A rich array of institutional diversity makes the United States an excellent place to study the relationship between political institutions and public policy outcomes. This essay has three main aims. First, it reviews existing empirical evidence on the relationship between institutional rules, political representation and policy outcomes. It aims to place the literature into a broader context of theoretical and empirical work in the field of political economy. Second, it develops a parallel empirical analysis that updates studies in the literature and re-examines some of the claims made, in a setting unified both in terms of policy outcomes and the period under study. Third, the paper develops some new directions for research, presenting a small number of novel exploratory results.
We survey the evidence bearing on measurement error in the CPI and provide our best estimate of the magnitude of CPI bias. We also identify a "weighting" bias in the CPI that has not been previously discussed in the literature. In total, we estimate that the CPI overstates the change in the cost of living by about 0.6 percentage point per year, with a confidence interval that ranges from 0.1 to 1.2 percentage points. Roughly half of this bias is accounted for by the CPI's inability to fully capture the welfare improvement from quality change and the introduction of new items. Our bias estimate is smaller than that found in several earlier studies, in part because the BLS has recently made a variety of improvements to its procedures; our study highlights several potential areas for further improvement.
This paper reviews the literature on commercial sport through the lens of the economic theory of contests/tournaments. It seeks to draw together research on incentives in individualistic sports such as golf and footraces with the research on uncertainty of outcome and competitive balance in team sports such as baseball and soccer. The contest framework is used to analyze issues such as the optimal distribution of prizes, the impact of revenue sharing, salary caps, draft rules, and a variety of other restraints commonly employed in sports leagues. The paper draws heavily on a comparative analysis of contest organization, in particular between North America and Europe.
Study of Competition and Regulation for the permission to use a previous study (Vogelsang 2000) on which this survey is based. My deep thanks for helpful comments go to Lewis Evans, Larry Kotlikoff, John McMillan, Bridger Mitchell, Glenn Woroch and two insightful referees.
This paper contains a review of the burgeoning research that has been designed to shed light on how the art auction system actually works and what it indicates about price formation. First, we find that in recent years returns on art assets appear to be little different from returns on other assets. In addition, some researchers have found that because of the weak correlation between art asset returns with other returns, there may be a case for the inclusion of art assets in a diversified portfolio. Second, we find evidence of several anomalies in art market pricing. The evidence clearly suggests that, contrary to the view of the art trade, masterpieces underperform the market. In addition, there is considerable evidence that there are fairly long periods in which art prices may diverge across geographic areas and even auction houses. Third, we review the public record of the criminal trial of Sotheby`s former Chairman, who was accused of price fixing, to show how the collusion with Christie`s, the other great public auction house, was actually engineered. Contrary to the way the proceeds from the settlement of the civil suit in this case were distributed, we show that buyers were almost certainly not injured by the collusion, but that sellers were. In addition, based on the public record of settlement, it appears that the plaintiffs in the civil suit were very handsomely repaid for their injury. Finally, we review the extensive research on the effects of the auction institution on price formation. There is now considerable theoretical research on strategic behavior in auctions, much of it in response to empirical findings, and we review three key findings. First, the evidence suggests that art experts provide extremely accurate predictions of market prices, but that these predictions do not optimally process the publicly available information. Second, high reserve prices, and the resulting high unsold (buy-in) rates are best explained as optimal search in the face of stochastic demand. Third, extensive research has documented that the prices of identical objects are more likely to decline than to increase when multiple units are sold, and this has led to considerable theoretical research. Subsequent empirical research has tended to document declining demand prices even when the objects are imperfect substitutes.
This paper contains a review of the burgeoning research that has been designed to shed light on how the art auction system actually works and what it indicates about price formation.First, we find that in recent years returns on art assets appear to be little different from returns on other assets.In addition, some researchers have found that because of the weak correlation between art asset returns with other returns, there may be a case for the inclusion of art assets in a diversified portfolio.Second, we find evidence of several anomalies in art market pricing.The evidence clearly suggests that, contrary to the view of the art trade, "masterpieces" underperfo rm the market.In addition, there is considerable evidence that there are fairly long periods in which art prices may diverge across geographic areas and even auction houses.Third, we review the public record of the criminal trial of Sotheby's former Chairman, who was accused of price fixing, to show how the collusion with Christie's, the other great public auction house, was actually engineered.Contrary to the way the proceeds from the settlement of the civil suit in this case were distributed, we sho w that buyers were almost certainly not injured by the collusion, but that sellers were.In addition, based on the public record of settlement, it appears that the plaintiffs in the civil suit were very handsomely repaid for their injury.Finally, we review the extensive research on the effects of the auction institution on price formation.There is now considerable theoretical research on strategic behavior in auctions, much of it in response to empirical findings, and we review three key findings.First, the evidence suggests that art experts provide extremely accurate predictions of market prices, but that these predictions do not optimally process the publicly available information.Second, high reserve prices, and the resulting high unsold ("buy-in") rates are best explained as optimal search in the face of stochastic demand.Third, extensive research has documented that the prices of identical objects are more likely to decline than to increase when multiple units are sold, and this has led to considerable theoretical research.Subsequent empirical research has tended to document declining demand prices even when the objects are imperfect substitutes.
A rich array of institutional diversity makes the United States an excellent place to study the relationship between political institutions and public policy outcomes.This essay has three main aims.First, it reviews existing empirical evidence on the relationship between institutional rules, political representation and policy outcomes.It aims to place the literature into a broader context of theoretical and empirical work in the field of political economy.Second, it develops a parallel empirical analysis that updates studies in the literature and re-examines some of the claims made, in a setting unified both in terms of policy outcomes and the period under study.Third, the paper develops some new directions for research, presenting a small number of novel exploratory results.
I explore the connection between income inequality and health in both poor and rich countries. I discuss a range of mechanisms, including nonlinear income effects, credit restrictions, nutritional traps, public goods provision, and relative deprivation. I review the evidence on the effects of income inequality on the rate of decline of mortality over time, on geographical pattens of mortality, and on individual-level mortality. Much of the literature needs to be treated skeptically, if only because of the low quality of much of the data on income inequality. Although there are many puzzles that remain, I conclude that there is no direct link from income inequality to ill-health; individuals are no more likely to die if they live in more unequal places. The raw correlations that are sometimes found are likely the result of factors other than income inequality, some of which are intimately linked to broader notions of inequality and unfairness. That income inequality itself is not a health risk does not deny the importance for health of other inequalities, nor of the social environment. Whether income redistribution can improve population health does not depend on a direct effect of income inequality and remains an open question.
We classify social security pension systems in three dimensions: actuarial versus non-actuarial, funded versus unfunded, and defined-benefit versus defined-contribution systems. Recent pension reforms are discussed in terms of these dimensions. Shifting to a more actuarial system reduces labor-market distortions, although limiting the scope for redistribution. Shifting to a funded system may increase saving, redistribute income to future generations and distort contemporary labor supply. A partial shift to a funded system helps individuals diversify their pension assets. A shift from a defined-benefit to a defined-contribution system means that income risk will be shifted from workers to pensioners.
A rich array of institutional diversity makes the United States an excellent place to study the relationship between political institutions and public policy outcomes. This essay has three main aims. First, it reviews existing empirical evidence on the relationship between institutional rules, political representation and policy outcomes. It aims to place the literature into a broader context of theoretical and empirical work in the field of political economy. Second, it develops a parallel empirical analysis that updates studies in the literature and re-examines some of the claims made, in a setting unified both in terms of policy outcomes and the period under study. Third, the paper develops some new directions for research, presenting a small number of novel exploratory results.