Knowledge that Transforms

We synthesize and review retrospective analyses of federal air quality regulations to examine the contributions of the Clean Air Act (CAA) to the vast air quality improvements seen since 1970. Geographic heterogeneity in stringency affects emissions, public health, compliance costs, and employment. Cap-and-trade has delivered greater emission reductions at lower cost than conventional mandates, yet has fallen short of textbook ideals. Market power also influenced the CAA’s benefits and costs. New benefit categories have been identified ex post, but specific technology requirements have not yet been rigorously evaluated. Comparisons of aggregate benefits and costs of the CAA are beyond present capabilities. (JEL D61, K32, Q51, Q53, Q58)

We discuss and review literature on the macroeconomic effects of epidemics and pandemics since the late 20th century. First, we cover the role of health in driving economic growth and well-being and discuss standard frameworks for assessing the economic burden of infectious diseases. Second, we sketch a general theoretical framework to evaluate the tradeoffs policymakers must consider when addressing infectious diseases and their macroeconomic repercussions.In so doing, we emphasize the dependence of economic consequences on (i) disease characteristics; (ii) inequalities among individuals in terms of susceptibility, preferences, and income; and (iii) cross-country heterogeneities in terms of their institutional and macroeconomic environments. Third, we study pharmaceutical and nonpharmaceutical policies aimed at mitigating and preventing infectious diseases and their macroeconomic repercussions. Fourth, we discuss the health toll and economic impacts of five infectious diseases:HIV/AIDS, malaria, tuberculosis, influenza, and COVID-19. Although major epidemics and pandemics can take an enormous human toll and impose a staggering economic burden, early and targeted health and economic policy interventions can often mitigate both to a substantial degree.

This article reviews the global health and economic consequences of the 1918 influenza pandemic, with a particular focus on topics that have seen a renewed interest because of COVID-19. We begin by providing an overview of key contextual and epidemiological details as well as the data that are available to researchers. We then examine the effects on mortality, fertility, and the economy in the short and medium run. The role of non-pharmaceutical interventions in shaping those outcomes is discussed throughout. We then examine longer-lasting health consequences and their impact on human capital accumulation and socioeconomic status. Throughout the paper we highlight important areas for future work. (JEL E24, E32, I12, I15, J13, J24, N30)

Recent research has explored the distributive consequences of major historical epidemics, and the current crisis triggered by COVID-19 prompts us to look at the past for insights about how pandemics can affect inequalities in income, wealth, and health. The fourteenth-century Black Death, which is usually believed to have led to a significant reduction in economic inequality, has attracted the greatest attention. However, the picture becomes much more complex if other epidemics are considered. This article covers the worst epidemics of preindustrial times, from the Plague of Justinian of 540–41 to the last great European plagues of the seventeenth century, as well as the cholera waves of the nineteenth. It shows how the distributive outcomes of lethal epidemics do not only depend upon mortality rates, but are mediated by a range of factors, chief among them the institutional framework in place at the onset of each crisis. It then explores how past epidemics affected poverty, arguing that highly lethal epidemics could reduce its prevalence through two deeply different mechanisms: redistribution toward the poor or extermination of the poor. It concludes by recalling the historical connection between the progressive weakening and spacing in time of lethal epidemics and improvements in life expectancy, and by discussing how epidemics affected inequality in health and living standards. (JEL D31, I12, I14, I30, N30, J11, J31)

Noel D. Johnson and Mark Koyama’s book, Persecution and Toleration: The Long Road to Religious Freedom, examines the links between religion, state action, and the development of liberalism in medieval Europe. It discusses a model of “conditional toleration”; how the interaction between religion and state influences persecution and discrimination against minorities; and how religious freedom eventually paved the way for scientific advances, liberalism, and economic growth. It tackles issues such as fiscal capacity, anti-Semitism in Europe, plagues including the Black Death, heresy in the Spanish Inquisition, witchcraft trials, the Holocaust, climate shocks, and the growth of cities with emergent religious minorities. It discusses these issues for a range of countries in medieval Europe, providing rich historical detail and interpretive depth for its main argument. This is a deeply evocative book that makes an important contribution to the new economics of religion. Carefully researched and thoughtfully crafted, the themes it discusses and the ideas it raises have relevance not only for medieval European societies, with which it is principally concerned, but also for contemporary economies everywhere. (JEL D72, N13, N33, N43, Z12)

In his book, The Community of Advantage: A Behavioural Economist’s Defence of the Market, Robert Sugden says that people should be left alone to do what they want. We interpret his reasons for saying so and try to unify them. The unification uses simple economic models. When we fail to unify, we explain why. Open problems emerge. If Sugden’s passion for his subject won’t motivate the reader to pursue these problems, what will? (JEL C71, C72, D60, D71, D72, I31)

Prediction Machines: The Simple Economics of Artificial Intelligence, by artificial intelligence (AI) experts, Ajay Agrawal, Joshua Gans, and Avi Goldfarb, pulls no punches. AI is all about prediction—machines learning precisely what to do for us and to us. The learning is occurring at warp speed, as AI uses big data to pick our brains for what we know and what we like. The authors are partly infatuated and partly terrified by AI’s parasitic potential. Readers should read this chilling and insightful book, but they should do so with a bottle of scotch, ideally from one of Scotland’s ancient distilleries that has recently been fully automated. (JEL C45, C55, E26, M10, M20, O30)

In The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era, Barry Eichengreen relies on historical and contemporary evidence to analyze major episodes of populism in the twenty-first century, the Trump election in the United States, and Brexit in Europe. Populism—an anti-elite, authoritarian, and nativist movement—rises in times of economic and political discontent because elites, the winners of the preceding period, are unwilling or unable to share their winnings with the losers. This review asks for a model that would allow one to differentiate a destructive populism wave and a constructive adjustment of the political system to changing circumstances.(JEL D72, D73, N40)

Recent years have seen several 100-year anniversaries of the women’s vote, and today universal and equal suffrage is an inseparable part of democracy. Dawn Teele’s book, Forging the Franchise, is an inquiry into the reasons why male politicians elected by male voters gave women the right to vote in the United Kingdom, the United States, and France. It offers a theory of the political origins that focuses on electoral expediency and mobilization of women’s groups and it provides quantitative evidence from the three countries. It argues that women got the right to vote when the incumbents saw and needed an electoral advantage of expanding the right to vote to females. The book is of interest not only to those who want a deeper understanding of the historical process of women’s enfranchisement or who are interested in the political economy of democratization, but to everyone with a concern about gender inequality in politics today. (JEL D72, E16, J16, N30, N40)