Natalie Bau and David Baqaee named as 2022 Sloan Fellows

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Natalie Bau and David Baqaee have been named as Sloan Fellows for 2022, two of eight economists nationwide.
Natalie Bau is an assistant professor in the Economics Department. She graduated from Harvard, Public Policy, in 2015 and joined the Economics Department in 2020. Her research spans a variety of topics in development and educational economics, including the effects of cultural traditions on economic decision-making and the industrial organization of educational markets.
David Baqaee is an Assistant Professor in the Economics Department, having received his Ph.D. from Harvard and worked previously at the London School of Economics.  He works on aggregation in disaggregated macroeconomic models, with an emphasis on the role production networks play in business cycles, growth, and international trade.The official announcement can be found here.

LIFE-M Data Access

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The LIFE-M data, which has been more than seven years in the making, have been released. The data can be downloaded from OPEN ICPSR here.
 
The LIFE-M project combines millions of U.S. vital records (birth, marriage, death certificates) with census information into a longitudinal and intergenerational micro-database. With the help of cutting-edge, machine learning techniques, the LIFE-M data follow four generations of Americans from birth to death. High quality training data is used to achieve large-scale performance at high rates of precision. Birth cohorts begin in late 1800s and include their great grandchildren born between 1915 and 1975.

MQE Distinguished Speaker: John List

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The Masters of Quantitative Economics Distinguished Speaker Series featured John List of the University of Chicago being interviewed by Simon Board. Professor List is the Kenneth Griffin Professor of Economics at the University of Chicago and one of the leaders in running field experiments. He talked about his experience as Chief Economist at Uber, setting up a school in Chicago, and his new book, The Voltage Effect.

A video of the lecture can be found here.

Droughts, Deluges, and (River) Diversions: Valuing Market-Based Water Reallocation

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Will Rafey

Will Rafey

Climate change will continue to amplify water scarcity and variability. Rising temperatures directly alter the hydrological cycle, intensifying drought and deluges. Climate models predict substantial declines in water resources for irrigation and more uncertainty over future river inflows (1).

These unprecedented environmental changes renew longstanding questions about the efficiency of water allocation. Water regulators typically allocate water through non-market mechanisms, such as quotas based on landholdings, political influence, or historical priority. Economists have amassed considerable evidence for water misallocation under these existing water rights regimes (2). However, such findings have rarely translated into policy, where market-based instruments remain highly controversial.

While water markets can improve efficiency under ideal conditions, the practical realities of a river system make it challenging to obtain evidence of the prospective gains from trade. As a long literature seeking to explain the rarity of water markets has emphasized, trading opportunities in an actual river network may be costly, uncertain, or manipulable. River flow constraints, noncompetitive conduct, and liquidity constraints can dampen or reverse prospective trading gains. Moreover, evidence from several nascent water markets has led some economists to conclude that “the reality of water markets falls short of their potential (3).”

In his paper, “Droughts, deluges, and (river) diversions: Valuing market-based water reallocation,” Professor Will Rafey contributes to this debate over water markets with an approach that accounts for evolving river flow constraints and other market imperfections. His paper relies on new data on water rights, trades, and agricultural production collected from the largest water market in human history, located in southeastern Australia. The empirical framework values the Australian water market in two steps. First, the paper estimates a model of irrigated agricultural production to recover the distribution of water values. Second, the paper compares welfare under observed pre- and post-trade water allocations.

The paper finds that water trading increased output by 4-6% from 2007-2015, which makes shutting down the market for water equivalent to experiencing the median water shortfall from 1°C of global warming. In addition, the gains from trade increased substantially during drought. This result implies that water markets can be important for adapting to climatic variation from long-run shocks like climate change and cyclical shocks such as droughts.

1. On climate change and the hydrological cycle, see Oki and Kanae (2006).
On droughts and deluges, see Prudhomme et al. (2014) and Sobel et al. (2016), respectively.
On irrigation, Elliott et al. (2014) document water scarcity and Schewe et al. (2014) analyze water variability.
2. Libecap (2011).
3. Regnacq et al. (2016), p. 1274.

Paul Clyde Profiled by The Center for Global Health Equity at the University of Michigan

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The Center for Global Health Equity at the University of Michigan recently published a profile on Paul Clyde, a graduate of the UCLA’s Economics program (Ph.D ’90). Professor Clyde is currently the Tom Lantos Professor of Business Administration, President of the William Davidson Institute, and a member with the Center for Global Health Equity at the University of Michigan. The profile highlights Professor Clyde’s role in advancing economic development and health care provision in low- and middle-income countries.

The profile can be found here.

More stories from the Equity Connections Blog can be found here.

David Baqaee Invited to Contribute an Article by the Society for Economic Dynamics

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UCLA’s Economics Professor David Baqaee was recently invited by the Society for Economic Dynamics to write an article about his research agenda. The article, Macroeconomics as Explicitly Aggregated Microeconomics, describes Professor Baqaee’s focus on the role of production networks in the transmission of economic shocks.

More about SED can be found here.

Newly Elected Economic Theory Fellows 2022: Simon Board and Andrew Atkeson

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The Department of Economics congratulates Andrew Atkeson and Simon Board on being named Economic Theory Fellows by the Society for the Advancement of Economic Theory (SAET). SAET’s purpose is to advance knowledge in theoretical economics and to facilitate communication among researchers in economics, mathematics, game theory, or any other field which is potentially useful to economic theory. Economic Theory Fellows are selected for their scientific excellence, originality, and leadership, high ethical standards, and scholarly and creative achievement.  The research contributions of fellows may exist in many areas of theoretical economics, including pure and applied research, and government service. The primary qualification for fellowship is to have substantially advanced economic theory work.

Professor Atkeson is the Stanley M. Zimmerman Professor of Economics and Finance. His research spans a variety of topics in macroeconomics, including the sustainability of international debt, the design of monetary policy and the measurement of the firm solvency.

Professor Board is a microeconomic theorist who studies information economics, with applications to auction design, industrial organization, and labor economics. His recent research includes the spread of information on social networks, the design of dynamic pricing algorithms, and the role of reputation in incentivizing investment.

Restorative Justice and Recidivism: Evidence from the Make-it-Right Program

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Yotam Shem-Tov

Yotam Shem-Tov

The United States criminal justice policy has historically relied on sanctions to enforce compliance.  Sanctions became increasingly punitive beginning in the late 1970s, leading to large increases in the correctional populations. Recent years have seen an effort to dial back the severity of punishments and use alternatives to criminal prosecution.

Restorative justice conferencing (RJC) is one such alternative that emphasizes accountability through repairing harm rather than imposing sanctions. While restorative justice programming can take many forms, in criminal justice settings, it usually involves direct conferencing between the person responsible for the harm and the victim.

In “Can Restorative Justice Conferencing Reduce Recidivism? Evidence from the Make-it-Right Program,” Professor Yotam Shem-Tov and his co-authors Steven Raphael and Alissa Skog present new evidence on the effectiveness of RJC in combating recidivism by evaluating the Make-it-Right program (MIR).

MIR is a restorative justice conferencing program that serves teens between the ages of 13 to 17 who would have otherwise been charged with a felony offense of medium severity (e.g., burglary, assault). Following extensive preparation, participating youth meet with the people they have harmed, accept responsibility for the impact of their actions and come to an agreement for how the youth can repair to the greatest extent possible the harm they caused. If the youth follow through with the repair actions outlined in the agreement, charges against them are never filed; if they do not, they face felony prosecution. In this study, eligible youth were randomly assigned to participate in MIR or to a control group in which they standard faced criminal prosecution.

The authors find that assignment to MIR has large recidivism-reducing effects.  Youth assigned to MIR are less likely to be rearrested within six months by 19 percentage points, a 44 percent reduction relative to the control group. Moreover, the reductions in rearrests persist even four years after randomization. Among those assigned to MIR, 81 percent enrolled in the program, and 53 percent completed it. Accounting for imperfect take-up of treatment magnifies the results. The effect of enrolling or completing MIR is roughly 1.3 and 1.9 times larger than effects based on the naïve comparison of youth assigned to MIR relative to the control group.

The results provide strong evidence that restorative justice conferencing can reduce recidivism among youth charged with relatively serious offenses and can be an effective alternative to traditional prosecution.