Knowledge that Transforms

Heat's impact on economic growth and aggregate productivity is well-established, but while individual impairments are well-understood as mechanisms, the role of interpersonal dynamics remain unexplored despite the growing prevalence of team-based occupations. In our experiment, programmers were randomly assigned to work individually or in pairs under warm (29°C) or control (24°C) conditions. We found that heat had no effect on individual performance but impaired team performance—not through decreased effort but likely through impaired collaboration. This negative impact was strongest in heterogeneous teams, suggesting heat exacerbates coordination challenges, confirmed by poorer partner evaluations in warm conditions.

We develop and estimate a general equilibrium signaling game model of xenophobia, in which the reputational consequences of committing xenophobic acts are determined endogenously. Using our unique survey data, which enables the identification of the model, we find that reputational incentives are a key driver of xenophobic behavior, suggesting that policies targeting these motivations could be effective. We then apply this structural model to assess the impact of the COVID-19 pandemic on anti-Chinese xenophobia. Our findings suggest that the majority of the post-pandemic rise in xenophobic behaviors is driven by changes in reputational incentives.

In criminal cases, prosecutors have the discretion to adjust arresting officers’ charges and so can offset racial disparities introduced by police. Yet prior research suggests that prosecutors instead compound earlier disparities. We investigate prosecutors’ impacts on disparities using sentencing discontinuities in North Carolina, where defendants with slightly longer criminal histories face mandatory prison. Prosecutors can sidestep these mandatory-prison laws by reducing qualifying defendants’ charges. Between 1995 and 2019, Black defendants were initially less likely — but ultimately became more likely — to benefit from charge reductions that avoid mandatory prison. This reversal is driven by arrests typically initiated by police.

We empirically characterize episodes of large inflation surges observed worldwide in the last three decades. We document four facts. (1) Inflation surges tend to be persistent, with the duration of disinflation exceeding that of the initial inflation increase. (2) Surges are initially unexpected but followed by a gradual catch-up of average short-term expectations with realized inflation. (3) Long-term inflation expectations tend to exhibit increases that persist throughout disinflation. (4) Policy responses are characterized by hikes in nominal interest rates but no tightening of real rates or fiscal balances, departing from textbook policy rules, and instead exhibiting a “fear of tightening.”

We examine student, teacher, and peer perceptions of effort, ability, performance, and self-confidence in Romania's highly tracked schools. We find that: (1) students just above a cutoff—tracked into high-achieving classes—have less favorable self-perceptions than those just below (“big-fish-little-pond” effects); (2) students perceive peers in their classes more favorably (“in-group bias”); (3) this bias is stronger in lower-achieving classes; (4) students perceive themselves more positively than others perceive them (“illusory superiority”); (5) this bias is stronger among lower-achieving students (“Krueger-Dunning effects”). In short, being tracked into lower-achieving classes does not appear to negatively affect self-perceptions.

A key assumption of the differences-in-differences designs is that the average evolution of untreated potential outcomes is the same across different treatment cohorts: parallel trend assumption. In this paper, we relax the parallel trend assumption by assuming a latent type variable and developing a type-specific parallel trend. With a finite support assumption on the latent type and long pretreatment time periods, an extremum classifier consistently estimates the type assignment. Based on the classification, we propose a type-specific DiD estimator for type-specific ATT. By estimating the type-specific ATT, we study heterogeneity in treatment effect, in addition to heterogeneity in baseline outcomes.

We investigate a low-income country's long run employment response to new export opportunities. The U.S.–Vietnam Bilateral Trade Agreement reduced U.S. import tariffs on exports from Vietnam. Employment grew faster in the industries most exposed to the U.S. tariff reductions and this was driven by foreign affiliates of multinationals entering Vietnam. Foreign entrants continue to expand employment long after entry–even after 16 years. Most foreign entrants are exporters and from East Asia, highlighting that opportunities created by bilateral agreements are not just limited to signing parties. Vietnam's subsequent capacity growth allows it to export to other markets over time.

We use linked administrative data on the universe of California births to provide novel evidence on economic inequality in infant and maternal health. Infants and mothers at the top of the income distribution have worse birth and morbidity outcomes than their lowest-income counterparts, but are nevertheless the least likely to die in the year following birth. Racial disparities swamp these income disparities, with no racial convergence in health outcomes as income rises. A comparison with Sweden shows that infant and maternal health is worse in California at virtually all income levels.

Acquirers and targets in horizontal mergers are typically multiproduct firms that often sell the same core product. How do mergers affect these multiproduct firms? Using Danish data, we establish empirically that the combined domestic product scope of the acquirer and target falls after a merger, and sales of the acquirer become more concentrated towards the core product. Moreover, the acquirer exports more products to more destinations that are costly to serve. To rationalize these findings, we develop a model of mergers between oligopolistic firms, highlighting merger-induced within-firm adjustments along the product dimension that promote efficiency improvements and international trade.

Individuals frequently make insurance choices that appear sub-optimal, possibly reflecting difficulty mapping insurance contracts to their distribution of financial consequences. We develop and experimentally test a decision aid that provides this mapping in two experiments mirroring typical health insurance decisions. Compared to standard feature-based information, our distributionbased tool substantially reduces dominance violations and changes choice patterns across a range of menus. Under feature-based displays, choices can be most easily rationalized by models of heuristic choices, such as minimizing premium or deductible. With the decision aid, significantly more people have choice patterns that are better explained by expected utility theory.