Knowledge that Transforms

Though fundamental to innovation and essential to many industries and occupations, individual creativity has received limited attention as an economic behavior and has historically proven difficult to study. This paper studies the incentive effects of competition on individuals' creative production. Using a sample of commercial logo design competitions and a novel, content-based measure of originality, I find that intensifying competition induces agents to produce original, untested ideas over tweaking their earlier work, but heavy competition drives them to stop investing altogether. The results yield lessons for the management of creative workers and the implementation of competitive procurement mechanisms for innovation.

We investigate the link between hospital performance and managerial education by collecting a large database of management practices and skills in hospitals across nine countries. We find that hospitals closer to universities offering both medical education and business education have lower mortality rates from acute myocardial infarction (heart attacks), better management practices, and more MBA-trained managers. This is true compared to the distance to universities that offer only business or medical education (or neither). We argue that supplying bundled medical and business education may be a channel through which universities improve management practices in hospitals and raise clinical performance.

Abstract We estimate the effects of universal cash transfers on crime from Alaska's Permanent Fund Dividend, an annual lump-sum payment to all Alaska residents. We find a 14% increase in substance-abuse incidents the day after the payment and a 10% increase over the following four weeks. This is partially offset by an 8% decrease in property crime, with no changes in violent crimes. On an annual basis, however, changes in criminal activity from the payment are small. Estimated costs comprise a very small portion of the total payment, suggesting that crime-related concerns of a universal cash transfer program may be unwarranted.

Abstract This paper asks whether scarcity increases violence in markets that lack a centralized authority. We construct a model in which, by raising prices, scarcity fosters violence. Guided by our model, we examine this effect in the Mexican cocaine trade. At a monthly frequency, scarcity created by cocaine seizures in Colombia, Mexico's main cocaine supplier, increases violence in Mexico. The effects are larger in municipalities near the United States, with multiple cartels and with strong support for PAN (the incumbent party). Between 2006 and 2009 the decline in cocaine supply from Colombia could account for 10% to 14% of the increase in violence in Mexico.

Will college students who set goals work harder and perform better? We report two field experiments that involved four thousand college students. One experiment asked treated students to set goals for performance in the course; the other asked treated students to set goals for a particular task (completing online practice exams). Task-based goals had robust positive effects on the level of task completion and marginally significant positive effects on course performance. Performance-based goals had positive but small and statistically insignificant effects on course performance. A theoretical framework that builds on present bias and loss aversion helps to interpret our results.

School finance reforms caused some of the most dramatic increases in intergovernmental aid from states to local governments in U.S. history. We examine whether teachers' unions affected the fraction of reform-induced state aid that passed through to local spending and the allocation of these funds. Districts with strong teachers' unions increased spending nearly dollar-for-dollar with state aid and spent the funds primarily on teacher compensation. Districts with weak unions used aid primarily for property tax relief and spent remaining funds on hiring new teachers. The greater expenditure increases in strong union districts led to larger increases in student achievement.

Abstract This paper reports the results of two randomized field experiments, each offering different populations of Chicago youth a supported summer job. The program consistently reduces violent-crime arrests, even after the summer, without improving employment, schooling, or other arrests; if anything, property crime increases over two to three years. Using a new machine learning method, we uncover heterogeneity in employment impacts that standard methods would miss, describe who benefits, and leverage the heterogeneity to explore mechanisms. We conclude that brief youth employment programs can generate important behavioral change, but for different outcomes, youth, and reasons than those most often considered in the literature.

Using a proprietary database of online job postings, we find that education and experience requirements rose during the Great Recession. These increases were larger in states and occupations that experienced greater increases in the supply of available workers. This finding is robust to controlling for local demand conditions and firm [Formula: see text] job-title fixed effects and using a natural experiment arising from troop withdrawals as an exogenous shock to labor supply. Our results imply that the increase in unemployed workers during the Great Recession can account for 18% to 25% of the increase in skill requirements between 2007 and 2010.

We study the adoption of energy-efficient LED lighting in garment factories around Bangalore, India. Combining daily production line–level data with weather data, we estimate a negative, nonlinear productivity-temperature gradient. We find that LED lighting raises productivity on hot days. Using the firm's costs data, we estimate that the payback period for LED adoption is less than one-third the length after accounting for productivity co-benefits. The average factory in our data gains about $2,880 in power consumption savings and about $7,500 in productivity gains.

We show that tenth-grade teacher expectations affect students' likelihood of college completion. Our approach leverages a unique feature of a nationally representative dataset: two teachers provided their educational expectations for each student. Identification exploits teacher disagreements about the same student, an idea we formalize using a measurement error model. We estimate an elasticity of college completion with respect to teachers' expectations of 0.12. On average, teachers are overly optimistic, though white teachers are less so with black students. More accurate beliefs are counterproductive if there are returns to optimism or sociodemographic gaps in optimism. We find evidence of both.