Jacob Goldin

Optimal Tax Salience

Recent empirical work finds that consumers under-account for commodity taxes when the after-tax price is not prominent. I investigate how policymakers may utilize such “low-salience” taxes to promote welfare. The optimal combination of high- and low-salience taxes balances two competing effects: low-salience taxes dampen distortionary substitution but cause consumers to misallocate their budgets. Using a stylized model, I show the availability of taxes with differing salience provides an extra degree of freedom that can be used to implement the first-best welfare outcome. I characterize the optimal policy and derive a formula for incremental adjustments when the first-best is unattainable.

Consumer Borrowing after Payday Loan Bans

High-interest payday loans have proliferated in recent years; so too have efforts to regulate them. Yet how borrowers respond to such regulations remains largely unknown. Drawing on both administrative and survey data, we exploit variation in payday-lending laws to study the effect of payday loan restrictions on consumer borrowing. We find that although such policies are effective at reducing payday lending, consumers respond by shifting to other forms of high-interest credit (for example, pawnshop loans) rather than traditional credit instruments (for example, credit cards). Such shifting is present, but less pronounced, for the lowest-income payday loan users. Our results suggest that policies that target payday lending in isolation may be ineffective at reducing consumers’ reliance on high-interest credit.

Which Way to Nudge? Uncovering Preferences in the Behavioral Age

Behavioral Law and Economics has created a dilemma for policymakers. On the one hand, research from the field suggests a wide range of unconventional policy instruments (“nudges”) may be used to shape people’s voluntary choices in order to lead them to the option they most prefer. On the other hand, the very nature of these new instruments precludes researchers from measuring people’s preferences in the traditional way, i.e., by looking to see which option people choose from the set of available choices. As a result, policymakers often lack the information they need to design nudges that will make people better off.To tackle this dilemma, I propose a new framework that focuses on the distinction between those decision-makers who respond to nudges and those who do not. The framework highlights that existing methods for designing nudges come up short—none accounts for what I argue is the crucial piece of information: the preferences of the nudge-sensitive decision-makers. After exploring this dilemma, the Essay describes two new approaches for uncovering the preferences of this group and argues that they hold promise for informing the design of nudges in a wide range of policy settings.

Defaults, Mandates, and Taxes: Policy Design with Active and Passive Decision-Makers

Growing evidence suggests that many people are surprisingly responsive to unconventional policy tools, such as defaults or choice-framing, yet unresponsive to conventional ones, such as taxes or subsidies. This paper studies the optimal choice of policy instrument in settings characterized by such features. We utilize a simple binary-choice model in which decision-makers are either active or passive; active choosers make their decisions by comparing perceived costs and benefits whereas passive choosers select whichever option is the default. From this simple model, a number of results emerge. First, manipulating the default option (“nudging�?) is preferable to imposing a mandate when active choosers tend to make correct decisions. Second, taxes and nudges are complements, not substitutes; employing the two types of instruments in conjunction can yield better results than utilizing either one alone. Finally, the optimal combination of taxes and nudges is typically preferable to a mandate even in settings where active choosers are prone to biases. The results establish important limits on the range of settings in which mandates are an efficient policy response to decision-maker errors.

How Should the Graduate Economics Core be Changed

The authors present suggestions by graduate students from a range of economics departments for improving the first-year core sequence in economics. The students identified a number of elements that should be added to the core: more training in building microeconomic models, a discussion of the methodological foundations of model-building, more emphasis on institutions to motivate and contextualize macroeconomic models, and greater focus on econometric practice rather than theory. The authors hope that these suggestions will encourage departments to take a fresh look at the content of the first-year core.

The Analysis of Survey Data with Framing Effects

A well-known difficulty in survey research is that respondents’ answers to questions can depend on arbitrary features of a survey’s design, such as the wording of questions or the ordering of answe...

Influence and Ideology in the American Judiciary: Evidence from Supreme Court Law Clerks

Supreme Court justices employ law clerks to help them perform their duties. We study whether these clerks influence how justices vote in the cases they hear. We exploit the timing of the clerkship hiring process to link variation in clerk ideology to variation in judicial voting. To measure clerk ideology, we match clerks to the universe of disclosed political donations. We find that clerks influence judicial voting, especially in cases that are high-profile, legally significant, or when justices are more evenly divided. We interpret these results to suggest that clerk influence occurs through persuasion rather than delegation of decision-making authority.

Optimal Defaults with Normative Ambiguity

A large and growing literature shows that decision-makers are more likely to select options presented to them as the default. We study the optimal choice of defaults. Our model assumes that decision-makers behave as if there is some cost to selecting any option that is not the default. These “as-if�? opt-out costs may or may not be normative -- i.e., they may or may not enter into the planner’s social welfare function. The model parameterizes the degree to which as if costs are normative, and in doing so nests a large number of models of default effects from the literature. With this model, we characterize the optimal default. Our results suggest that in many situations, determining the optimal policy will not be possible without judgments concerning the normative relevance of behavioral frictions. When as-if costs are not normative, optimal policies tend to encourage active choices. When as-if costs are normative, the optimal policy tends to minimize opt-outs. We apply this framework to study default contributions to pension plans, and find that the optimal policy differs dramatically based on the share of opt-out costs that are normative.

Beyond Head of Household: Rethinking the Taxation of Single Parents

Under current law, unmarried taxpayers with children can take advantage of the head of household filing status (HHFS) to reduce their federal income taxes. We argue that the design of the filing status is largely obsolete, geared toward alleviating a “marriage penalty” in the tax code that is much less important than when the filing status was first established. At the same time, the growth in the fraction of Americans raising children outside of traditional two-parent households has dramatically raised the cost of the filing status to the fisc. In this article, we highlight two features of the design of HHFS that undermine its goal of providing support to single parent households. First, because it is designed as a filing status, HHFS provides a larger tax break to high-income taxpayers than to low-income ones: in 2013 HHFS saved qualifying taxpayers in the 25th percentile of the income distribution under

The Political Ideologies of Law Clerks and their Judges

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