Real-world economics

Use AEA articles and podcasts to illustrate concepts in economics

The used car market is a useful example of the lemons problem, but after a while it can get old. There are additional ways of discussing asymmetric information that illustrate the concept while sparking conversation and grounding the idea in a real-world example.

The AEA's Research Highlight series can help, with short articles and podcasts that feature papers published in AEA journals, the authors' findings, and how they relate to the world around us. Many focus on a central concept and can supplement more traditional classroom readings. The Journal of Economic Perspectives (JEP) is also a good resource for accessible material that relates to everyday economics.

Adverse selection

• How health insurance markets work (and fail)  | Research Highlight Article

Altruism

• Why do people give to charity?  | Research Highlight Article

Asymmetric information

• Giving Pakistani parents more information about their children’s schools changed the educational landscape | Research Highlight Article
• What health choices do doctors make, and why are they different than most people’s medical decisions? | Research Highlight Article

Behavioral economics

• There are many reasons why people ignore information, but they are hard for economists to empirically tell apart  | JEP Article

Cartel

• Many cartel members undercut the other members without retribution. How? | Research Highlight Article
• The NCAA might be a cartel | JEP Article
• How many cartels exist and how important is competition policy to reining them in? | Research Highlight Article

Contracts

• Contracts are relationships, and trust is important | Research Highlight Article
• Contracts may be able to prevent sovereign debt defaults | Research Highlight Article

Comparative advantage

• Is water a source of comparative advantage? | Research Highlight Article

Culture

• Economists are studying culture more and more | Research Highlight Article
• The economics of anti-Semitism | Research Highlight Article
• Can a school-based program have a meaningful impact on gender inequality? | Research Highlight Article
• How do shared goals among different social groups impact prejudice? | Research Highlight Article
• Penny Goldberg discusses how legal gender discrimination affects women’s economic opportunities around the globe. | Research Highlight Podcast
• How does religious intensity affect development? | Research Highlight Article
• Eduardo Montero and Dean Yang discuss the long-term economic consequences of religious festivals in Mexico that coincide with peak planting or harvest months. | Research Highlight Podcast

Deadweight loss

• Gift exchanges tend to create deadweight loss | Research Highlight Article
• England’s 17th century window tax meant 150 years of deadweight loss | JEP Article

Discount rate

• What should we do about climate change?  | Research Highlight Article

Externality

• Electric cars export pollution to other states | Research Highlight Article
• Why spam email has externality issues | JEP Article
• Why local officials in China began to clean up rivers | Research Highlight Article
• How much does it cost to reduce one ton of carbon dioxide? | Research Highlight Article

Federal Reserve

• The downside of central bank transparency | Research Highlight Article
• A history of the Fed’s role in preventing crises | JEP Article
• Landings, Soft and Hard: The Federal Reserve, 1965–2022 | JEP Article

Financial crisis

• What does growing bank interconnectedness mean for future crises? | Research Highlight Article
• How investors viewed systemic risk in 2008 | Research Highlight Article
• US policymakers faced limits when responding to the 2008 financial crisis | JEP Article
• How a modern-day run on a UK bank happened | JEP Article

Game theory

• A history of game theory and where it might be headed | JEP Article

Human capital

• Impatience contributes to lower educational attainment and earnings | Research Highlight Article
• How increasing human capital can help China’s economy | JEP Article
• What are the long-run benefits of public preschool? | Research Highlight Podcast 

Incentive

• Do parents skew their children’s birth dates for tax purposes? | Research Highlight Article
• Citizenship could disincentivize immigrants from pursuing illegal work. | Research Highlight Article
• Confused taxpayers may be responding to incentives that don’t exist. | Research Highlight Article
• How can you motivate yourself to go to the gym? | Research Highlight Article
• Why local officials in China began to clean up rivers. | Research Highlight Article
• A program designed to improve learning incentivized cheating. | Research Highlight Article
• Could the "interim-payment" model solve the key flaws with research contests? | Research Highlight Article

Inflation

• China’s reported inflation might be too stable to believe. | Research Highlight Article

Inequality

• The rise of warehouse stores may explain why consumption inequality has not tracked an expanding income gap. | Research Highlight Article
• Florian Hoffman discusses how income disparities have grown in the US and Europe over the last 40 years. | Research Highlight Podcast
• Are poor countries catching up with rich countries? | Research Highlight Article

Market failures

• Consumers do not always buy energy-efficient products, even when they would save money  | Research Highlight Article
• Market-based reforms from 1999 to 2012 significantly decreased the costs of producing electricity in the United States.  | Research Highlight Article

Market concentration

• Is consolidation among marketing networks driving down online advertising sales?  | Research Highlight Article
• Should the United States be worried about its growing monopolies? | Research Highlight Article
• When sports leagues have monopoly power, cities end up paying for stadiums | Research Highlight Article
• The oligopolistic smartphone market isn't producing enough phones for consumers. | Research Highlight Article
• How do the firms of today match up with the firms of yesterday? | Research Highlight Article
• The AEA interviews Naomi Lamoreaux about the history of Americans' response to dominant companies. | Research Highlight Podcast
• Growing demand for hotels led to fewer, bigger firms in the 70s—but the business didn’t become any less cutthroat. | Research Highlight Article
• How do incumbent companies react to a new competitor? | Research Highlight Article

Moral hazard

• Patients don’t seem to care about how much their hospital visit costs | Research Highlight Article

Opportunity cost

• How citizenship changes the opportunity cost of crime | Research Highlight Article

Phillips Curve

• Understanding the 1960s debate on inflation and unemployment can shed light on today's economy  | Research Highlight Article

Public good

• Sample public good classroom game | JEP Article

Randomized controlled trial

• Scaling up RCTs to policy is a difficult but necessary goal for economists  | Research Highlight Article

Resource curse

• The 2000s commodity boom spurred Africa’s economy, but at what cost? | Research Highlight Article

Risk aversion

• Why don’t investors invest more in stocks? | Research Highlight Article
• After a flood, the probability of another is low. Still, people buy more insurance | Research Highlight Article

Signaling

• Why do restaurants with the best inspection reports keep their results a secret?  | Research Highlight Article

Social capital

• How the printing press may have bolstered social capital | Research Highlight Article

Specialization

• Can household specialization explain the gender gap? | JEP Article
• Specialization has made online crime more productive | JEP Article

State building

• Could the success of a national team be enough to unite a divided nation? | Research Highlight Article
• The Democratic Republic of Congo shows how city chiefs can help low-capacity governments collect more taxes. | Research Highlight Article
• A more nuanced understanding of diversity can help explain why some nations are better at fostering a common identity. | Research Highlight Article
• Why do autocracies sometimes use democratic institutions? | Research Highlight Article

Subsidy

• Should people receive subsidies to buy energy efficient light bulbs? | Research Highlight Article

Supply and demand

• When illegal goods become legitimate, everything changes | Research Highlight Article

Tax

• Scandinavian countries have high taxes but maintain economic growth. How? | JEP Article
• England’s 17th century window tax meant 150 years of deadweight loss | JEP Article
• A tax spike on companies after layoffs is discouraging them from rehiring when business turns around. | Research Highlight Article
• A threat paired with insights from behavioral economics can help ensure companies pay their taxes. | Research Highlight Article

Technology

• Technology leads to more job turnover, which might make people happier | Research Highlight Article
• To what extent can technological disruption lead to civil unrest? | Research Highlight Article

Trade

• Trade policy contributed to South Korea’s spectacular economic growth | Research Highlight Article
• Britain’s protectionism in the 1930s may offer insights for policymakers today | Research Highlight Article
• Which companies are successful at selling abroad? | Research Highlight Article
• Why do special economic zones exist? | Research Highlight Article
• What would ending NAFTA and Brexit do to car industries around the world? | Research Highlight Article
• How much does trade impact urbanization? | Research Highlight Article

Uncertainty

• Comprehensive survey of the uncertainty literature | JEP Article
• How valuable are long-run predictions? | Research Highlight Article
• How do overly optimistic growth forecasts affect a nation’s economy? | Research Highlight Article

Unemployment

• The US housing boom may have disguised a deeper decline in manufacturing | Research Highlight Article
• Has the natural rate of unemployment increased since the recession? | JEP Article
• Unemployment insurance helped stabilize the housing market during the Great Recession | Research Highlight Article
• How does part-time work respond to economic swings? | Research Highlight Article