Assorted Papers of Interest

  • The Journal of Economic Behavior and Organization just published this paper I co-authored with Vincenzina Caputo and Rudy Nayga.  We argue that the choices survey-takers make depend not only on the prices used in hypothetical shopping choices in the survey itself but on people's perceptions about the level and variability of prices outside the survey.  We derive a conceptual model showing that when the variability (or uncertainty) about prices in "real life" increases, people are more likely to refrain from making any purchase at all.  The results stemming from our study, which manipulated information about the level and variability of prices outside the study, are broadly consistent with this hypothesis in addition to re-confirming the often-found loss aversion phenomenon (i.e., people are more sensitive to price changes above a reference point than below).
  • In case you missed it, last month the Congressional Research Service released a report outlining the possible effects on agriculture of a US withdrawal from NAFTA.  The short summary is that if the US looses most favored nation status with Canada and Mexico, the overall effects are likely to be negative for US producers and consumers.  
  • In the past couple months I've noticed a couple interesting papers suggesting new ways of learning about consumer behavior and welfare. 
    • The first is this paper by Robert Allen in the American Economic Review. Allen proposes doing away with the World Bank's "$1 a day" measure of poverty and instead proposes to measure poverty by calculating the least cost to attain an "adequate" diet given the particular prices and income in a given country.  His paper suggest people may be poorer than we thought they were. 
    • The second is this paper by Scott Schuh in Economic Inquiry who discusses a method to measure consumer expenditures based on records of daily authorizations made by different payment types (cash, check, or debit/credit card).  He finds significantly higher levels of spending with this method compared to other popular government methods of measuring consumer expenditures.  The results seem to suggest people may be spending more on food than we thought they were.