Knowledge that Transforms

The national income accounts, together with the source data which they use, form the core of our economic measurement system. The development of the concepts and measurements of national income are among the most important achievements of modern

Why Are Women Such Reluctant Economists? Evidence from Liberal Arts Colleges by Elizabeth J. Jensen and Ann L. Owen. Published in volume 90, issue 2, pages 466-470 of American Economic Review, May 2000

A change in the audition procedures of symphony orchestras—adoption of “blind” auditions with a “screen” to conceal the candidate's identity from the jury—provides a test for sex-biased hiring. Using data from actual auditions, in an individual fixed-effects framework, we find that the screen increases the probability a woman will be advanced and hired. Although some of our estimates have large standard errors and there is one persistent effect in the opposite direction, the weight of the evidence suggests that the blind audition procedure fostered impartiality in hiring and increased the proportion women in symphony orchestras.

Whether welfare benefits affect marriage and fertility decisions of the low-income population has been the subject of much research. The substantial bias in the U.S. welfare system toward female-headed families, relative to either married couples or single childless individuals, provides a clear financial incentive for early nonmarital childbearing, postponement of marriage, divorce, postponement of remarriage, and other behaviors that make eligibility for welfare benefits more likely or that avoid the loss of eligibility after it has been achieved. The findings in the cross-sectional research literature through 1995, summarized in Moffitt (1998), exhibit a clear central tendency pointing toward an effect of welfare on some aspects of family structure, namely, marriage and fertility. However, there is also agreement that the time-series evidence is inconsistent with that from crosssectional data, for real benefits have been falling for over 20 years, while female headship has been rising. Moreover, bringing other programs such as Food Stamps and Medicaid into the picture helps explain rising female headship increases in the late 1960's and early 1970's, when those programs were introduced and solidified, but does less well in explaining the

Cognition requires scarce inputs, including time and concentration. Since cognition is costly, sophisticated decision-makers should use mental shortcuts, or heuristics, to reduce cognitive burdens. A model is proposed and tested that is motivated by these principles. It is believed this model achieves four goals. First, the model makes quantitative behavioral predictions and, hence, provides a precise alternative to the rational-actor hypothesis. Second, the model is psychologically plausible because it is based on the actual decisions algorithms that subjects claim to use. Third, the model is empirically testable; such a test is provided in this paper. Fourth, the model is broadly applicable, because it can be used to analyze decision problems that can be represented in tree form.

While Harriet Taylor Mill's work on feminist economics has only recently begun to receive the attention it deserves, one can hardly say that she was earlier ignored: for more than a century, debate has raged over the extent and nature of her influence on John Stuart Mill. The debate was provoked by Mill himself, who used quite extravagant language in describing his wife and her contributions to his work.1 The following example is from his Autobiography (J. S. Mill, 1873 [1965 p. 251]), completed after Harriet's death and published only after his own:

We examine how owners of productive resources (e.g., public enterprises or financial capital) optimally allocate their resources among wealth-constrained operators of unknown ability. Optimal allocations exhibit: (1) shared enterprise profit—the resource owner always shares the operator's profit; (2) dispersed enterprise ownership—resources are widely distributed among operators of varying ability; (3) limited benefits of competition—the owner may not benefit from increased competition for the resource; and, sometimes, (4) diluted incentives for the most capable—more capable operators receive smaller shares of the returns they generate. Implications for privatizations and venture capital arrangements are explored.

We ask whether the following observations may result from endogenously determined fluctuations in the money multiplier rather than a causal influence of money on output: (i) M1 is positively correlated with real output; (ii) the money multiplier and deposit-to-currency ratio are positively correlated with output; (iii) the price level is negatively correlated with output; (iv) the correlation of M1 with contemporaneous prices is substantially weaker than the correlation of M1 with real output; (v) correlations among real variables are essentially unchanged under different monetary-policy regimes; and (vi) real money balances are smoother than money-demand equations would predict.

This paper attempts to bring theoretical and empirical research on capital gains realization behavior closer together by considering whether investors who appear to engage more in strategic tax avoidance activity also respond differently to tax rates. We find that such investors exhibit significantly smaller responses to permanent tax rate changes than other investors. Put another way, a larger part of their response to capital gains tax rates reflects timing, consistent with their closer adherence to tax avoidance strategies emphasizing arbitrage based on tax rate differentials. This finding holds for two alternative specifications of realization behavior, one of which suggests larger permanent responses to capital gains tax rates than those of previous panel studies.