Abstract We analyse the contribution of rising longevity to the increase in wealth inequality in the U.S. over the past seventy years. To do so, we construct an overlapping generations (OLG) model with multiple sources of inequality, carefully calibrated to the data. Our key finding is that improvements in old-age longevity have a substantial impact on wealth inequality, accounting for approximately half the effect of income inequality, which has been the focus of much of the existing literature. In contrast, the impact of tax changes is relatively minor. The contribution of rising longevity is expected to continue driving wealth inequality upward in the coming decades.
Abstract Political polarization can undermine democratic governance by weakening electoral accountability through biases in voter information consumption and processing. A growing literature, primarily from high-income countries, has identified promising interventions to reduce negative affect toward out-partisans, though evidence regarding their downstream effects remains mixed. We evaluate whether these depolarizing interventions and an open-mindedness nudge that increases awareness of information-processing biases stemming from emotions or partisanship promote counter-attitudinal information consumption and internalization in a survey of nearly 2,500 participants from a nationally representative panel in Mexico, a heavily polarized context. Videos designed to correct misperceptions about out-partisans improved trust in opposition media, while those designed to foster empathy or emphasize shared identities reduced partisan polarization. Although none of the videos affected immediate counter-attitudinal news consumption, exposure to either the corrective video or the open-mindedness nudge led to greater partisan attitudinal updating when participants were exposed to a counter-attitudinal news article. This effect is due to reduced partisan perceptions of the article rather than increased factual retention of its information. These findings provide insights into the potential and limitations of scalable interventions to improve citizens’ ability to consume and process politically relevant information across partisan lines.
Abstract Using machine learning and product-level data on single men’s and single women’s consumption patterns, we develop an index that quantifies the „gendered‟ nature of consumer goods. We use the index to investigate how gender-specific labour market shocks influence spending patterns within heterosexual households. Our findings reveal that industrial robot adoption, which worsened men’s relative economic position, shifted household consumption toward products predominantly purchased by single women. In contrast, the expansion of fracking, which boosted demand for young and less skilled men, yields suggestive but less robust evidence of increased spending on goods favoured by single men. Although neither shock significantly altered total spending on children’s products, robot exposure led to a reallocation of spending toward goods more commonly purchased for daughters than for sons.
Abstract Dominant platforms like Booking.com have often imposed Price Parity Clauses to prevent lower prices on alternative sales channels. We provide quasi-experimental evidence on the removal of these price restrictions in France in 2015 for three major global hotel groups. Our analysis reveals limited and non-significant price effects for rooms sold through consumer-visible channels, such as hotels’ websites or online travel agencies. However, we document a significant price reduction on sales channels not visible to consumers, such as direct offline bookings. Additionally, we identify a significant shift in the share of bookings from online travel agencies to the hotels’ direct offline channels.
Abstract This paper constructs a new game—the ”rule-the-roost game”—where players compete repeatedly for power (“chickens”) and wealth (“eggs”) in the lab. In a “patronage” treatment, players can buy others’ support to win power; in a ”no-patronage” treatment, such payments are impossible. A vicious circle develops under patronage, where the powerful accumulate more power and wealth, leading to substantial inequality. This is attenuated, however, by a countervailing force: the powerless act to oppose the powerful. No vicious circle arises in the no-patronage treatment and inequality is markedly lower. Gender differences in outcomes are small without patronage but large with it.
Abstract We study gender differences in the response to losing competitions using an online experiment (N=2,086). We find that both genders reduce tournament entry rates in response to losses that are unequivocally meritocratic. However, when the winner is not necessarily determined by merit—a setting perceived as less fair than the meritocratic tournament—female losers are relatively more discouraged. These results suggest that women are more negatively affected by competitions perceived as unfair than men. Exploratory machine learning analysis indicates that risk preferences, age and sports participation in adolescence are associated with a reduced impact of losing competitions.
Abstract Following Sargent and Wallace’s ‘Some Unpleasant Monetarist Arithmetic,’ we study different ways to implement monetary and fiscal policy. In one case, monetary policy pegs the path of the money supply, while fiscal policy adjusts endogenously to balance the budget. In another, fiscal policy pegs the deficit path, while money adjusts to balance the budget. We ask which is more prone to instability – i.e., more likely to have multiple equilibria, endogenous dynamics, or volatile responses to news? The answer depends on whether inflation (equivalently, the deficit) is positive or negative in the long run. This is consistent with cross-country data.
Abstract Consider the transition out of a stagnant Malthusian system spearheaded by high-human-capital people. Individuals with a stronger preference for offspring quality may be the first to escape the Malthusian regime and adopt modern fertility behaviours (Galor and Moav 2002). To test this hypothesis, we examine the relationship between family size and human capital among academics in Northern Europe in the two centuries before the Industrial Revolution. We measure the human capital of academics using a novel approach based on their publications. We find that scholars with a higher number of publications than the median shifted from having more siblings to having fewer siblings in the first half of the 18th century. Estimating the parameters of an evolutionary growth model by indirect inference, we show how Malthusian constraints initially led the high human capital families to reproduce more, before being endogenously replaced by Beckerian constraints with a tradeoff between child quality and quantity. Our results support an extension of Galor and Moav’s (2002) approach, in which the decline of Malthusian constraints is linked to the accumulation of human capital during the 18th century.
Abstract Economists usually endorse the efficacy of price mechanisms, such as matching subsidies, to foster philanthropic contributions. Our experiments, however, show that the match only increases donations when avoiding the ask is not possible. Our data are consistent with a behavioural hypothesis of a “norm-signalling mechanism,” positing that a match increases the psychological cost of deviating from the norm of giving but only when the ask cannot be avoided. We show that indeed, giving zero, but not avoiding the ask, is perceived as less socially desirable under a match. Our findings highlight the possible limits and potential welfare losses of matching subsidies.
Abstract Models of intertemporal choice typically assume that decision makers are impatient and often refer to the limited length of life as motivation for this assumption. Yet direct empirical evidence for the association between life expectancy and patience is scarce and restricted to variation in age. This paper documents distinct associations of patience with life expectancy and age. The analysis is based on data for 80,000 individuals in 76 countries and exploits variation in expected remaining years of life from period life tables. The empirical findings document that higher life expectancy is associated with a greater patience, conditional on age. Our findings also show that the association is unique to patience and does not pertain to other preferences, provide evidence for a hump-shaped age profile, document an association of patience with institutions in addition to life expectancy, hold conditional on country-cohort-specific variation in development, and provide indirect evidence for selective mortality influencing the life expectancy-patience nexus.
Abstract We conduct a meta-analysis of distributional preferences, examining 297 estimates of sensitivity to inequality from 41 articles that structurally estimate the Fehr and Schmidt (1999) model. Our analysis indicates that individuals are inequality averse: mean sensitivity to disadvantageous and advantageous inequality are, respectively, 0.533 and 0.326. We also uncover systematic heterogeneity: aversion to advantageous (disadvantageous) inequality is smaller (larger) in strategic environments. Finally, we examine 98 estimates of altruism and attitude towards equity versus efficiency from 17 studies structurally estimating the Andreoni and Miller (2002) model. The representative individual displays Cobb–Douglas preferences with roughly 1/3 weight on others’ earnings.
Abstract How does polarisation — as measured by mistreatment of political rivals — spread? In an online experiment, participants choose between splitting financial resources equally or discriminating against a supporter of the opposing political party. We vary the information subjects receive about others’ choices and justifications for discrimination. Exposure to extreme justifications for discrimination increases discrimination — particularly in a polarized environment, when many others are already discriminating — and it leads participants to adopt more extreme justifications themselves. Our findings suggest a self-reinforcing dynamic that may fuel polarisation: Exposure to extreme statements increases polarisation and the prevalence of extreme reasoning.
Abstract This paper investigates whether tax evasion opportunities can increase tax revenue. Past theoretical discussions have presented mixed outcomes as to whether allowing taxpayers to opt into uncertainty could indeed enhance overall tax revenues. In this study, we conducted a series of original real-effort experiments in an online setting with almost 6,000 participants to test this hypothesis empirically. Our findings show significant positive labour supply responses to the opportunity to evade (increased labour supply by 30%). More importantly, the expected tax revenue significantly and substantially increased by up to 40%. Strikingly, this effect persists when comparing effective tax rates: Lowering effective tax rates through probabilistic enforcement (the opportunity to evade) is more efficient than simply lowering statutory tax rates. Our findings suggest that the opportunity for tax evasion can increase tax revenues beyond what a corresponding decrease in nominal rates would achieve.
Abstract Can transport infrastructure expand long-term labour opportunities and weaken the occupational link between parents and children? We estimate the causal effect of railway access on occupational attainment and intergenerational mobility in nineteenth-century England and Wales. Exploiting the as-good-as-random opening of built and planned stations, we address endogeneity in rail proximity. Sons living 5 km closer to a station were more likely to leave farming for industrial and commercial jobs, often entering the top quartile of the occupational distribution. Railway access increased the probability of working in a different occupation than one’s father by 2% and of upward mobility by 6%.
Abstract Concerns over the adequacy of retirement incomes have led governments to incentivise low- and middle-income earners to contribute more to private pensions. In this study we exploit several reforms using a simulated instruments approach and administrative data to estimate the impacts of a targeted national contribution-matching scheme in Australia across 50%, 100% and 150% match rates. Overall, we find that responses increase with the match rate, are modest in size and are mostly unwound when eligibility is lost. Sub-group analysis highlights the possibility that responses are limited by liquidity constraints. We find little evidence that the scheme crowds-out other savings.
Abstract Political polarisation has reshaped electoral competition in many democracies, presenting traditional programmatic political parties with a dual challenge: finding ways to make policy-based campaigning resonate with voters without exacerbating partisan divisions. We partner with a mainstream opposition party to implement a field experiment during the 2019 Philippine Senatorial election to compare two common campaign strategies—direct policy-focused canvassing and an emotional engagement component—to assess both their electoral effects and their implications for polarisation. We find that, even in polarised contexts, in-person engagement providing policy information increases votes for the party. Both strategies increase learning, and importantly, neither strategy produces backlash among pro-incumbent voters; if anything, evidence suggests cross-cutting moderating effects. These results suggest that mainstream parties can communicate policy effectively even in highly polarised contexts, and that direct policy and emotional engagement need not exacerbate partisan divides.
Abstract Robo-advisors are tools in financial markets that provide investors with low-cost financial advice, typically based on individual characteristics such as risk attitudes. We study the benefits of robo-advice in a ten-week portfolio choice experiment. Depending on treatment, investors either receive robo-advice, have a robo-advisor implement recommendations by default, or invest on their own. While we observe no effect of robo-advice on initial market participation, we find positive effects on continued participation. Robo-advisors also help investors avoid mistakes, increase rebalancing, and yield portfolios closer to the utility-maximising benchmark. Default implementation of recommendations performs significantly better than advice alone.
Abstract Chamley and Judd argued that optimal taxation dictates zero long-run taxes on capital income, but Straub and Werning found that these taxes may be positive in the steady state. These models feature a ‘period-zero problem’ because the Ramsey formulation omits past commitments but includes future ones. Chari, Nicolini, and Teles (2020) add commitments to the representative household’s wealth in utility units. Then a nonzero capital levy may apply in period 1, future tax rates on asset income equal zero, and tax rates on consumption are constant. Time-consistency fails if future policymakers are unconstrained but holds if wealth commitments in each period are strict enough to motivate each policymaker to choose zero capital levies. Then a timeless perspective applies where period 1 is not special, tax rates on asset income are always zero, and tax rates on consumption are constant. In the neoclassical growth model with utility depending on the log of consumption, the level of the wealth commitment is constant in the steady state. Extensions allow for uncertainty and heterogeneity and for a form of partial commitment.
