More than 19 million US households are enrolled in SNAP, the Supplemental Nutrition Assistance Program, which provides monthly benefits to buy groceries at a wide range of retailers. This research tests how recipients’ spending changes after they join the program – and in particular whether SNAP benefits affect their purchases of food by more than an equivalent cash benefit. The results indicate that a family receiving, say, a $200 monthly SNAP benefit can be expected to increase its monthly expenditure on groceries by $100, far more than the $20 expected rise in food spending from a cash benefit of comparable size.
Many school districts have adopted centralized admissions systems to coordinate student assignments. These systems ask students to rank the schools they would like to attend and then use an algorithm to coordinate placement. These algorithms consider student preferences, eligibility criteria and school capacities. In order to better understand student preferences and the performance of various systems, this study develops a general methodology to analyze the reports on student preferences submitted to school choice systems.
How widespread is tax evasion – and what does that imply for the true extent of inequality? This research explores these questions by analyzing a unique dataset of leaked customer lists from offshore financial institutions matched to administrative wealth records in Scandinavia. The results show that offshore tax evasion is highly concentrated among the rich. The top 0.01% of households by wealth evade about a quarter of the taxes they owe, largely by concealing assets and investment income abroad. Top wealth shares in Denmark, Norway and Sweden increase substantially when adding back these unreported assets, highlighting the need to take account of tax evasion to measure inequality accurately.
Civil servants constitute a key element of state capacity, with the responsibility for raising government revenues, providing public services and implementing reforms. But what happens to their performance when they are appointed to office less on the basis of their talents than on their social connections to powerful patrons? This research examines the costs of patronage through the lens of a historical bureaucracy that spanned the globe: Britain’s Colonial Office. The research combines newly digitized personnel and public finance data from the administration of the British Empire over the period 1854-1966 to show how patronage influenced the promotion and performance of colonial governors.
There is considerable anecdotal evidence of US companies moving from high-tax states to low-tax states, but what do the data reveal about the impact of state taxation on economic activity? This research finds that firms subject to state-level corporate taxation respond to higher corporate tax rates by closing establishments and reducing employment; those subject only to state-level personal income taxation respond similarly to individual income tax rates, though to a lesser extent. Since half of these responses are due to reallocation of business activity to lower-tax states, tax competition across states clearly plays a first-order role in corporate decision-making.
How much does consuming news with a strong political slant influence Americans’ votes in presidential elections? And how strongly do people prefer news sources that are slanted towards their own political preferences? This research provides evidence on the persuasive effects of slanted news and viewers’ tastes for like-minded news by analyzing data on the three big US cable news channels: CNN, Fox News, and MSNBC. The results indicate that these news sources – and Fox News in particular – have the potential for large effects on the outcomes of elections.
In the 1960s, there were worries that U.S. economic growth would lead to increasingly dangerous levels of pollution, and that by the year 2000, air pollution would make cities like Los Angeles and New York uninhabitable. Instead, U.S. air quality has improved dramatically since then. The U.S. Environmental Protection Agency estimates that the reduction in U.S. air pollution since 1990 prevented several hundred thousand premature deaths annually, so it is important to understand its causes. How do U.S. manufacturers produce more now, while polluting less?
A public program of unemployment benefits aims to protect people against job loss, but it should ideally be designed so that it doesn’t encourage them to stay out of work too much longer than they otherwise would. This research explores how policy can achieve the ideal balance between maximizing the insurance value of benefits while minimizing the incentive cost. Analyzing data from Sweden on unemployment, consumption, income, and wealth, the findings indicate that contrary to recent reforms that push towards making the generosity of benefits decline over the unemployment spell, it is more socially desirable to reduce benefits for the short-term unemployed in order to raise them for the long-term unemployed.
How should government bonds be sold? Research typically emphasizes how the auction design affects outcomes depending on the nature of demand and the competitive environment. This study combines models of strategic bidding in Treasury auctions with detailed bidding data to construct empirical measures that reveal the effectiveness of auctions. Applying these methods to data on US Treasury auctions shows that the gains from optimizing the auction mechanism are no more than 5 basis points. The research also quantifies the advantage enjoyed by primary dealers in these markets, who are able to observe the ‘willingness-to-pay’ of their customers who route their bids through them.
Matching theory, which examines what happens when one or more types of searchers interact, has proven to be a powerful tool for increasing the efficiency of markets where mutual consent is required. The process of matching employers with job seekers, pairing suitable romantic partners, and even finding compatible kidney donors and recipients has been enhanced through the application of this theory. Today, school admissions processes are being redesigned using matching theory, but the outcome of this innovation has received less analysis.