• Reading List

    Stiff String-Theory: Richard Feynman on Piano Tuning, by John Bryner

    In a letter to his piano tuner, the great theoretical physicist talks about how the nonzero stiffness of piano strings affects their tuning, and he conjectures that piano tuners may need to pay more attention to ear-created harmonics.

    Calorie Posting in Chain Restaurants, by Bryan Bollinger, Phillip Leslie, Alan Sorensen

    We study the impact of mandatory calorie posting on consumers’ purchase decisions, using detailed data from Starbucks. We find that average calories per transaction falls by 6%. The effect is almost entirely related to changes in consumers’ food choices—there is almost no change in purchases of beverage calories. There is no impact on Starbucks profit on average, and for the subset of stores located close to their competitor Dunkin Donuts, the effect of calorie posting is actually to increase Starbucks revenue. Survey evidence and analysis of commuters suggest the mechanism for the effect is a combination of learning and salience.

    Modeling College Major Choices using Elicited Measures of Expectations and Counterfactuals, Peter Arcidiacono, V. Joseph Hotz, Songman Kang

    The choice of a college major plays a critical role in determining the future earnings of college graduates. Students make their college major decisions in part due to the future earnings streams associated with the different majors. We survey students about what their expected earnings would be both in the major they have chosen and in counterfactual majors. We also elicit students’ subjective assessments of their abilities in chosen and counterfactual majors. We estimate a model of college major choice that incorporates these subjective expectations and assessments. We show that both expected earnings and students’ abilities in the different majors are important determinants of student’s choice of a college major. We also show that students’ forecast errors with respect to expected earnings in different majors is potentially important, with our estimates suggesting that 7.5% of students would switch majors if they made no forecast errors.

    An Autopsy of the U.S. Financial System, by Ross Levine

    In this postmortem, I find that the design, implementation, and maintenance of financial policies during the period from 1996 through 2006 were primary causes of the financial system’s demise. The evidence is inconsistent with the view that the collapse of the financial system was caused only by the popping of the housing bubble and the herding behavior of financiers rushing to create and market increasingly complex and questionable financial products. Rather, the evidence indicates that regulatory agencies were aware of the growing fragility of the financial system associated with their policies during the decade before the crisis and yet chose not to modify those policies.

    Michael T. Doonan and Katharine R. Tull (2010) “Health Care Reform in Massachusetts: Implementation of Coverage Expansions and a Health Insurance Mandate,” The Milbank Quarterly, Vol. 88, No. 1, 2010 (pp. 54–80). (Jason Shafrin has a review.)

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