During historical periods in which U.S. fuel economy standards were unchanging, automakers increased performance but not fuel economy, contrasting with recent periods of tightening standards and rising fuel economy. This paper evaluates the welfare consequences of automakers forgoing performance increases to raise fuel economy as standards have tightened since 2012. Using a unique data set and a novel approach to account for fuel economy and performance endogeneity, we find undervaluation of fuel cost savings and high valuation of performance. Welfare costs of forgone performance approximately equal expected fuel savings benefits, suggesting approximately zero net private consumer benefit from tightened standards.

After growing steadily for decades, average U.S. household energy consumption began declining in the mid-2000s. Using household-level data from the Residential Energy Consumption Survey and Current Population Survey between 1990 and 2020, we decompose overall changes in per household consumption into three components: average income, cross-household income distribution, and consumption habits, which include energy efficiency. Growth of average income caused consumption to increase by 11%, and rising income inequality reduced consumption by 8%, nearly entirely offsetting the effect of income growth. Changes in habits also reduced consumption. Back-of-the-envelope calculations indicate an unexpected effect of rising income inequality: climate and air quality improvements valued at $9 billion in 2020 due to lower electricity consumption. The results indicate the importance of coordinating policies that address inequality and pollution.

The introduction of Medicare in 1965 was the single largest change in health insurance coverage in U.S. history.Many economists and commentators have conjectured that the introduction of Medicare may have also been an important impetus for the development of new drugs that are now commonly used by the elderly and have substantially extended their life expectancy.In this paper, we investigate whether Medicare induced pharmaceutical innovations directed towards the elderly.Medicare could have played such a role only if two conditions were met.First, Medicare would have to increase drug spending by the elderly.Second, the pharmaceutical companies would have to respond to the change in market size for drugs caused by Medicare by changing the direction of their research.Our empirical work finds no evidence of a "first-stage" effect of Medicare on prescription drug expenditure by the elderly.Correspondingly, we also find no evidence of a shift in pharmaceutical innovation towards therapeutic categories most used by the elderly.On the whole, therefore, our evidence does not provide support for the hypothesis that Medicare had a major effect on the direction of pharmaceutical innovation.