NBER Working Group Abbreviations, Directors, and Brief Descriptions

Behavioral Economics (BE), Robert J. Shiller and Richard Thaler, Directors

    The working group on behavioral economics studies economic decision-making from a broad social science perspective. It acknowledges the complexity of underlying human behavior and draws on an expansive repertory of research methods. It seeks to broaden the tool kit used by researchers in both economics and finance by introducing models of human behavior that are well grounded in psychological research. One active research area within this working group is behavioral finance. Work in this area challenges some conclusions about financial behavior in standard economic models by providing contrary evidence, anomalies, that call these models into question. Work in behavioral finance seeks to understand the parameters of human behavior in the financial context by econometric analysis of extensive data sets on financial transactions, asset prices, and related economic data. A second active research area examines the implications of similar models of human behavior, when aggregated across individuals or firms, for macroeconomic aggregates such as consumption, investment, and the level of employment.

Chinese Economy (CE), Shang-Jin Wei, Director

    The NBER Working Group on China provides a forum to discuss recent research related to various aspects of the Chinese economic development, including China's macroeconomic policies, trade and financial interactions with the rest of the world, reform strategies, lessons from China for other developing and transition economies and lessons from other countries for China.

Cohort Studies (CS), Dora Costa, Director

    The NBER's Working Group on Cohort Studies (CS) investigates changes in well-being across generations, with a strong focus on health. The premise of the working group is that each generation is marked by particular lifetime experiences that affect it throughout the life-cycle and that are transmitted to their children either through social conditioning, or, in the case of some health conditions, through direct biological mechanisms. To understand the present we therefore need to look not only at early life conditions but also at the experience of previous generations. This requires the creation of new longitudinal data sets that cover the entire twentieth century, because many of the dramatic changes in life expectancy, health, and leisure and the consumer goods revolution occurred during the first half of the twentieth century. Assessing the importance of these changes requires in turn the quantification of the contribution of non-market goods to the national income accounts. The group's members therefore consist of specialists in economic history, family economics, health economics, and productivity. Many of the group's members are also closely involved with Robert Fogel's P01 Early Indicators of Later Work Levels, Disease, and Death which is creating longitudinal micro-level data on the first generations to reach age 65 at the beginning of the twentieth century.

Economics of Crime (CRI), Philip J. Cook, Jens Ludwig, and Justin McCrary, Directors

    The NBER working group on the Economics of Crime brings together economists and other scholars who research the causes and consequences of crime, as well as ways to reduce the costs of crime to society. Among the topics of interest are, first, estimating the costs and benefits of criminal justice programs and policies; second, the analysis of underground markets, including drugs, firearms, prostitution, human smuggling, money laundering and other illicit goods and services; and third, the influence on crime of other aspects of economic life including education, health care, substance abuse, and the labor market. The group will meet one or two times per year for discussions of new research, and will seek opportunities for publication of symposiums on special topics.

Economics of National Security (ENS), Martin Feldstein, Director

    The Working Group on the Economics of National Security will deal with the wide range of issues that affect national security with a primary focus on the security of the United States. Topics will include : military strategy (defense budgets, technical change, manpower, etc), sources of terrorist risks (causes of terrorism, financing of terrorism, etc), homeland security policies for dealing with terrorism (nuclear, chemical and biological), problem areas (North Korea, Iraq, etc). The group will meet at least once during the academic year and will hope to develop research suitable for a regular research project and conference.

Entrepreneurship (ENT), Antoinette Schoar, Director

    The past decade has seen a dramatic increase in the importance in entrepreneurial activity: the role of new enterprises in fomenting innovation, stimulating employment, and creating value for investors increased dramatically. Moreover, the resources available to support young firms also increased sharply: for instance, the pool of venture capital increased by nearly ten-fold. Yet surprisingly, academic research-particularly in economics-has not kept pace. The number of articles on entrepreneurship issues in the major economics journals actually declined in the 1990s from the levels seen in the 1980s.

    This lack of attention is a consequence of the barriers to pursuing research in this area. While data on public firms are readily available in computer databases, information on young private firms is much harder to come by. The consequences are unfortunate, as the tools and frameworks of economics have the potential to analyze entrepreneurial situations in an effective and compelling way.

    The NBER Entrepreneurship Working Group, established in the spring of 2003, seeks to address these problems. The group brings together some of the leading discipline-based researchers in the field of entrepreneurship. While the effort largely draws upon those approaching these issues from a variety of economics-based perspectives-for instance, from the disciplines of corporate finance, industrial organization, and labor studies-leading researchers from other areas are involved. A common theme, however, is that the participants have a strong track record or orientation towards publishing in the major discipline-based journals.

    The working group has three components. First, there is a regular series of workshops where new work is presented. Second, there are special projects that look at important themes relating to the economics of entrepreneurship. Finally, there is a provision for advanced doctoral students to visit the NBER entrepreneurship meetings.

Household Finance (HF), Brigitte Madrian and Nicholas Souleles, Directors

    The Household Finance working group examines topics that relate to household saving, portfolio behavior, borrowing decisions, and investment choices. The group is concerned with conceptual models that explain household financial decisions, with empirical research on the household behavior on a range of financial margins, and with analyzing the influence of various public and private policies on household financial choices.

Innovation Policy and the Economy (IPE), Scott Stern, Director

    The Innovation Policy and the Economy (IPE) Group at the National Bureau of Economic Research seeks to foster research by economists and other social scientists on the interactions between public policy and the innovation process, and to provide communication mechanisms between researchers and the policy community. Interactions between and among researchers and people working in government, business, and non-profit organizations can improve the timeliness, policy-relevance and focus of academic research, while easier access to the findings of policy-oriented research can improve public policy decision-making. In keeping with the general NBER traditions, the activities address many policy issues and provide useful information without making policy recommendations.

Insurance (INS), Liran Einav and Kenneth Froot, Co-Directors

    From a theoretical perspective insurance is a cornerstone of economic theory. It often used in textbooks as an example of a pure contingent claim (e.g. one that pays off upon flood damage to one's house, or death from natural causes). It is also frequently used as an example of markets that run into imperfections (such as moral hazard and adverse selection). Even the imperfections are interesting, of course, since they are affected by contractual form (as is true in corporate finance). The nature and structure of insurance contracts and equilibria remains of great interest to economists today.

    The NBER working group on Insurance has a broad focus , encompassing theoretical, empirical, and industrial topics. Here are a few:


    The NBER Insurance Project is addressing these and related questions over time. We have convened once a year for 2-day meeting where papers have been presented by researchers with discussants commenting on them. Participants in the working group are predominantly outstanding academics from a variety of fields, plus perhaps a group of carefully-selected practitioners.

Market Design (MD), Susan Athey and Parag Pathak, Directors

    Over the past two decades, economic research and ideas have played an increased role in the practical organization and design of markets. Some examples include auctions for spectrum, electricity, Treasury bills, timber, and other commodities; tradable permit systems for pollution abatement and other environmental regulations; internet search advertising; market mechanisms for innovation; labor market clearinghouses; centralized systems for the allocation of organs; formal procedures for student assignment; and other related matching and trading processes. In each of these cases, both theory and empirical and experimental research have influenced the design of market institutions.

    “Market design” examines the reasons why markets institutions fail and considers the properties of alternative mechanisms, in terms of efficiency, fairness, incentives, and complexity. Research on market design is influenced by ideas from industrial organization and microeconomic theory; it brings together theoretical, empirical, and experimental methods, with an aim of studying policy-relevant tradeoffs with practical consequences. The NBER’s Market Design Working Group, established in the fall of 2008, seeks to create a forum for bringing together leading researchers in the field of Market Design. To encourage research on Market Design, the Working Group will host a series of workshops where new work will be presented.

Market Microstructure (MM), Bruce Lehmann, Director

    The market microstructure research group is devoted to theoretical, empirical, and experimental research on the economics of securities markets, including the role of information in the price discovery process, the definition, measurement, control, and determinants of liquidity and transactions costs, and their implications for the efficiency, welfare, and regulation of alternative trading mechanisms and market structures.

Organizational Economics (OE), Robert Gibbons, Director,

    Viewed broadly, the NBER's Working Group on Organizational Economics studies governed transactions (i.e., those that do not occur in frictionless markets). Naturally, the group's main focus is on transactions within firms. As a result, many of the group's members are drawn from the relevant margins of other NBER programs and working groups that study resource allocation and other processes within firms, such as Corporate Finance, Personnel Economics, and Productivity.

    The group is also pursuing a significant interest in governed transactions between firms, such as contracts, "hybrid" governance structures (e.g., alliances, joint ventures, networks, and so on), and activities that change firms' boundaries (e.g., start-ups, spin-offs, mergers, and so on). As a result, some of the group's members are drawn from the relevant margins of NBER programs and working groups such as Entrepreneurship, Industrial Organization, and International Trade and Organization.

    Finally, many of the principles that apply to governed transactions within and between firms also apply to other kinds of organizations and institutions, so the group is also pursuing a subsidiary interest in organizations such as schools, hospitals, government agencies, and beyond.

    The group began in Fall 2002 and is co-funded by MIT's Program on Innovation in Markets and Organizations. So far, we have convened annually for a two-day meeting involving about 15 papers, with comments by discussants.

Personnel Economics (PE), Ed Lazear , Director

    Much of the theory in labor economics over the past twenty years has been in personnel economics, which is the application of economic theory and principles to the human resources problems of the firm. There has been limited empirical work in this area, in large part as a result of a shortage of data that enables testing of the theories.

    Over the past few years, two new types of data sources have become available. The first consists of detailed data from individual firms that can form the basis of econometric case studies. These data provide great detail, often on the production environment and practices of firms studied. As a result, they allow researchers to examine the effects of various practices on productivity. Examples of such practices are changing the compensation structure, instituting the use of teams and job rotation, and empowerment of the workforce through less hierarchical command structures.

    The second type of data relates to entire countries or to large subsets of workers and firms within the entire country. One difficulty with case studies is that the firm may be idiosyncratic and atypical of the economy as a whole. The country-wide data sets allow researchers to examine issues that require knowledge of the entire firm. For example, suppose one were interested in understanding the structure of wages within a firm. How much variation is there within firms and how much between firms? How homogeneous are firms in the choice of workers? How sensitive are the typical firm's wage structure to general market conditions? How does a workers relative position in a firm affect his or her promotion and retention probabilities? There are many questions of this sort that are first order, but that we have been unable to answer because of lack of data. The new country-wide data sets make investigation of these issues possible. Because data on the entire firm are available over a large number of firms and over an extended period of time, questions that relate to firm structure and to the importance of a workers position within the firm can be answered. There are now data sets from around ten countries, including the US and some European countries. Researchers from Europe have been included into the group and they will analyze the data from their own countries.

    One product of the group for the immediate future is a book that will do cross-country comparisons on some basic issues that relate to wage structures and hierarchical patterns. The book will be the first of its kind and should shed light on an area that has been in complete darkness until now.

    Our group has been meeting twice per year. One meeting occurs in conjunction with Labor Studies during the summer institute. Another takes place in early Spring. The group includes participants from Labor Studies and other groups and has combined both theory and empirical papers effectively during its first two meetings.

Risks of Financial Institutions (FR) , René M. Stulz, Mark Carey, Directors

    The practice and theory of risk management for financial institutions has changed dramatically over the last twenty years. A plethora of new financial instruments has become available for trading and hedging purposes. Financial institutions have also become much more resourceful in taking advantage of differences in regulatory requirements across countries and across types of institutions. With all these changes, financial institutions that face financial difficulties often do so in ways that are hard to understand in light of traditional models of bank runs. Further, new types of financial institutions, such as hedge funds, have become markedly more important. Regulators have attempted to respond to financial innovation with more flexible capital requirements that make greater use of the risk management models of financial institutions and with more risk-focused supervision. These changes in financial institutions and the financial system mean that many theories of financial institutions have become materially incomplete and that our current understanding is deficient. The goal of the NBER Working Group on the Risks of Financial Institutions is to improve our understanding of the risks of financial institutions, of how these risks can be measured and managed with new techniques and new financial instruments, of how these risks are affected by new risk management technologies and new financial instruments, of how regulations and capital requirements impact these risks, of how the risks differ across types of institutions, and of whether the risks pose threats to the financial system. The Group will meet several times a year to discuss new research of interest and to receive input from industry participants and regulators.

Urban Economics (UE), Edward Glaeser, Director

    The NBER working group on Urban Economics brings together scholars who work on the economics of cities. The overarching theme of the group is the causes and consequences of metropolitan density, but the group is interested in all areas of economics that touch on urban life. For example, the group has a strong interested in local public finance and local tax issues. Agglomeration economies, which are so important to the success of cities, are also of primary concern. More generally, the group is interested in papers on real estate, urban poverty, racial relations and segregation in cities, urban crime and other local amenities, and transportation technologies. The American city is undergoing a massive transportation as high density cities of the 19th century are replaced by the lower density, car-oriented cities of today. As such, this is a particularly exciting period to work on the the economics of urban areas. The group will meet one or two times per year, and at some future point will try to assemble current research into a bureau conference volume.

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