This paper provides a critical review of the literature on choosing social discount rates (SDRs) for public cost-benefit analysis. We discuss two dominant approaches, the first based on market prices and the second based on intertemporal ethics. While both methods have attractive features, neither is immune to criticism. The market-based approach is not entirely persuasive even if markets are perfect, and faces further headwinds once the implications of market imperfections are recognised. By contrast, the ‘ethical’ approach—which relates SDRs to marginal rates of substitution implicit in a single planner’s intertemporal welfare function—does not rely exclusively on markets, but raises difficult questions about what that welfare function should be. There is considerable disagreement on this matter, which translates into enormous variation in the evaluation of long-run payoffs. We discuss the origins of these disagreements, and suggest that they are difficult to resolve unequivocally. This leads us to propose a third approach that recognises the immutable nature of some normative disagreements, and proposes methods for aggregating diverse theories of intertemporal social welfare. We illustrate the application of these methods to social discounting, and suggest that they may help us to move beyond long-standing debates that have bedevilled this field. (JEL D60, D61, D71, H43, H54)
{"title":"Choosing the Future: Markets, Ethics, and Rapprochement in Social Discounting","authors":"Antony Millner, Geoffrey Heal","doi":"10.1257/jel.20211675","DOIUrl":"https://doi.org/10.1257/jel.20211675","url":null,"abstract":"This paper provides a critical review of the literature on choosing social discount rates (SDRs) for public cost-benefit analysis. We discuss two dominant approaches, the first based on market prices and the second based on intertemporal ethics. While both methods have attractive features, neither is immune to criticism. The market-based approach is not entirely persuasive even if markets are perfect, and faces further headwinds once the implications of market imperfections are recognised. By contrast, the ‘ethical’ approach—which relates SDRs to marginal rates of substitution implicit in a single planner’s intertemporal welfare function—does not rely exclusively on markets, but raises difficult questions about what that welfare function should be. There is considerable disagreement on this matter, which translates into enormous variation in the evaluation of long-run payoffs. We discuss the origins of these disagreements, and suggest that they are difficult to resolve unequivocally. This leads us to propose a third approach that recognises the immutable nature of some normative disagreements, and proposes methods for aggregating diverse theories of intertemporal social welfare. We illustrate the application of these methods to social discounting, and suggest that they may help us to move beyond long-standing debates that have bedevilled this field. (JEL D60, D61, D71, H43, H54)","PeriodicalId":48416,"journal":{"name":"Journal of Economic Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136353999","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A standard conception of meritocracy, reflected in state referenda and the many legal filings against university admissions policies, is that selection rules should be blind to group identity and monotonic in measures of past accomplishment. We present theoretical arguments and survey empirical evidence challenging this view. Past accomplishment is often a garbled signal of multiple traits, some of which matter more for future performance than others. In such cases, group identity can be informative as a predictor of success and the increased representation of resource-disadvantaged groups could improve organizational performance. This perspective helps explain some recent empirical findings regarding the efficiency effects of group-contingent selection and moves us toward a conception of meritocracy more closely tied to organizational mission. (JEL I23, I26, I28, J15)
{"title":"Meritocracy and Representation","authors":"Rajiv Sethi, Rohini Somanathan","doi":"10.1257/jel.20221707","DOIUrl":"https://doi.org/10.1257/jel.20221707","url":null,"abstract":"A standard conception of meritocracy, reflected in state referenda and the many legal filings against university admissions policies, is that selection rules should be blind to group identity and monotonic in measures of past accomplishment. We present theoretical arguments and survey empirical evidence challenging this view. Past accomplishment is often a garbled signal of multiple traits, some of which matter more for future performance than others. In such cases, group identity can be informative as a predictor of success and the increased representation of resource-disadvantaged groups could improve organizational performance. This perspective helps explain some recent empirical findings regarding the efficiency effects of group-contingent selection and moves us toward a conception of meritocracy more closely tied to organizational mission. (JEL I23, I26, I28, J15)","PeriodicalId":48416,"journal":{"name":"Journal of Economic Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136354001","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The literature on intergenerational income mobility uses a diverse set of measures and there is limited knowledge about whether these measures provide similar information and yield similar conclusions. We provide a framework to highlight the key concepts and properties of the different estimators. We then show how these measures relate to one another empirically. Our main analysis uses income tax data from Australia to produce a comprehensive set of empirical estimates for each of 19 different mobility measures at both the national and regional levels. We supplement this analysis with other data that uses either within- or between-country variation in mobility measures. A key finding is that there is a clear distinction between relative and absolute measures both conceptually and empirically. A region may be high with respect to absolute mobility but could be low with respect to relative mobility. However, within broad categories, the different mobility measures tend to be highly correlated. For rank-based estimators, we highlight the importance of how the choice of the distribution used for calculating ranks can play a critical role in determining its properties as well as affect empirical findings. These patterns of results are important for policymakers whose local economy might fare well according to some mobility indicators but not others. (JEL D31, H24, I32, J62)
{"title":"Measuring Intergenerational Income Mobility: A Synthesis of Approaches","authors":"Nathan Deutscher, Bhashkar Mazumder","doi":"10.1257/jel.20211413","DOIUrl":"https://doi.org/10.1257/jel.20211413","url":null,"abstract":"The literature on intergenerational income mobility uses a diverse set of measures and there is limited knowledge about whether these measures provide similar information and yield similar conclusions. We provide a framework to highlight the key concepts and properties of the different estimators. We then show how these measures relate to one another empirically. Our main analysis uses income tax data from Australia to produce a comprehensive set of empirical estimates for each of 19 different mobility measures at both the national and regional levels. We supplement this analysis with other data that uses either within- or between-country variation in mobility measures. A key finding is that there is a clear distinction between relative and absolute measures both conceptually and empirically. A region may be high with respect to absolute mobility but could be low with respect to relative mobility. However, within broad categories, the different mobility measures tend to be highly correlated. For rank-based estimators, we highlight the importance of how the choice of the distribution used for calculating ranks can play a critical role in determining its properties as well as affect empirical findings. These patterns of results are important for policymakers whose local economy might fare well according to some mobility indicators but not others. (JEL D31, H24, I32, J62)","PeriodicalId":48416,"journal":{"name":"Journal of Economic Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135889699","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-09-01DOI: 10.1257/jel.61.3.1188.r4
Matthew Jaremski
Matthew Jaremski of Utah State University reviews “Virtuous Bankers: A Day in the Life of the Eighteenth-Century Bank of England” by Anne L. Murphy. The Econlit abstract of this book begins: “Explores the eighteenth-century Bank of England's ability to command the confidence of a wide public while delivering a set of services that were essential to the English state, explaining how a private organization became the guardian of the public credit upon which the economic and geopolitical success of Britain was based.”
犹他州立大学的Matthew Jaremski评论了Anne L. Murphy所著的《善良的银行家:18世纪英格兰银行的一天》。这本书的经济学摘要是这样开头的:“探讨了18世纪英格兰银行在提供一系列对英国国家至关重要的服务的同时，如何赢得广大公众的信任，解释了一个私人组织如何成为英国经济和地缘政治成功基础上的公共信用的守护者。”
{"title":"Virtuous Bankers: A Day in the Life of the Eighteenth-Century Bank of England","authors":"Matthew Jaremski","doi":"10.1257/jel.61.3.1188.r4","DOIUrl":"https://doi.org/10.1257/jel.61.3.1188.r4","url":null,"abstract":"Matthew Jaremski of Utah State University reviews “Virtuous Bankers: A Day in the Life of the Eighteenth-Century Bank of England” by Anne L. Murphy. The Econlit abstract of this book begins: “Explores the eighteenth-century Bank of England's ability to command the confidence of a wide public while delivering a set of services that were essential to the English state, explaining how a private organization became the guardian of the public credit upon which the economic and geopolitical success of Britain was based.”","PeriodicalId":48416,"journal":{"name":"Journal of Economic Literature","volume":null,"pages":null},"PeriodicalIF":12.6,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42472785","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate the effect of income on the long-standing racial mortality gap in the United States by using evidence from White and Black Civil War veterans who went on to receive postwar pensions. To circumvent endogeneity, we propose an exogenous source of variation in pension income: the judgment of the doctors who certified disability. We find large effects of pension income on longevity; large enough to close the Black–White mortality gap, in principle. However, because physicians discriminated against Blacks when evaluating the existence and severity of disabilities, Blacks received reduced pension benefits that failed to eliminate racial mortality gaps in practice. Our findings shed light on the role of beliefs about race, as opposed to racial animus, in contributing to racial differentials in well-being. (JEL H55, I12, I14, I24, J15, N31)
{"title":"The Enduring Effects of Racial Discrimination on Income and Health","authors":"Shari Jane Eli, Trevon Logan, Boriana Miloucheva","doi":"10.1257/jel.20221706","DOIUrl":"https://doi.org/10.1257/jel.20221706","url":null,"abstract":"We investigate the effect of income on the long-standing racial mortality gap in the United States by using evidence from White and Black Civil War veterans who went on to receive postwar pensions. To circumvent endogeneity, we propose an exogenous source of variation in pension income: the judgment of the doctors who certified disability. We find large effects of pension income on longevity; large enough to close the Black–White mortality gap, in principle. However, because physicians discriminated against Blacks when evaluating the existence and severity of disabilities, Blacks received reduced pension benefits that failed to eliminate racial mortality gaps in practice. Our findings shed light on the role of beliefs about race, as opposed to racial animus, in contributing to racial differentials in well-being. (JEL H55, I12, I14, I24, J15, N31)","PeriodicalId":48416,"journal":{"name":"Journal of Economic Literature","volume":null,"pages":null},"PeriodicalIF":12.6,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45407855","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Philip Glandon, Kenneth Kuttner, Sandeep Mazumder, Caleb Stroup
How is macroeconomic research conducted and what is it trying to accomplish? We explore these questions using information gleaned from 1,894 articles published in 10 leading journals. The emphasis on quantitative, computation-intensive theory-based analysis has grown over the past 40 years, while the use of econometric methods to test economic hypotheses has diminished. Applied micro techniques and micro data have displaced time series methods. Market imperfections are pervasive and financial frictions have received increasing attention in the past 10 years. The frequency with which non-macro JEL codes appear in macro articles indicates a great deal of overlap between macroeconomics and other fields. (JEL A14, B41, C10, C18, E00, E10)
{"title":"Macroeconomic Research, Present and Past","authors":"Philip Glandon, Kenneth Kuttner, Sandeep Mazumder, Caleb Stroup","doi":"10.1257/jel.20211609","DOIUrl":"https://doi.org/10.1257/jel.20211609","url":null,"abstract":"How is macroeconomic research conducted and what is it trying to accomplish? We explore these questions using information gleaned from 1,894 articles published in 10 leading journals. The emphasis on quantitative, computation-intensive theory-based analysis has grown over the past 40 years, while the use of econometric methods to test economic hypotheses has diminished. Applied micro techniques and micro data have displaced time series methods. Market imperfections are pervasive and financial frictions have received increasing attention in the past 10 years. The frequency with which non-macro JEL codes appear in macro articles indicates a great deal of overlap between macroeconomics and other fields. (JEL A14, B41, C10, C18, E00, E10)","PeriodicalId":48416,"journal":{"name":"Journal of Economic Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135894816","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Daniel Aaronson, Daniel Hartley, Bhashkar Mazumder, Martha Stinson
We estimate the long-run effects of the 1930s Home Owners Loan Corporation (HOLC) redlining maps by linking children in the full count 1940 census to 1) the universe of Internal Revenue Service (IRS) tax data in 1974 and 1979 and 2) the long form 2000 census. We use two identification strategies to estimate the potential long-run effects of differential access to credit along HOLC boundaries. The first strategy compares cross-boundary differences along HOLC boundaries to a comparison group of boundaries that had statistically similar preexisting differences as the actual boundaries. A second approach only uses boundaries that were least likely to have been chosen by the HOLC based on our statistical model. We find that children living on the lower-graded side of HOLC boundaries had significantly lower levels of educational attainment, reduced income in adulthood, and lived in neighborhoods during adulthood characterized by lower educational attainment, higher poverty rates, and higher rates of single-parent households. (JEL G21, I26, I32, J13, N32, R23, R31)
{"title":"The Long-Run Effects of the 1930s Redlining Maps on Children","authors":"Daniel Aaronson, Daniel Hartley, Bhashkar Mazumder, Martha Stinson","doi":"10.1257/jel.20221702","DOIUrl":"https://doi.org/10.1257/jel.20221702","url":null,"abstract":"We estimate the long-run effects of the 1930s Home Owners Loan Corporation (HOLC) redlining maps by linking children in the full count 1940 census to 1) the universe of Internal Revenue Service (IRS) tax data in 1974 and 1979 and 2) the long form 2000 census. We use two identification strategies to estimate the potential long-run effects of differential access to credit along HOLC boundaries. The first strategy compares cross-boundary differences along HOLC boundaries to a comparison group of boundaries that had statistically similar preexisting differences as the actual boundaries. A second approach only uses boundaries that were least likely to have been chosen by the HOLC based on our statistical model. We find that children living on the lower-graded side of HOLC boundaries had significantly lower levels of educational attainment, reduced income in adulthood, and lived in neighborhoods during adulthood characterized by lower educational attainment, higher poverty rates, and higher rates of single-parent households. (JEL G21, I26, I32, J13, N32, R23, R31)","PeriodicalId":48416,"journal":{"name":"Journal of Economic Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135049351","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Journal of Economic Literature, September 2023, Volume LXI, Number 3","authors":"","doi":"10.1257/jel.61.3.1","DOIUrl":"https://doi.org/10.1257/jel.61.3.1","url":null,"abstract":"","PeriodicalId":48416,"journal":{"name":"Journal of Economic Literature","volume":null,"pages":null},"PeriodicalIF":12.6,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43855232","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Perspectives on Race/Ethnicity and Economic Justice","authors":"Gerald Jaynes","doi":"10.1257/jel.20221701","DOIUrl":"https://doi.org/10.1257/jel.20221701","url":null,"abstract":"","PeriodicalId":48416,"journal":{"name":"Journal of Economic Literature","volume":null,"pages":null},"PeriodicalIF":12.6,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42071609","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Contemporary scholars view race as a constructed social category, not a biological fact. Yet most empirical discrimination research treats race no differently than other individual characteristics typically observed in data. This article considers the implications of adopting a constructivist perspective instead. I develop a simple model where agents use observable characteristics to both interpret membership in racial social categories and make decisions. Discrimination is the result of acting based on perceived social identity. The model highlights the need to measure the racial “first stage”—the social identity contrast between individuals—instead of relying on race as coded in data, and draws a novel distinction between race-based and direct statistical discrimination. I illustrate some implications using data on wages, speech patterns, and skin color and conclude with strategies for future research that build on the constructivist model. (JEL J15, J31, J71, K38)
{"title":"A Constructivist Perspective on Empirical Discrimination Research","authors":"Evan K. Rose","doi":"10.1257/jel.20221705","DOIUrl":"https://doi.org/10.1257/jel.20221705","url":null,"abstract":"Contemporary scholars view race as a constructed social category, not a biological fact. Yet most empirical discrimination research treats race no differently than other individual characteristics typically observed in data. This article considers the implications of adopting a constructivist perspective instead. I develop a simple model where agents use observable characteristics to both interpret membership in racial social categories and make decisions. Discrimination is the result of acting based on perceived social identity. The model highlights the need to measure the racial “first stage”—the social identity contrast between individuals—instead of relying on race as coded in data, and draws a novel distinction between race-based and direct statistical discrimination. I illustrate some implications using data on wages, speech patterns, and skin color and conclude with strategies for future research that build on the constructivist model. (JEL J15, J31, J71, K38)","PeriodicalId":48416,"journal":{"name":"Journal of Economic Literature","volume":null,"pages":null},"PeriodicalIF":12.6,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42260684","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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