At the end of every year, culture critics get to compile best of the year lists. At Quartz, we decided they shouldn’t get to have all the fun. Just like films and albums, economics deserves a little year-end reflection.To identify the economics research that mattered most in 2018, Quartz decided to call in some help. Just as we did last year, we enlisted some of the greatest minds in economics today, including two Nobel prize winners.We asked these economists to name the study they thought was the most important or intriguing of 2018, along with their thoughts on the research. The chosen studies capture the concerns of 2018, with subjects ranging from criminal justice to how to best design an auction.Here are their picks:(Received two nominations)Institutions of authors: University of
Miles Kimball considers the following as important:
This could be interesting, too:
Tyler Cowen writes The new Ben Horowitz management book
Tyler Cowen writes Saturday assorted links
Tyler Cowen writes Chernobyl model this
At the end of every year, culture critics get to compile best of the year lists. At Quartz, we decided they shouldn’t get to have all the fun. Just like films and albums, economics deserves a little year-end reflection.
To identify the economics research that mattered most in 2018, Quartz decided to call in some help. Just as we did last year, we enlisted some of the greatest minds in economics today, including two Nobel prize winners.
We asked these economists to name the study they thought was the most important or intriguing of 2018, along with their thoughts on the research. The chosen studies capture the concerns of 2018, with subjects ranging from criminal justice to how to best design an auction.
Here are their picks:
(Received two nominations)
Institutions of authors: University of Michigan, Syracuse University, and the College Board
Main finding: Encouraging high-achieving, low-income students to apply to a university, along with the promise of aid, makes them much more likely to go to a good school.
Nominating economist: Susan Athey, Stanford University
Specialization: The economics of technology
Why? “Susan Dynarski and coauthors wrote a paper about a powerful intervention aimed at low-income high school students applying to college. From previous research, the authors hypothesized that many low-income students choose not to apply to selective colleges because of various frictions, including filling out complex financial aid paperwork, and incorrectly believe that they may have a low chance of success. The intervention involved sending high achieving, low-income students a letter telling them that they would be admitted and receive a full scholarship to the University of Michigan if they applied. The treated group was twice as likely to apply and twice as likely to enroll as the control group, and the enrollment increase did not come at the expense of more selective colleges..”
Nominating economist: Raj Chetty, Stanford University
Specialization: Public economics and equality of opportunity
Why? “People have been talking about how we can get more low- and middle-income students to attend highly selective colleges for a long time. This study shows big impacts of a scalable intervention using a very convincing randomized trial. I expect it will be widely replicated as a model going forward.”
Institutions of authors: Stanford University, Bridge Clinical Research, and University of California, Berkeley
Main finding: African-American men are more likely to listen to doctors who are also African-American.
Nominating economist: David Autor, Massachusetts Institute of Technology
Specialization: Globalization and labor markets
Why? (no explanation given)
Institutions of authors: University of California, Berkeley; and University of Southern California
Main finding: The police are less lenient with kids in areas with a larger share of minorities.
Nominating economist: David Card, University of California, Berkeley
Specialization: Labor markets
Why? “There is a lot of interest in the past couple of years on how the criminal justice system creates racial disparities. This is a very careful piece on the earliest stage of “building a criminal record,” showing how the system is more forgiving of kids in cities where people tend to be white and well off.”
Institution of authors: Federal Reserve Board
Main finding: Whether an American’s parents are rich is even more predictive of how wealthy their children will be than we thought.
Nominating economist: William A Darity Jr., Duke University
Specialization: Public policy and inequality
Why? “This is the most compelling paper I’ve encountered in 2018. By demonstrating the dominant role of dynastic effects in the transmission of resources across generations as the fundamental source of wealth concentration, it undercuts a host of explanations for wealth inequality that implicate personal decisions and judgments.”
Institutions of authors: University of Colorado, Boulder; and University of Sydney
Main finding: Exposure to lead negatively impacts kids for the rest of their lives.
Nominating economist: Jennifer Doleac, Texas A&M
Specialization: Criminal justice and public policy
Why? “This paper uses a clever natural experiment to measure the effect of a CDC-recommended intervention for kids with high exposure to lead. The results are important for two reasons: (1) They show how detrimental lead exposure is, and (2) they show that the CDC intervention works to mitigate many of lead’s effects! Kids who get the intervention see large improvements in educational outcomes and antisocial behavior – including fewer arrests for violent crime. This should be required reading for all policymakers.”
Institutions of authors: Rutgers University and University of Michigan
Main finding: Restricting employers from asking about their criminal history can lead to more discrimination based on race.
Nominating economist: Claudia Goldin, Harvard University
Specialization: Economic history and labor economics
Why? “‘Ban the Box’ (BTB) policies were intended to reduce racial disparities in hiring by restricting employers from asking about the criminal backgrounds of job applicants. But withholding information can have negative consequences on some the policy is meant to help. A field experiment finds that the BTB policy increased, rather than decreased, racial disparities in job applicant call-backs.”
Institution of authors: University of California, Los Angeles
Main finding: Growing up in an affluent neighborhood leads to better economic outcomes as an adult.
Nominating economist: James Heckman, University of Chicago, winner of the 2000 Nobel prize in economics
Specialization: Econometrics and education
Why? “‘Randomized control trials are considered the “gold standard” of economic evaluation research. Yet, many people assigned to treatment status do not comply. Noncompliance compromises simple interpretation of experimental evidence. Using basic economic choice theory, Pinto shows how to enhance the information from experiments. He applies his tools to the analysis of the Moving to Opportunity experiment, which offers low-income families the opportunities to move to better neighborhoods. Pinto shows that, contrary to influential claims based on results from naïve application of experimental methods, there are substantial impacts on neighborhoods of the outcomes of both the adults and children of families. His work greatly bolsters the evidence on the power of place and the ability of policy to reduce inequality within and across generations.”
Institutions of authors: University of California, Berkeley; and Northwestern University
Main finding: Giving schools more money does actually lead to better outcomes for kids.
Nominating economist: Alan Krueger, Princeton University
Specialization: Labor economics
Why? “Economists and others have long debated whether spending more money on schools leads to better outcomes for students. One reason why this question is important is because courts are often forced to consider whether funding is adequate. The paper by Lafortune, Rothstein and Shanzenbach provides the best available evidence on whether school finance reform efforts since the 1990s have led to increased school spending and improved outcomes for students in low-income school districts. Their transparent and compelling data analysis provides a clear answer of “yes” to both questions. Their findings should inform and influence policy decisions at the state and local level, as well as in the courts.”
Institutions of authors: University of California, Berkeley; and University of Chicago
Main finding: A massive experiment on how to motivate workers shows extra cash is the best incentive—but other techniques are effective as well
Nominating economist: John List, University of Chicago
Specialization: Experimental economics and the economics of charity
Why? “The wonderful paper of Della Vigna and Pope not only lays out how to more formally think about using expert advice, but it also sets the table for how next-generation managers can maximize predictions and their own decision making using information markets.
Yet, the paper is much more, as they also enhance our understanding of an age-old problem in economics: how can a principal (manager) induce greater effort from agents (workers) using monetary and non-monetary rewards. The authors produce novel evidence that monetary incentives work largely as anticipated by neoclassical economics, including that a very low piece rate treatment does not crowd out effort. Nevertheless, there are neat behavioral elements observed, such as warm glow playing a role in worker effort [when offered a philanthropic incentive].
(Editor’s note: The study was done with workers on Amazon Mechanical Turk, who were simply asked to alternately press the “a” and “b” keys on a keyboard as fast as they could for ten minutes.)
Interestingly, on average, the experts anticipate several key features, such as the effectiveness of psychological motivators. However, a number of experts expect crowding-out when there is none. As a whole, predictions purely based on the literature underperform the expert forecasts. I urge all readers to take a look at this tour-de-force field experiment, as it will be cited for years to come.”
Institutions of authors: University of California, San Diego; and University of Copenhagen
Main finding: Having a sick family member significantly increases a person’s investments in their own health.
Nominating economist: Emily Oster, Brown University
Specialization: Health economics and research methodology
Why? “The authors exploit a novel data source to look at how our choices about health care are influenced by what is happening around us—with our family, and even our co-workers. It challenges our standard notion of how people think about their own health behavior choices.”
Credible Mechanisms (pdf) by Mohammad Akbarpour and Shengwu Li
Institutions of authors: Stanford University and Harvard University
Main finding: An auction in which every body submits their bid without knowing anyone else’s bid is the best way to make sure the auction is legitimate.
Nominating economist: Alvin Roth, Stanford University, winner of the 2012 Nobel prize in economics
Specialization: Game theory and market design
Why? “It defines a notion of “credibility” of an auction, having to do with not having to trust the auctioneer beyond what the bidders can see for themselves. The first-price auction is the unique credible static mechanism and the ascending auction is the unique credible strategy-proof mechanism. So the paper gives us a new way to understand those venerable auction forms.”
(Editor’s note: Roth also commends the paper “Does Diversity Matter for Health” (pdf), which was also nominated by David Autor. “It shows that diversity isn’t just about role models—black men are more likely to follow the advice of black doctors,” writes Roth.)