Continuing a tradition of mine, here is a shamelessly subjective list of the most noteworthy research which came out in the last year:
Putting a new spin on the idea of sticky wages, Lena Edlund, Joseph Engelberg, and Christopher A. Parsons point out that the earnings of high-end prostitutes don't fall as fast as the decline in the sex-worker's physical attractiveness.
William Nordhaus makes a mathematical argument for why it's impossible to ever accurately measure happiness.
Before there was Superfreakonomics, before there was even Freakonomics, there was Steve Levitt and John Donohue's (in)famous abortion paper claiming that a major cause of declining crime rates was the legalization of abortion. Reviewing follow-up research 10 years after Levitt and Donohue's original paper, Theodore Joyce finds little support for the abortion-crime link.
Yale's (and AIG's) Gary Gorton released a much-discussed paper on the nature of banking panics.
The always-interesting David Galenson surveyed art-history textbooks concluded that Alfred Stieglitz was considered by scholars to be the greatest photographer of the 20th century.
A pair of papers (one by Lawrence Christiano, Martin Eichenbaum, and Sergio Rebelo and another by Gauti Eggertsson) provided strong evidence that fiscal policy can be particularly effective when interest rates are close to, or below, zero.
Bernanke first Fed chair to be named Time's Person of the Year.
Luigi Zingales wants targeted Tobin tax on short-term debt.
Andrew Gelman rips into Steve Levitt's statistical thinking.
Steve Levitt gets no love from his own school.
Top CEOs summoned by the Fed over pay.
Steve Levitt will be on the The Daily Show tonight.
Are Asian economies already overheating?
Still plenty of takers for Treasuries.
I enjoyed the original Freakonomics quite a bit. It surveyed some fun-to-read economic research that Steve Levitt had done at the University of Chicago, and while a lot of that work was employed in the service of trifling questions ("Do sumo wrestlers cheat?" "Do game-show participants discriminate?"), it was clear Levitt was a clever economist who could gin up fascinating "natural experiments" to crack open everyday mysteries.
Related Links: Steven Levitt's response to Scheiber's argument, and Scheiber's response to Levitt.
One of the few papers I actually read as a grad student was written by a pair of economists named Josh Angrist and Alan Krueger. In the early '90s, Angrist and Krueger set off to resolve a question that had been gnawing at economists for decades: Does going to school increase your future wages? Intuitively, it seemed obvious that it did. When you compared the salaries of, say, Ph.D.s with those of high-school dropouts, the grad-school set almost always did better. The question was whether education accounted for the difference. What if it was simply the case that smarter people spent more time in school and that their bigger salaries reflected intelligence, not education? One couldn't be sure. The only way to get to the bottom of it would be a ghastly social experiment, wherein you took a group of students and randomly sent half to the local vo-techinstitute while forcing the other half to study feminist literary theory. Even an economist wouldn't be so audacious.
That's where Angrist and Krueger came in. In the paper, they pointed out that two features of the public school system allowed you to answer the question without all the uproar. First, most states force students to attend school until age 16. Second, for many decades, students started school the year they turned six. The upshot was that, if I were born in January and you were born in December of the same year, and we both dropped out at 16, then the rules forced you to stay in school almost one year longer. (We’d start school the same year, but I'd turn 16 midway through tenth grade and you'd hit 16 midway through eleventh.) The additional schooling foisted upon one group by this arbitrary state of affairs produced a scaled-down version of our experiment, allowing Angrist and Krueger to conclude that education did, in fact, help people earn more money.
