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The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
"The top 1 percent of the income distribution accounted for 21.6 percent of real total income gains during 1966-2001 and 21.3 percent during the productivity revival period 1997-2001." A basic tenet of economics is that productivity growth is the source of growth in real per capita income for the typical -- that is, median -- American worker. However, in Where Did the Productivity Growth Go? Inflation Dynamics and the Distribution of Income (NBER Working Paper No....

Research Summaries

"When time watching television is taken into account, the number of hours of fast food advertising per week has no significant impact on overweight." A number of population measures suggest that childhood overweight has increased since the early 1960s. In explaining this, researchers have tended to focus on environmental factors that affect energy intake and expenditure. When energy intake is greater than energy expenditure, children gain weight. More time spent...
"By using these psychological factors as competitive tools, firms may be able to raise demand without suffering from adverse selection, all the while dulling the incentives for price competition." Classical models of consumer choice presume individual rationality: that is, that consumers make important decisions by weighing costs, benefits, and preferences. Psychology, in contrast, emphasizes the importance of context and cognitive limitations. Preferences are...
"This largest federal cash transfer program also successfully meets its explicit goal of encouraging low-income parents to go to work by, in effect, lowering their tax rate and providing a financial bonus for that work effort." The Earned Income Tax Credit (EITC), a federal program that provided 22 million American families with children a total of $34 billion in cash assistance in 2003, accomplishes its stated goals. It not only provides low-income workers, including...
"The central tendencies of market-based forecasts are at least as accurate, and in fact somewhat superior to, the 'consensus' or 'survey' forecast derived by taking the average estimate from a survey of forecasters." Economic derivatives, which invite investors to purchase options based on macroeconomic activities, have been traded for less than four years. The payoff from these options depends on macroeconomic outcomes, such as growth in GDP and non-farm payrolls,...

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