Knowledge that Transforms

Little is known about the costs of crime to victims. We use unique and detailed register data on victimizations and monthly labor market outcomes from the Netherlands and estimate event study designs to assess short- and long-term effects of criminal victimization. Across offenses, both males and females experience significant decreases in earnings (up to −12.9%) and increases in benefit receipt (up to +6%) after victimization. The negative labor market responses are lasting (up to 4 years) and accompanied by shorter-lived responses in health expenditure. Heterogeneity results suggest that most groups of victims, including the noninjured, suffer nontrivial losses.

We study the impact of artificial intelligence (AI) on labor markets using establishment-level data on the near universe of online vacancies in the United States from 2010 onward. There is rapid growth in AI-related vacancies over 2010–18 that is driven by establishments whose workers engage in tasks compatible with AI’s current capabilities. As these AI-exposed establishments adopt AI, they simultaneously reduce hiring in non-AI positions and change the skill requirements of remaining postings. While visible at the establishment level, the aggregate impacts of AI-labor substitution on employment and wage growth in more exposed occupations and industries is currently too small to be detectable.

We synthesize and review retrospective analyses of federal air quality regulations to examine the contributions of the Clean Air Act (CAA) to the vast air quality improvements seen since 1970. Geographic heterogeneity in stringency affects emissions, public health, compliance costs, and employment. Cap-and-trade has delivered greater emission reductions at lower cost than conventional mandates, yet has fallen short of textbook ideals. Market power also influenced the CAA’s benefits and costs. New benefit categories have been identified ex post, but specific technology requirements have not yet been rigorously evaluated. Comparisons of aggregate benefits and costs of the CAA are beyond present capabilities.

We discuss and review literature on the macroeconomic effects of epidemics and pandemics since the late 20th century. First, we cover the role of health in driving economic growth and well-being and discuss standard frameworks for assessing the economic burden of infectious diseases. Second, we sketch a general theoretical framework to evaluate the tradeoffs policymakers must consider when addressing infectious diseases and their macroeconomic repercussions.In so doing, we emphasize the dependence of economic consequences on (i) disease characteristics; (ii) inequalities among individuals in terms of susceptibility, preferences, and income; and (iii) cross-country heterogeneities in terms of their institutional and macroeconomic environments. Third, we study pharmaceutical and nonpharmaceutical policies aimed at mitigating and preventing infectious diseases and their macroeconomic repercussions. Fourth, we discuss the health toll and economic impacts of five infectious diseases:HIV/AIDS, malaria, tuberculosis, influenza, and COVID-19. Although major epidemics and pandemics can take an enormous human toll and impose a staggering economic burden, early and targeted health and economic policy interventions can often mitigate both to a substantial degree.

This article reviews the global health and economic consequences of the 1918 influenza pandemic, with a particular focus on topics that have seen a renewed interest because of COVID-19. We begin by providing an overview of key contextual and epidemiological details as well as the data that are available to researchers. We then examine the effects on mortality, fertility, and the economy in the short and medium run. The role of non-pharmaceutical interventions in shaping those outcomes is discussed throughout. We then examine longer-lasting health consequences and their impact on human capital accumulation and socioeconomic status. Throughout the paper we highlight important areas for future work.

Recent research has explored the distributive consequences of major historical epidemics, and the current crisis triggered by COVID-19 prompts us to look at the past for insights about how pandemics can affect inequalities in income, wealth, and health. The fourteenth-century Black Death, which is usually believed to have led to a significant reduction in economic inequality, has attracted the greatest attention. However, the picture becomes much more complex if other epidemics are considered. This article covers the worst epidemics of preindustrial times, from the Plague of Justinian of 540–41 to the last great European plagues of the seventeenth century, as well as the cholera waves of the nineteenth. It shows how the distributive outcomes of lethal epidemics do not only depend upon mortality rates, but are mediated by a range of factors, chief among them the institutional framework in place at the onset of each crisis. It then explores how past epidemics affected poverty, arguing that highly lethal epidemics could reduce its prevalence through two deeply different mechanisms: redistribution toward the poor or extermination of the poor. It concludes by recalling the historical connection between the progressive weakening and spacing in time of lethal epidemics and improvements in life expectancy, and by discussing how epidemics affected inequality in health and living standards.

The existence of an effective legal system is assumed throughout economic analysis, and yet there has been little study of the economics of legal markets themselves. Research to date has focused narrowly on the economics of markets for lawyers. In this review, I distinguish legal markets from the market for lawyers and show how excessive regulation of our legal markets—by lawyers themselves—distorts economic activity and growth. It does so primarily by inhibiting investment in the legal and regulatory technologies needed to respond to the transformation of the economy wrought by globalization, digitization, aspirations for inclusion, and the coming of artificial intelligence.

In 1955, Herbert Simon introduced the notion of satisficing: an agent satisfices by searching for an alternative that meets an aspiration level but does not optimize. We survey more than 60 years of advances in understanding satisficing in economics, psychology, and management, identifying two research traditions that address two classes of situations: under risk, satisficing is typically inferior to optimization strategies and modeled according to the neoclassical framework; under uncertainty, satisficing strategies are often derived empirically and can be highly effective. We integrate the two research traditions and show the conditions under which satisficing can be rational.

We study the mental health of graduate students at eight top-ranked economics PhD programs in the United States using clinically validated surveys. We find that 24.8 percent experience moderate or severe symptoms of depression or anxiety—more than two times the population average. Though our response rate was 45.1 percent and sample selection concerns exist, conservative lower bounds nonetheless suggest higher prevalence rates of such symptoms than in the general population. Mental health issues are especially prevalent at the end of the PhD program: 36.7 percent of students in years 6+ of their program experience moderate or severe symptoms of depression or anxiety, versus 21.2 percent of first-year students. Of economics students with these symptoms, 25.2 percent are in treatment, compared to 41.4 percent of graduate students in other programs. A similar percentage of economics students (40–50 percent) say they cannot honestly discuss mental health with advisers as say they cannot easily discuss nonacademic career options with them. Only 26 percent find their work to be useful always or most of the time, compared to 70 percent of economics faculty and 63 percent of the working age population. We provide recommendations for students, faculty, and administrators on ways to improve graduate student mental health.

This paper evaluates the literature on international unconventional monetary policies (UMPs). Introducing market segmentation, limits-to-arbitrage, and time-consistent policy in standard models permits a theoretical role for UMP. Empirical studies provide compelling evidence that UMPs influenced international asset prices and tail risk in the desired manner. Calibrated modeling and vector autoregressive (VAR) exercises imply that these policies also improved macroeconomic outcomes. We assess the recent debate on the empirical evidence and discuss central bank assessments of UMP. Despite qualified successes, we recommend that UMP be reserved for crises and/or when the zero bound constrains conventional monetary policy.