We propose that individuals are more politically active in more like-minded social environments. To test this hypothesis, we combine administrative data from the Federal Election Commission and the U.S. Postal Service. We identify 45,000 individuals who contributed to Barack Obama’s 2008 presidential campaign and changed residences either before or after the 2012 election cycle.We examine whether living in an area with a higher share of Democrats causes higher contributions to Obama. We find that conformity effects are economically significant. Additionally, we conduct counterfactual analysis that shows that these effects are important for understanding geographic polarization.

Offices are social places. Employees and managers take breaks together and talk about family and hobbies. In this study, we show that employees’ social interactions with their managers can be advantageous for their careers, and that this phenomenon contributes to the gender pay gap. We use administrative and survey data from a large financial institution and exploit quasi-random variation induced by the rotation of managers. We provide evidence that when employees have more face-to-face interactions with their managers, they are promoted at a higher rate. This mechanism could explain a third of the gender gap in promotions at this firm.

The vast majority of the pay inequality in organizations comes from differences in pay between employees and their bosses. But are employees aware of these pay disparities? Are employees demotivated by this inequality? To address these questions, we conducted a natural field experiment with a sample of 2,060 employees from a multibillion-dollar corporation in Southeast Asia. We document large misperceptions among employees about the salaries of their managers and smaller but still significant misperceptions of the salaries of their peers, and we show that these perceptions have a significant causal effect on the employees’ own behavior.

Firms are allowed to use aggregate data on market salaries to set pay, a practice known as salary benchmarking. Using national payroll data, we study firms that gain access to a tool that reveals market benchmarks for each job title. Using a difference-in-differences design, we find that the benchmark information reduces salary dispersion by 25%. Thus, salary dispersion must stem partly from aggregate uncertainty about the salaries offered by other firms. Our model formalizes how salary dispersion can arise even in competitive labour markets for identical workers when such uncertainty exists, and we discuss implications for an ongoing policy debate.

We examine how macroeconomic expectations affect consumer decisions, using an experiment with 2,872 credit card customers at a large commercial bank. In the experiment, participants are randomized into receiving expert forecasts of inflation and the nominal exchange rate. We find that forecasts shift inflation and exchange rate expectations, but do not change spending or self-reported consumption plans as predicted by standard models of intertemporal choice. Results from a supplementary survey experiment suggest that consumers are sophisticated enough to anticipate nominal rigidities and reduce spending on durables for precautionary reasons, counteracting the effects predicted by standard models of intertemporal optimization.

Do individuals care about their relative income? While this is a long-standing hypothesis, revealed-preference evidence remains elusive. We provide a unique test by studying residential choices: individuals often must choose between places with different income distributions, and as a result they “choose” their relative income. We conducted a field experiment with 1,080 senior medical students who participated in the National Resident Matching Program. We estimate their preferences by combining choice data, survey data on perceptions, and information-provision experiments. The evidence suggests that individuals care about their relative income and that these preferences differ across single and nonsingle individuals.