Institute of Social Research to students conducting empirically grounded economic research.
Gelman’s research looks at empirical data to model how households make consumption decisions. Using the finance tracking app Check, Gelman has been able to test the standard economic models about how people spend their money. Check consolidates all financial information, which has allowed Gelman to look at how people spend money after getting their paychecks. The standard economic models say that since people are rational, it shouldn’t matter when you get your paycheck - spending will be evenly spread out. However, the data shows a spike in spending immediately after paychecks, contradicting the standard model.
This award will allow Gelman to work on building a model to explain the trends seen in the data. He hopes that a model will help to better understand how sensitive people are to getting infusions of cash.
Eric Lewis wasn’t always interested in economics. It wasn’t until he spent a year in Egypt and witnessed the enormous differences between the United States and Egypt that he decided he wanted a better understanding of why world differences occur. Now he’s in his fifth year of the University’s economics PhD program and a recipient of a Rackham Predoctoral Fellowship.
Lewis’ research and dissertation look at the economics of the onshore oil and gas industries. In the United States there are many different entities that can own rights to oil and gas– the federal government, state governments, and private citizens. In this system, a single oil field can be owned by multiple entities. Lewis studies how multiple ownerships affect how firms search for oil and gas onshore. There are accusations that the federal government makes it too hard for firms, and Lewis’ research tests whether this is true. With an increase in hydraulic fracturing, the onshore energy industry is an increasingly important player in the economy. Lewis’ work seeks to fill a void in our understanding of this prominent industry.
Anne Fitzpatrick, a doctoral student in Economics and Public Policy has been awarded a Doctoral Dissertation Research Improvement grant from the Economics division of National Science Foundation (NSF). Her project, “Empirical Tests of Asymmetric Information in the Pharmaceutical Retail Market” focuses on if shopkeepers in Uganda knowingly or inadvertently sell counterfeit drugs to individuals and whether shopkeepers can control the quality of their supply chain. Fitzpatrick, under the guidance of Professors Rebecca Thornton and Jeffrey Smith, spent 9 months in Africa collecting 900 samples of anti-malarial medication that she will chemically test for quality. She is pairing these drug samples with a survey of drug shopkeepers on their operation and knowledge as well as interviews with both real customers as they leave the shops and mystery shoppers operating with randomly assigned scripts that vary the level of medical knowledge and product preference they present.
The results of this research will be used in her dissertation. This study is essential for developing feasible and effective anti-counterfeit policy solutions by filling important gaps in our knowledge regarding the prevalence of counterfeit anti-malarial drugs in the marketplace and the role of shopkeepers in the sale of counterfeit drugs. As such, the findings from the study are expected to help curb the sale of counterfeit drugs and to improve health and access to quality medicines among the poor worldwide.
The effects of domestic anti-poverty policies
Professor Martha Bailey and I use archival data from the 1960s to examine the effect of the Community Health Center program on the mortality of Americans over 50. Our results show that Community Health Centers, which are now called Federally Qualified Health Centers, greatly reduced county-level mortality rates. We provide credible evidence that health centers improve community health, and our large results for populations eligible for Medicare show that changes in the delivery of primary care can have large and long-term benefits even when insurance is nearly universal.
How changes in the incarceration of men since the 1970s have affected women's use of public assistance benefits
On one hand, women may be more likely to take up benefits after the imprisonment of a partner. On the other hand, if incarceration shrinks the pool of potential male partners, then fertility and public assistance eligibility (and caseloads) may fall. My work combines survey and administrative data on prisoners and public assistance recipients with changes in criminal justice policy to separately estimate these two offsetting effects. The relative magnitude of these two effects has strong implications for the true financial cost of policies that affect incarceration and for the well-being of women and children in communities affected by crime and incarceration.
"Working Under Pressure: Evidence from the Impacts of Soccer Fans on Players’ Performance"
Breno Braga and Diogo Guillen
Economics Letters, (February 2012) 58(2): 212-215
In this paper we study how pressure affects individuals’ behavior. For this purpose we use sports data, where the attendance is a proxy for pressure, to investigate if the number of fans in the stadium affects the performance of the players. We overcome the reverse causality problem by proposing an instrument variable: a promotion in Brazil during which low cost tickets were assigned to random soccer matches. In contrast to previous literature, our results suggest that pressure does not significantly affect players’ behavior
"Schooling and the Public-Private Wage Gap in Brazil"
Breno Braga, Sergio Firpo and Gustavo Gonzaga
Pesquisa e Planejamento Econômico (2009) 39(3): 431-464, 2009, (in Portuguese)
We study the determinants of the public-private wage gap for different levels of schooling of Brazilian workers. First, using the current earnings as the variable of interest, we estimate that less educated people receive higher earnings in the public sector (i.e., the earnings gap is favorable to the public sector). On the other hand, for workers with higher schooling, the earnings gap disappears or becomes favorable to the private sector. In addition, we consider the different retirement regimes in Brazil by creating the variable Present Value of Work Contract (PVWC). This variable is a measure of the lifetime earnings for each individual in our database. In contrast to the results from the current earnings analysis, we found that the PVWC gap is favorable to the public sector even for the highest educated group of workers.
Public Finance, Economic History, and Environmental Economics
My main research studies the Revenue Act of 1924, which allowed for the printing of tens of thousands of names, addresses, and income tax payments in 1924 and 1925. The tax rates in the two years are different, and I use this difference to study aggregate response to tax rate changes.
Implications of Increased Wind Generation for Electricity MarketsI am examining the effects of additional wind generation capacity on the de-regulated Texas Electricity Market. Future work will tentatively include investigating how a recent institutional change in this same market has affected the bidding behavior of participating firms.
Firm Responses to Outsourcing and Exporting
My research agenda focuses on firm responses to outsourcing and exporting, especially wages and employment in firms, and how firm-level responses affect overall trade flows. Using firm data, I have documented empirically that exporters in China and the US pay higher wages than non-exporters. I have calibrated a model that demonstrates the gap between exporter and non-exporter wages decreases as tariffs and trade costs decreases. I have also used US firm data to measure wages and employment trends in firms that have had some fraction of their jobs outsourced. I am currently working on a model and empirical testing that explains both of these trends with Chinese exports to the US becoming less substitutable over time affecting firm importing and exporting behavior over time.
Macro Development and Political Economy
In particular, my work focuses on the macroeconomic implications of microeconomic frictions and market failures. My current research is on the role of factor misallocations in explaining income differences, and in particular identifying the sources of factor allocative efficiency. Current projects include the decomposition of factor allocative efficiency into measures of efficiency due to factor versus financial market imperfections in the rural sector, a decomposition of efficiency into measures of costs due to credit versus insurance market imperfections in manufacturing and services cross-nationally, and joint work with Professor Raj Arunachalam on political economic explanations for the persistence of factor misallocations.