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Languages differ widely in the ways they encode time. I test the hypothesis that the languages that grammatically associate the future and the present, foster future-oriented behavior. This prediction arises naturally when well-documented effects of language structure are merged with models of intertemporal choice. Empirically, I find that speakers of such languages: save more, retire with more wealth, smoke less, practice safer sex, and are less obese. This holds both across countries and within countries when comparing demographically similar native households. The evidence does not support the most obvious forms of common causation. I discuss implications for theories of intertemporal choice.

We provide evidence from field experiments with three different banks that reminder messages increase commitment attainment for clients who recently opened commitment savings accounts. Messages that mention both savings goals and financial incentives are particularly effective, whereas other content variations such as gain versus loss framing do not have significantly different effects. Nor do we find evidence that receiving additional late reminders has an additive effect. These empirical results do not map neatly into existing models, so we provide a simple model where limited attention to exceptional expenses can generate undersaving that is in turn mitigated by reminders. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2015.2296 . This paper was accepted by Teck-Hua Ho, behavioral economics .

Across the social sciences, a key question is how societies manage to enforce cooperative behavior in social dilemmas such as public goods provision or bilateral trade. According to an influential body of theories in psychology, anthropology, and evolutionary biology, the answer is that humans have evolved moral systems: packages of functional psychological and biological mechanisms that regulate economic behavior, including a belief in moralizing gods; moral values; negative reciprocity; and emotions of shame, guilt, and disgust. Based on a stylized model, this article empirically studies the structure and evolution of these moral traits as a function of historical heterogeneity in extended kinship relationships. The evidence shows that societies with a historically tightly knit kinship structure regulate behavior through communal moral values, revenge taking, emotions of external shame, and notions of purity and disgust. In loose kinship societies, on the other hand, cooperation appears to be enforced through universal moral values, internalized guilt, altruistic punishment, and an apparent rise and fall of moralizing religions. These patterns point to the presence of internally consistent but culturally variable functional moral systems. Consistent with the model, the relationship between kinship ties, economic development, and the structure of the mediating moral systems amplified over time.

Many of the insights of economics seem to be qualitative, with many fewer reliable quantitative laws. However a series of power laws in economics do count as true and nontrivial quantitative laws—and they are not only established empirically, but also understood theoretically. I will start by providing several illustrations of empirical power laws having to do with patterns involving cities, firms, and the stock market. I summarize some of the theoretical explanations that have been proposed. I suggest that power laws help us explain many economic phenomena, including aggregate economic fluctuations. I hope to clarify why power laws are so special, and to demonstrate their utility. In conclusion, I list some power-law-related economic enigmas that demand further exploration. A formal definition may be useful.

Societies adapt to climate variations and develop unique cultures that lead to distinctive economic behaviour across different regions. To estimate the climate-economic link and test the hypothetical role of culture, this paper uses a nationwide survey at the household level in China, together with historical temperature data at the prefectural city level for empirical analysis. The results show the significant role of local climate variations on consumption, savings and investment decisions by households. Harsh weather conditions are associated with lower consumption, lower income and higher savings. Such climate characteristics are also associated with a lower probability of purchasing risky financial assets. Using a sample of migrating families, we find strong evidence that culture is an important channel in the climate-economic relationship. Additional support for this view is found through the “catching up with the Joneses” effect documented in the economics literature. Overall, this research provides an alternative perspective for understanding the long-term behavioural impact of climate change.

News—or foresight—about future economic fundamentals can create rational expectations equilibria with non-fundamental representations that pose substantial challenges to econometric efforts to recover the structural shocks to which economic agents react. Using tax policies as a leading example of foresight, simple theory makes transparent the economic behavior and information structures that generate non-fundamental equilibria. Econometric analyses that fail to model foresight will obtain biased estimates of output multipliers for taxes; biases are quantitatively important when two canonical theoretical models are taken as data generating processes. Both the nature of equilibria and the inferences about the effects of anticipated tax changes hinge critically on hypothesized information flows. Different methods for extracting or hypothesizing the information flows are discussed and shown to be alternative techniques for resolving a non-uniqueness problem endemic to moving average representations.

We build a game-theoretic model to examine how better demand forecasting resulting from algorithms, machine learning, and artificial intelligence affects the sustainability of collusion in an industry. We find that, although better forecasting allows colluding firms to better tailor prices to demand conditions, it also increases each firm’s temptation to deviate to a lower price in time periods of high predicted demand. Overall, our research suggests that, despite concerns expressed by policy makers, better forecasting and algorithms can lead to lower prices and higher consumer surplus. This paper was accepted by Joshua Gans, business strategy.

We study the importance of family ties on economic behavior. We define our measure of family ties using individual responses from the World Value Survey (WVS) regarding the role of the family and the love and respect that children are expected to have for their parents in 81 countries. We show that with strong family ties home production is higher and families larger, labor force participation of women and youngsters, and geographical mobility lower. To assess causality, we look at the behavior of second generation immigrants. Our results overall indicate a significant influence of the strength of family ties on economic outcomes.

Survey data regularly show that assessments of current and expected future economic performance are more positive when a respondent's partisanship matches that of the president. To determine if this is a survey artifact or something deeper, we investigate whether partisanship is associated with behavioral differences in economic decisions. We construct a new data set of county-level quarterly taxable sales to examine the effect of partisanship on consumption. Consumption change following a presidential election is correlated with a county's partisan complexion, a result consistent with partisans acting outside the domain of politics in accordance with the opinions they express in surveys. These results support an expansive view of the role of partisanship in mass politics and help validate surveys as a method for studying political behavior.

Adam Smith's psychological perspective in The Theory of Moral Sentiments is remarkably similar to “dual-process” frameworks advanced by psychologists, neuroscientists, and more recently by behavioral economists, based on behavioral data and detailed observations of brain functioning. It also anticipates a wide range of insights regarding phenomena such as loss aversion, willpower, and fairness that have been the focus of modern behavioral economics. This essay draws attention to some of these connections.