Social Media and Fake News in the 2016 Election

Following the 2016 U.S. presidential election, many have expressed concern about the effects of false stories ("fake news"), circulated largely through social media. We discuss the economics of fake news and present new data on its consumption prior to the election. Drawing on web browsing data, archives of fact-checking websites, and results from a new online sur-vey, we find:(i) social media was an important but not dominant source of election news, with14 percent of Americans calling social media their "most important" source;(ii) of the known false news stories that appeared in the three months before the election, those favoring Trump were shared a total of 30 million times on Facebook, while those favoring Clinton were shared8 million times;(iii) the average American adult saw on the order of one or perhaps several fake news stories in the months around the election, with just over half of those who recalled seeing them believing them; and(iv) people are much more likely to believe stories that favor their preferred candidate, especially if they have ideologically segregated social media networks

Is There an Energy Efficiency Gap?

Many analysts have argued that energy efficiency investments offer an enormous “win-win” opportunity to both reduce negative externalities and save money. This overview paper presents a simple model of investment in energy-using capital stock with two types of market failures: first, uninternalized externalities from energy consumption, and second, forces such as imperfect information that cause consumers and firms not to exploit privately-profitable energy efficiency investments. The model clarifies that only if the second type of market failure cannot be addressed directly through mechanisms such as information provision, energy efficiency subsidies and standards may be merited. We therefore review the empirical work on the magnitude of profitable unexploited energy efficiency investments, a literature which frequently does not meet modern standards for credibly estimating the net present value of energy cost savings and often leaves other benefits and costs unmeasured. These problems notwithstanding, recent empirical work in a variety of contexts implies that on average the magnitude of profitable unexploited investment opportunities is much smaller than engineering-accounting studies suggest. Finally, there is tremendous opportunity and need for policy-relevant research that utilizes randomized controlled trials and quasi-experimental techniques to estimate the returns to energy efficiency investments and the welfare effects of energy efficiency programs.

Rethinking Real Time Electricity Pricing

Most US consumers are charged a near-constant retail price for electricity, despite substantial hourly variation in the wholesale market price. This paper evaluates the .rst program to expose residential consumers to hourly real time pricing (RTP). I .nd that enrolled households are statistically signi.cantly price elastic and that consumers responded by conserving energy during peak hours, but remarkably did not increase average consumption during o¤-peak times. Welfare analysis suggests that program households were not su¢ ciently price elastic to generate efficiency gains that substantially outweigh the estimated costs of the advanced electricity meters required to observe hourly consumption. Although in electricity pricing, congestion pricing, and many other settings, economists.intuition is that prices should be aligned with marginal costs, residential RTP may provide an important real-world example of a situation where this is not currently welfare-enhancing given contracting or information costs.Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research

Social Norms and Energy Conservation

This paper evaluates a pilot program run by a company called OPOWER, previously known as Positive Energy, to mail home energy reports to residential utility consumers. The reports compare a household’s energy use to that of its neighbors and provide energy conservation tips. Using data from randomized natural field experiment at 80,000 treatment and control households in Minnesota, I estimate that the monthly program reduces energy consumption by 1.9 to 2.0 percent relative to baseline. In a treatment arm receiving reports each quarter, the effects decay in the months between letters and again increase upon receipt of the next letter. This suggests either that the energy conservation information is not useful across seasons or, perhaps more interestingly, that consumers’ motivation or attention is malleable and non-durable. I show that “profiling,” or using a statistical decision rule to target the program at households whose observable characteristics suggest larger treatment effects, could substantially improve cost effectiveness in future programs. The effects of this program provide additional evidence that non-price “nudges” can substantially affect consumer behavior.Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research

The performance of decentralized school systems : evidence from Fe y Alegría in Venezuela

This program evaluation estimates the effects on standardized test scores of graduating from the Fe y Alegría private school system in Venezuela. The authors find an Average Treatment Effect on the order of 0.1 standard deviations (approximately 16 percent of the average score), using a control group of public school students. These effects are significantly larger for households at the bottom of the distribution, and smaller for those at the top. The authors posit that the better performance of the Fe y Alegría system stems from their labor contract flexibility and decentralized administrative structure.Tertiary Education,Education For All,Secondary Education,Primary Education,Teaching and Learning

Political institutions, inequality, and agricultural growth : the public expenditure connection

This paper brings together the literatures on the political economy of public expenditures and the determinants of economic growth. Based on a new dataset of rural public expenditures in a panel of Latin American economies, the econometric evidence suggests that non-social subsidies reduce agricultural GDP. Furthermore, the evidence suggests that political and institutional factors as well as income inequality are determinants of the size and structure of rural public expenditures, through which they have large and significant effects on agricultural GDP.Public Sector Expenditure Analysis&Management,Economic Theory&Research,Public Sector Economics&Finance,Political Economy,Achieving Shared Growth

Gasoline Prices, Fuel Economy, and the Energy Paradox

It is often asserted that consumers purchasing automobiles or other goods and services underweight the costs of gasoline or other "add-ons." We test this hypothesis in the US automobile market by examining the effects of time series variation in gasoline price expectations on the prices and market shares of vehicles with different fuel economy ratings. When gas prices rise, demand for high fuel economy vehicles increases, pushing up their relative prices. Market share changes - increased production of high fuel economy vehicles and scrappage of low fuel economy vehicles - attenuate these price changes. Intuitively, the less that equilibrium vehicle prices and shares respond to changes in expected gasoline prices, the less that consumers appear to value gasoline costs. We estimate a nested logit discrete choice model using a remarkable dataset that includes market shares, characteristics, expected usage, and transaction price microdata for all new and used vehicles available between 1999 and 2008. To address simultaneity bias, we introduce a new instrument for used vehicle market shares, based on the fact that gasoline prices cause variation in new vehicle shares that then persists over time as the vehicles move through resale markets. Our results show that US auto consumers are willing to pay just $0.61 to reduce expected discounted gas expenditures by$1. We incorporate the estimated parameters into a new discrete choice approach to behavioral welfare analysis, which suggests with caution that a paternalistic energy efficiency policy could generate welfare gains of $3.6 billion per year.Princeton s Industrial Relations Section, Harvard s Energy Technology Innovation Policy group, and the Harvard University Center for the Envi- ronment

How Long Do Treatment Effects Last? Persistence and Durability of a Descriptive Norms Intervention's Effect on Energy Conservation

Behavioral decision research has profoundly changed our understanding of decision-making. Recent research has begun to explore how behavioral insights can influence behavior in the world, at scale. This work often involves field experiments studying outcomes over short time windows. We study a descriptive social norms intervention's impact on household energy usage continuously over 39 to 49 months. Our two field experiments (N=155,000 households) each have three conditions: untreated control, continued treatment, and treatment that is subsequently discontinued. We find that continued treatment reduces energy usage over the entire period (“durability”). Further, after treatment is discontinued, a sizable energy use reduction persists (“persistence”). Finally, continued treatment generates a greater impact over time than discontinued treatment, showing that continued treatment exerts incremental influence on behavior over and above persistence. We discuss implications, describe how long-term persistence can occur, and argue that future behavioral decision research should address long-term effects of interventions

Tagging and Targeting of Energy Efficiency Subsidies

A corrective tax or subsidy is "well-targeted" if it primarily affects choices that are more distorted by market failures. Energy efficiency subsidies are designed to correct multiple distortions: externalities, credit constraints, "landlord-tenant" information asymmetries, imperfect information, and inattention. We show that three important energy efficiency subsidies are primarily taken up by consumers who are wealthier, own their own homes, and are more informed about and attentive to energy costs. This suggests that these subsidies are poorly targeted at the market failures they were designed to address. However, we show that "tagging" can lead to large efficiency gains.Alfred P. Sloan Foundatio