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 Highlights series can help, with short articles, podcasts, and featured charts from selected papers published in AEA journals. 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 Highlights Article

Altruism

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

Asymmetric information

• Giving Pakistani parents more information about their children’s schools changed the educational landscape | Research Highlights Article
• What health choices do doctors make, and why are they different than most people’s medical decisions? | Research Highlights 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 Highlights Article
• The NCAA might be a cartel | JEP Article
• How many cartels exist and how important is competition policy to reining them in? | Research Highlights Article

Contracts

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

Comparative advantage

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

Culture

• Economists are studying culture more and more | Research Highlights Article
• The economics of anti-Semitism | Research Highlights Article
• Can a school-based program have a meaningful impact on gender inequality? | Research Highlights Article
• How do shared goals among different social groups impact prejudice? | Research Highlights Article
• Penny Goldberg discusses how legal gender discrimination affects women’s economic opportunities around the globe. | Research Highlights Podcast
• How does religious intensity affect development? | Research Highlights 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 Highlights Podcast

Deadweight loss

• Gift exchanges tend to create deadweight loss | Research Highlights 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 Highlights Article

Externality

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

Federal Reserve

• The downside of central bank transparency | Research Highlights 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 Highlights Article
• How investors viewed systemic risk in 2008 | Research Highlights 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 Highlights Article
• How increasing human capital can help China’s economy | JEP Article
• What are the long-run benefits of public preschool? | Research Highlights Podcast 

Incentive

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

Inflation

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

Inequality

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

Market failures

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

Market concentration

• Is consolidation among marketing networks driving down online advertising sales?  | Research Highlights Article
• Should the United States be worried about its growing monopolies? | Research Highlights 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 Highlights Article
• How do the firms of today match up with the firms of yesterday? | Research Highlights Article
• The AEA interviews Naomi Lamoreaux about the history of Americans' response to dominant companies. | Research Highlights Podcast
• Growing demand for hotels led to fewer, bigger firms in the 70s—but the business didn’t become any less cutthroat. | Research Highlights Article
• How do incumbent companies react to a new competitor? | Research Highlights Article

Moral hazard

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

Opportunity cost

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

Phillips Curve

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

Resource curse

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

Risk aversion

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

Signaling

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

Social capital

• How the printing press may have bolstered social capital | Research Highlights 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 Highlights Article
• The Democratic Republic of Congo shows how city chiefs can help low-capacity governments collect more taxes. | Research Highlights Article
• A more nuanced understanding of diversity can help explain why some nations are better at fostering a common identity. | Research Highlights Article
• Why do autocracies sometimes use democratic institutions? | Research Highlights Article

Subsidy

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

Supply and demand

• When illegal goods become legitimate, everything changes | Research Highlights 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 Highlights Article
• A threat paired with insights from behavioral economics can help ensure companies pay their taxes. | Research Highlights Article

Technology

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

Trade

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

Uncertainty

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

Unemployment

• The US housing boom may have disguised a deeper decline in manufacturing | Research Highlights 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 Highlights Article
• How does part-time work respond to economic swings? | Research Highlights Article

View the AEA Research Highlights series.