Every Monday, the National Bureau of Economic Research, a nonprofit organization made up of some of North America’s most respected economists, releases its latest batch of working papers. The papers aren’t peer-reviewed, so their conclusions are preliminary (and occasionally flat-out wrong). But they offer an early peek into some of the research that will shape economic thinking in the years ahead. Here are a few of this week’s most interesting papers
Authors: Gregory Colman, Dhaval Dave
What they found: After losing a job, Americans consume a little less food but are also less physically active, resulting in a slight increase in body weight.
Why it matters: Lots of research has been done on the effects of unemployment, but only a little of it focuses on health. The results of these studies are conflicting. Some indicate that with extra leisure time during unemployment, people exercise and sleep more, smoke less and make better health choices. Other studies show that people gain weight, smoke more and otherwise have worse behavior while off the job. The researchers of this study take a longitudinal view, following the same individuals before, during and after the Great Recession. They find unemployment leads to less energy consumption and less energy expenditure — that is, people eat less but also loaf around more, resulting in some weight gain, though it varies by gender. Losing a job leads to eating less fast food by about half a meal per week; and it causes heavy smokers to smoke less, but increases the probability that some take up smoking.
Key quote: “With our long-span longitudinal data, we can parse out the effects for persons who are initially sedentary or active prior to any shift in their employment status. Similarly, if recessions reduce smoking, cross-sectional data cannot reveal whether the change reflects light smokers quitting or heavy smokers cutting back.”
Data they used: The Panel Study of Income Dynamics and the National Longitudinal Survey of Youth (1979).
Authors: Tatyana Deryugina, Solomon M. Hsiang
What they found: Americans are less productive during warmer weather. Under moderate climate change projections, annual economic growth will be 0.06 to 0.16 percentage points lower in 2099.
Why it matters: The conventional wisdom posits that richer countries are better prepared for climate change because they can make investments (e.g., in air conditioners) or develop technologies (e.g., genetic variations in crops) to maintain their productivity. In this paper, the researchers question that assumption and find that warmer temperatures slow economic growth. They examined how the variation in daily temperatures of U.S. counties affects income per person, controlling for other possible confounding factors in the area. They find that productivity declines 1.7 percent for every 1 degree Celsius (1.8 degrees Fahrenheit) increase in temperature above 59 degrees Fahrenheit. All of the effects come on weekdays, not weekends. The optimal temperature range is 48 to 59 degrees Fahrenheit, with productivity declining significantly when it’s hotter. Each additional day above 86 degrees Fahrenheit costs a county about $20 per person in lost productivity. Under the “business as usual” projections for climate change — that is, a median projection of temperature increases — U.S. economic growth will slow 0.06 to 0.16 percentage points per year by the end of the century.
Key quote: “Contrary to the notion that wealthy countries easily decouple their economy from the environment because they ‘have the resources to adapt,’ the framework we present here suggests that the quantity of optimal adaptation is determined by the marginal costs and benefits of adaptation technology, not simply by the wealth of the population. … Our counterfactual simulation where counties optimize their temperature suggests that the current climate of the United States imposes a substantial economic cost, although there is not an obvious way in which these costs can be avoided.”
Data they used: National Climatic Data Center data for daily temperature data by county; Regional Economic Information System data from the Bureau of Economic Analysis for county economic data; Representative Concentration Pathway 8.5 from the Intergovernmental Panel on Climate Change for climate change projections.
Authors: Steven Venti, David A. Wise
What they found: Education level has a major effect on whether someone retires early — but it affects whether that person claims Social Security benefits or disability insurance differently. Whereas education affects early retirement via disability in indirect ways — that is, the better-educated are healthier and wealthier, delaying retirement — it works in direct ways in claiming Social Security benefits, as the level of education itself affects when to retire.
Why it matters: We know that people with more education retire later in life, and we know that education plays an enormous role in these decisions. But other factors — such as health and employment — also affect retirement decisions. The authors of this paper seek to disentangle education from these other factors, finding that education affects the decision to take Social Security and disability differently. Education works indirectly on disability insurance; less educations means less income and poorer health, and those factors can force someone into disability. For Social Security however, education matters directly; the better-educated are more likely to wait to retire, knowing they’ll earn more in benefits (controlling for their health and wealth).
Key quote: “The effect of education on early retirement is huge. Most of the effect of education on DI [disability insurance] participation is indirect through the effect of education on health, wealth, earnings and employment. Most of the effect of education on the early claiming of Social Security benefits is accounted for by the direct effect of education and not indirectly by way of the effect of education through the health, wealth, earnings, and employment pathways.”
Data they used: Health and Retirement Study from 1994 to 2010.