Econ 252 – Advanced Public Economics (1st Sem AY 2016-2017)

Professor: J.J. Capuno

Course description: This is an introduction to some advanced topics in public economics, particularly in political economics and behavioral public economics. Both theory and applications will be covered. By the end of the semester, the student is expected to have acquired mastery of the relevant literature to start own research or applied work.
References:
Persson, T. and G. Tabellini (2002). Political economics: Explaining economic policy. Cambridge, MA: The MIT Press. [print copy only]
Drazen, A. (2000). Political economy in macroeconomics. Princeton, NJ: Princeton University Press. [print copy only]
Congdon, W.J., J.R. Kling and S. Mullainathan (2011). Policy and Choice : Public Finance through the lends of    behavioral economics. Washington, DC: Brookings Institution Press. link [Open access]
Diamond, P. and H. Vartiainen, eds. (2007). Behavioral economics and its applications. Princeton, NJ: Princeton University Press. link [Open access]
Camerer, C. F., G. Loewenstein and M. Rabin, eds. (2004). Advances in behavioral economics. Princeton, NJ: Princeton University Press. [Print only]

I. Political economics
Useful background materials
Persson and Tabellini (2002). Chapters 1 – 7
Drazen (2002). Chapters 1 – 6

1. Political business cycles/Electoral cycles
Drazen (2002). Chapter 7
Perssson and Tabellini (2002). Chapters 13 and 16
2. Policy reform, taxation and redistribution
Drazen (2002). Chapters 10 and 8
Perssson and Tabellini (2002). Chapters 11 and 12
3. Public debt and growth
Drazen (2002). Chapters 11, 14
Perssson and Tabellini (2002). Chapters 13 and 14
Mid-term exam
II. Behavioral public economics
Useful background materials
Congdon, W.J., J.R. Kling and S. Mullainathan (2011). Chapters 1 – 3
Mullainathan, S. (2007). “Psychology and development economics,” in. Diamond, P. and H. Vartiainen, eds. (2007).
Camerer, C. F. and G. Loewenstein (2004). “Behavioral economics: Past, present and future,” in Camerer, C. F., G. Loewenstein and M. Rabin, eds. (2004).
Kahneman, D., J. L. Knetsch and R. H. Thaler (2004). “Experimental tests of the endowment effect and the Coase Theorem,” in Camerer, C. F., G. Loewenstein and M. Rabin, eds. (2004).
Thaler, R. H. (2004). “Mental accounting matters,” in Camerer, C. F., G. Loewenstein and M. Rabin, eds. (2004).
Gneezy, U., S. Meier and P. Rey-Biel (2011). When and Why Incentives (Don’t) Work to Modify behavior. Journal of Economic Perspectives 25 (4), 191-210.  link [Accessible via Dilnet only] ; [See also e-Reserve database]
Akerlof, G. (1991). Procrastination and Obedience. American Economic Review 81 (2), 1-19. link [Accessible via UPSE network only]
Bowles, S. and S. Polania-Reyes (2012). Economic incentives and social preferences : Substitutes or complements? Journal of Economic Literature 50(2);368-425. link [Accessible via UPSE network only]
Mullainathan, S. J. Schwartzstein and W. J. Congdon (2012). A reduced form approach to behavioral public finance. Annual Review of Economics 4: 511-540. link [Open access]
1. Taxation and savings
Congdon, W.J., J.R. Kling and S. Mullainathan (2011). Chapter 7
Congdon, W.J., J.R. Kling and S. Mullainathan (2009). Behavioral economics and tax policy. NBER Working Paper 15328. Cambridge, MA.: NBER.  link [Open access]
Chetty, R., A. Looney and K. Kroft (2007). Salience and taxation: Theory and evidence. American Economic Review 99 (4), 1145–1177.  link [Accessible via UPSE network only]
Finkelstein, A. (2009). E-ZTAX: Tax Salience and Tax Rates. Quarterly Journal of Economics 124 (3), 969-1010.   link [Accessible via Dilnet only]
Gruber, J. and B. Kőszegi (2004). Tax incidence when individuals are time-inconsistent: the case of cigarette excise taxes. Journal of Public Economics 88 (9), 1959-1987.  link [Open access]  link [Accessible via Dilnet only]
O’Donoghue, T. and M. Rabin (2006). Optimal sin taxes. Journal of Public Economics 90 (10), 1825-1849. link [Accessible via Dilnet only]
Slemrod, Joel (2007). Cheating ourselves: The economics of tax evasion. Journal of Economic Perspectives 21 (1), 25-48. link [Accessible via Dilnet only]
Shefrin, H. M. and R. H. Thaler (2004), “Mental accounting, saving and self-control,” in Camerer, C. F., G. Loewenstein and M. Rabin, eds. (2004).
Carroll, G.vD., J. J. Choi, D. Laibson, B.C. Madrian and A. Metrick (2009). Optimal Defaults and Active Decisions. Quarterly Journal of Economics 124 (4), 1639-1674. link [Accessible via Dilnet only]
Madrien, B. C. and D. F. Shea (2001). The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior. Quarterly Journal of Economics 116 (4), 1149-1187.  link [Accessible via Dilnet only]
Thaler, . R. H. and S. Benartzi (2004). Save More Tomorrow : Using Behavioral Economics to increase Employee Saving. Journal of Political Economy 112 (1), 164-187.  link [Accessible via UPSE network only]
2. Public goods provision and cooperation
Congdon, W.J., J.R. Kling and S. Mullainathan (2011). Chapter 5
Fehr, E. and S. Gatcher (2004). “Fairness and retaliation: The economics of reciprocity,” in Camerer, C. F., G. Loewenstein and M. Rabin, eds. (2004).
Dawes, R. M. and R. Thaler (1988). Anomalies. Cooperation. Journal of Economic Perspectives 2 (3), 187-197. link [Accessible via UPSE network only]
Fehr, E. and U. Fischbacher (2004). Social norms and human cooperation. Trends in Cognitive Sciences 8 (4), 185-190.  link [Open access]
Gachter, S., B. Herrmann and C. Thoni (2010). Culture and cooperation. Philosophical Transactions of the Royal Society B 365, 2651-2661.  link [Open access]
Herrmann, B., C. Thöni and S. Gächter (2008). Antisocial Punishment Across Societies. Science 319, 1362-1367. link  [Accessible via Dilnet] link [Open access]
Markussen, T., E. Reuben and J.-R. Tyran (2013). Competition, cooperation and collective choice. Economic Journal 127, F163-F195.  [See e-Reserve database]
3. Welfare economics
Congdon, W.J., J.R. Kling and S. Mullainathan (2011). Chapter 6
Bernheim, B.D. and A. Rangel (2007). “Behavioral public economics: Welfare policy analysis with non-standard decision makers,” in. Diamond, P. and H. Vartiainen, eds. (2007).
Camerer, C., S. Issacharoff, G. Loewenstein, T. O’Donoghue and M. Rabin (2003). Regulation for Conservatives: Behavioral Economics and the Case for “Asymmetric Paternalism”. University of Pennsylvania Law Review 151, 1211-1254. link [Open access]
Choi, J.J., D. Laibson, B. C. Madrian and A. Metrick (2003). Optimal Defaults. American Economic Review 93 (2), 180-185. link [Accessible via UPSE network only]
Glaeser, E. L. (2006). “Paternalism and Psychology,” University of Chicago Law Review 73 (1) (Winter 2006), 133-156 link [Open access]
Loewenstein, G., T. Brennan and K. G. Volpp (2007). Asymmetric Paternalism to Improve Health Behaviors. Journal of the American Medical Association 298 (20), 2415-2417. link [Open Access]
Mitchell, G. (2005). Libertarian paternalism is an oxymoron. Northwestern University Law Review 99 (3), 1245-1277 . link [Open Access]
Thaler, R. H. and C. R. Sunstein (2003). Libertarian Paternalism. American Economic Review 93 (2), 175-179. link [Accessible via UPSE network only]