Tomoya Mori, Jens Wrona, 16 August 2019

The gravity equation has often been used to explain trade between regions or cities within countries. But it assumes that the distribution of industries is exogenous. This column explains how trade estimates are affected if we assume that large, centrally located cities attract more industries whose firms are more likely to export to other cities. Japanese data show exports from these cities are systematically underpredicted by aggregate gravity estimations, as the theory predicts.

David Abrams, Roberto Galbiati, Emeric Henry, Arnaud Philippe, 05 June 2019

The rule of law in advanced democracies is based on the assumption that the law and its application are the same for all citizens. But research has shown that judges respond to ideology or political biases in their sentencing decisions. This column examines how location can also influence criminal court sentences using data from the US state of North Carolina’s superior court system. It shows that, even after controlling for characteristics of judges, sentencing varies by location and responds to local norms.

Anna Bindler, Randi Hjalmarsson, 02 September 2018

A growing body of research indicates that judge and jury decisions are affected by a number of external factors, including media exposure and jury demographics. This column looks at jury verdicts at London’s Old Bailey during the 18th century to examine another possible factor – the verdict and characteristics of the previous case. A previous guilty verdict is found to increase the chance of a subsequent guilty verdict by between 6.7% and 14.1%. Despite the historical context, the findings are relevant to many situations today involving sequential decisions.

Beryl Chang, Fabrizio Ghisellini, 21 May 2017

Behavioural economics has identified phenomena that standard models could not explain. But its critics warn that it is becoming little more than a ‘pile of quirks’. This column argues that the future development of behavioural economics should focus on a streamlining process that will clarify core issues, fill conceptual gaps, and create tractable models. Behavioural models will only become a coherent alternative to homo economicus if this process occurs.

, 07 September 2016

Does giving people a health test lead to a change in their behaviour? In this video, Zlata Tanović discusses the challenges of collecting medical data. The video was recorded during a UNU-WIDER conference on 'Human capital and growth' held in June 2016.

Lars Ivar Oppedal Berge, Kjetil Bjorvatn, Simon Galle, Edward Miguel, Daniel N. Posner, Bertil Tungodden, Kelly Zhang, 11 February 2016

Ethnic divisions have been shown to adversely affect economic performance and political stability, particularly in Africa. However, the underlying mechanisms remain poorly understood. Using experimental data from Kenya, this column studies whether one potential mechanism – co-ethnic bias – affects altruism. Strikingly, most tests yield no evidence of co-ethnic bias, suggesting that other mechanisms must be driving the negative association between ethnic diversity and economic and political outcomes in Africa.

Margherita Comola, Marcel Fafchamps, 08 December 2015

Dyadic social network data – describing relations between two actors – are frequently derived from self-reporting surveys. This column explores how the misreporting problems that are typical of such data can bias estimations. Data on transfers between households in a Tanzanian village are shown to display a high rate of discrepancies within dyads. Failure to account for such misreporting results in a sizeable underestimation of inter-household transfers. 

Vasiliki Skreta, Laura Veldkamp, 27 March 2009

Understanding the origins of the crisis requires understanding the failures of the market for ratings. This column explains how conflicts of interest and shopping for the best rating produced biased assessments of complex assets, whereas these bad incentives had not plagued ratings of simpler assets. We need to rethink how ratings are provided, lest the next bout of financial innovation trigger another round of ratings inflation and subsequent financial market turmoil.

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