tag:theconversation.com,2011:/us/topics/nber-16318/articlesNBER – The Conversation2021-07-21T12:16:49Ztag:theconversation.com,2011:article/1648162021-07-21T12:16:49Z2021-07-21T12:16:49ZCOVID-19 recession: One of America’s deepest downturns was also its shortest after bailout-driven bounceback<figure><img src="https://images.theconversation.com/files/412543/original/file-20210721-25-1d6g103.jpg?ixlib=rb-1.1.0&rect=85%2C38%2C5090%2C3406&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The U.S. economy bounced back in record time.
</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/TrampolineGymnasts/4142c475b52d40b29e8b1e0aded3c976/photo?Query=trampoline&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=964&currentItemNo=445">AP Photo/Gerald Herbert</a></span></figcaption></figure><p>Thanks to a <a href="https://news.wttw.com/2021/05/05/us-economy-surges-back-economists-forecast-2021-boom">roaring economy</a>, <a href="https://www.marketwatch.com/story/u-s-unemployment-claims-drop-to-new-pandemic-low-of-360-000-11626353365">plunging joblessness</a> and a <a href="https://www.wsj.com/articles/consumer-spending-personal-income-inflation-may-2021-11624563378">consumer spending spree</a>, it probably won’t come as a surprise that the COVID-19 recession is officially over.</p>
<p>We didn’t know this, formally, however, until July 19, 2021, when a <a href="https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021">group of America’s top economists determined</a> that the pandemic recession ended two months after it began, making it the shortest downturn on record.</p>
<p>As an <a href="https://www.bu.edu/questrom/executive-education/our-faculty/jay-zagorsky/">economist</a> who has <a href="http://businessmacroeconomics.com/">written a macroeconomics textbook</a>, I was eagerly waiting to know the official dates. This is in part because I recently asked my <a href="https://www.bu.edu/questrom/degree-programs/online-mba/">Boston University MBA</a> students to make guesses, and we all wanted to know who was closest to the mark. While many of my students ended up nailing it, I was off by a month.</p>
<p>But why did it take over a year to learn the recession ended?</p>
<h2>What’s a recession?</h2>
<p>When an economy is in recession, <a href="https://www.forbes.com/advisor/investing/what-is-a-recession/">it simply means</a> economic growth is falling.</p>
<p>You may have <a href="https://www.nytimes.com/2020/09/02/business/australia-recession.html">read in a news story</a> that a recession means <a href="https://www.investopedia.com/terms/r/recession.asp">two quarters of consecutive declines</a> in <a href="https://theconversation.com/the-us-economy-produced-about-21-7-trillion-in-goods-and-services-in-2019-but-what-does-gdp-really-mean-130685">gross domestic product</a>, which is the market value of all goods and services produced within a country’s borders.</p>
<p>This is basically shorthand used by journalists because the formal way of determining when a recession ends can take a long time – in this case over a year.</p>
<h2>America’s economic scorekeeper</h2>
<p>In the U.S., the dates of when recessions begin and end are determined by a nonpartisan organization called the <a href="https://www.nber.org/">National Bureau of Economic Research</a>. Or more specifically, a <a href="https://www.nber.org/research/business-cycle-dating/business-cycle-dating-committee-members">group of eight prominent economics professors</a> makes the call.</p>
<p>The group, however, does not use two quarters of falling GDP as their guide.</p>
<p>Instead, the <a href="https://www.nber.org/research/business-cycle-dating">National Bureau of Economic Research uses changes in GDP plus many other factors</a> like employment, personal income, industrial production and even retail sales. The group relies on its members’ expert judgment rather than fixed rules. </p>
<p>The National Bureau of Economic Research <a href="https://www.cnbc.com/2020/06/08/the-us-entered-a-recession-in-february-according-to-the-official-economic-arbiter.html">didn’t officially declare</a> a recession had begun until June 2020, three months after its actual start in February. Technically, it declared the peak of an expansion lasting 128 months, the longest ever.</p>
<p>And now we know that the recession ended in April. One reason the economists wait so long to declare the start or end of a recession is because <a href="https://www.nber.org/business-cycle-dating-procedure-frequently-asked-questions">they don’t want there to be any doubt</a>.</p>
<p>Though it was the shortest recession on record, it was also the <a href="https://fred.stlouisfed.org/series/A191RL1Q225SBEA">deepest since the U.S. began recording quarterly data</a> in 1947. The trillions in dollars of spending by the <a href="https://www.forbes.com/sites/leonlabrecque/2020/03/29/the-cares-act-has-passed-here-are-the-highlights/?sh=232c5ebf68cd">federal government</a> and <a href="https://fred.stlouisfed.org/series/WALCL">Federal Reserve</a> in March and April 2020 likely contributed significantly to the swift return to expansion.</p>
<h2>Most recessions last a while</h2>
<p>A two-month recession is incredibly brief. </p>
<p>The <a href="https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions">previous shortest recession</a>, which began in January 1980, was six months long.</p>
<p>Economists have tracked the length of U.S. recessions since 1854, shortly before <a href="https://www.history.com/topics/american-civil-war/american-civil-war-history">the U.S. Civil War began</a>. Since then, the <a href="https://www.nber.org/sites/default/files/2021-07/bcdc_07192021_0%20%281%29%20%283%29.xlsx">average recession has lasted 17</a> months, even when including the most recent one in 2020.</p>
<p>Recessions have gotten steadily shorter. Since the end of World War II, they’ve lasted an average of just 10 months, in part because governments have become more active and have had more tools to fight their effects. This activism started in 1946 with the “<a href="https://www.federalreservehistory.org/essays/employment-act-of-1946">Employment Act</a>” whose goal was to “promote maximum employment, production, and purchasing power.”</p>
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<h2>Avoining a double-dip</h2>
<p>Could there be a “double-dip” recession? </p>
<p>This happens when an economy returns to recession before fully recovering from the previous one. The U.S. experienced this in July 1981, a little more than a year after the six-month recession in 1980 ended.</p>
<p>While some observers were concerned about a double-dip recession late last year, the U.S. government <a href="https://www.bbc.com/news/business-56019033">has showered the economy</a> with about US$3 trillion more in <a href="https://www.cnn.com/2020/12/27/politics/trump-relief-bill-christmas-eve/index.html">additional aid</a> since then, which has led economists to worry <a href="https://www.politico.com/news/2021/07/13/larry-summers-biden-inflation-499502">more about spurring too much growth than too little</a>. Too much growth can be a bad thing, because it can lead to high inflation, which may force the Fed to raise interest rates. That can result in a recession.</p>
<p>There’s nothing you or I can do to stop another recession if it’s in the cards, but <a href="https://mint.intuit.com/blog/planning/how-to-prepare-for-a-recession/">there are actions we can take</a> to prepare during times of growth. Try to set aside extra money in your savings. Pay down credit card debt and other loans.</p>
<p>Doing these things during times of relative plenty will prepare you for when times aren’t so abundant.</p><img src="https://counter.theconversation.com/content/164816/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jay L. Zagorsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>An economist explains what a recession is, who decides and why it took so long to learn that the COVID-19 downturn was officially over.Jay L. Zagorsky, Senior Lecturer, Questrom School of Business, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/429212015-07-22T10:25:25Z2015-07-22T10:25:25ZRuns versus lemons: why US bank stress tests succeeded while Europe’s failed<figure><img src="https://images.theconversation.com/files/89241/original/image-20150721-24266-4u4d77.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In bank stress tests, what's worse: runs or lemons (the other kind)? </span> <span class="attribution"><span class="source">Lemons via www.shutterstock.com</span></span></figcaption></figure><p>At the height of the financial crisis, in February 2009, US authorities <a href="http://www.federalreserve.gov/newsevents/press/bcreg/20090225a.htm">announced</a> an innovative policy designed to restore confidence in the financial system: the Supervisory Capital Assessment Program, better known as the stress test. </p>
<p>Taking their supervisory duties an unprecedented step further, regulators would <a href="http://www.federalreserve.gov/newsevents/press/bcreg/20090507a.htm">reveal to the public</a> detailed bank-by-bank results of a thorough inspection of balance sheets – outing weak banks as such and endorsing the strength of sound ones. </p>
<p>With this information, it was hoped, investors would regain their willingness to invest in US financial institutions. And so it proved. </p>
<p><a href="http://www.ft.com/intl/cms/s/2/3d655d68-e978-11e3-99ed-00144feabdc0.html">Reflecting</a> on the effectiveness of stress tests, Tim Geithner (former US Treasury secretary and a key architect of the policy) <a href="http://www.ft.com/intl/cms/s/2/3d655d68-e978-11e3-99ed-00144feabdc0.html">called</a> this approach to disclosure and transparency “remarkably effective.”</p>
<p>Perhaps in recognition of this effectiveness, the Dodd-Frank Act – the most comprehensive overhaul of US banking legislation since the Great Depression, enacted five years ago this week – mandates a range of annual, publicly disclosed tests covering the majority of the US banking system. </p>
<p>At about the same time US lawmakers started work on Dodd-Frank in 2009, European authorities were conducting their own stress tests, but the design and effectiveness of these tests stood in stark contrast to the US. Most importantly, individual bank results were not disclosed. The tests were widely <a href="http://www.imf.org/external/pubs/cat/longres.aspx?sk=40874.0">disbelieved</a> and delivered few or none of the benefits of the US stress tests. </p>
<p>How can we explain European authorities’ failure to use stress tests effectively? And what are the broader lessons for government policy during a financial crisis?</p>
<p>These are the questions we ask in our <a href="https://865fefa9e39f90bb02f2a3dcc9daa1a4742686b8.googledrive.com/host/0B1NQuewqheqtWGhucEFId3gwYms/pdf/runs_vs_lemons.pdf">paper</a> “Runs versus Lemons: Information Disclosure and Fiscal Capacity.” We think the answers are found in understanding the link between a government’s willingness to publicly disclose information about banks and its capacity to raise tax revenue to pay for its expenditures (its fiscal capacity). </p>
<h2>Information disclosure</h2>
<p>Economic theory provides powerful arguments in favor of information disclosure. The financial system is a vast and complex web of contracts ultimately linking those in need of financing with savers. </p>
<p>Economists have come to understand that, in situations when one of the parties to such a contract has better information than the other, markets can break down due to what we call adverse selection. </p>
<p>Our research builds on the seminal work of economist George Akerlof. The “lemons” in our title is a reference to his celebrated <a href="http://qje.oxfordjournals.org/content/84/3/488.short?rss=1&ssource=mfc">article</a> on adverse selection, in which he uses the market for used cars (a “lemon” is a defective car) as an example of how markets can function inefficiently when sellers are better informed about the quality of their goods than buyers.</p>
<p>Imagine that there are strong and weak banks looking for financing. If an investor was able to tell them apart, she would demand a lower return to finance a strong bank because it is likelier to pay her back. </p>
<p>What if only the bankers know whether their bank is strong or weak, and the investor has no way of finding out? In this case, she would demand a return that guarantees a profit irrespective of the strength of the bank to which she lends. If this return is too high for strong banks to find it worthwhile to borrow, these banks will choose not to seek funding – the safest banks will self-select out of the market (hence adverse selection). </p>
<p>Recognizing that only weak banks are left in the market, investors will demand even higher returns, resulting in only weak banks being funded if any are funded at all. As a consequence, banks grant fewer loans and do so at high interest rates. If the government steps in to reveal which banks are strong and which ones are weak, order is restored: strong banks can borrow at low and weak ones at higher returns. </p>
<h2>Disclosure’s drawbacks</h2>
<p>Unfortunately, there are also drawbacks to disclosing information, which stem from the way banks raise funds to make loans. </p>
<p>Banks accept deposits that can usually be withdrawn at a moment’s notice and use the proceeds to provide loans that are usually given for a fixed period of time and cannot be called back. (For illustration, we refer to “banks” and “deposits,” but the arguments apply equally to any financial institution, such as a money market fund or an investment bank, that funds longer-term assets with shorter-term liabilities.)</p>
<p>Banks therefore transform very short maturity deposits into longer maturity loans, which leaves them vulnerable to bank runs (as in our title). A run happens when many depositors demand their money back at the same time. If a bank is unable to call back loans quickly enough to meet these demands, it will eventually be unable to repay depositors and be forced into bankruptcy.</p>
<p>Imagine again that there are strong and weak banks, and to begin with, depositors are unable to tell them apart. What if all depositors in a bank suddenly learn that their bank is weak? They will run to withdraw their money, causing the bank to fail. </p>
<p>As we learned at great cost during the financial crisis, bank failures can be very expensive and have far-reaching consequences. Governments are therefore reluctant to risk causing them by announcing that some banks are frail.</p>
<h2>Lemons or bank runs</h2>
<p>It would appear that any government deciding on how much information to produce and disclose has to choose between adverse selection and runs. </p>
<p>However, governments can (and very much do) use their ability to spend today and tax tomorrow to prevent bank runs. If a stress test reveals banks to be weak, the government can promise to repay those banks’ deposits in full. As long as the government can afford to keep its promises, this deposit insurance convinces depositors in weak banks not to withdraw their money, saving the banks from bankruptcy. </p>
<p>And again, the same argument applies to other types of insurance. For example, during the crisis, the US Department of the Treasury <a href="http://www.treasury.gov/press-center/press-releases/Pages/hp1161.aspx">announced</a> guarantees for investors in money market funds.</p>
<p>In our work, we show that governments with deeper pockets are able to offer more comprehensive deposit insurance programs and are therefore more willing to undertake and disclose informative stress tests. In contrast, fiscally constrained governments cannot afford to guarantee as many deposits and will therefore not risk disclosing detailed information that could cause bank runs. </p>
<p>This is our explanation for the contrasting experiences of US and European authorities. </p>
<p>At the time of the crisis, there was no mechanism in place that would pass part of the bill for guaranteeing the deposits of a Spanish bank to a German taxpayer – the European Union lacked a <a href="https://www.ecb.europa.eu/press/key/date/2013/html/sp130405.en.html">common resolution mechanism</a> for banks. </p>
<p>In the US, on the other hand, the federal government can use taxes raised in New York to pay for spending in California. Supported by this much larger fiscal backstop, US authorities could afford to be much more transparent about the state of the banking system.</p><img src="https://counter.theconversation.com/content/42921/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thomas Philippon is affiliated with the Centre for Economic Policy Research and the National Bureau of Economic Research.</span></em></p><p class="fine-print"><em><span>Joseba Martinez and Miguel Faria-e-Castro do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>US regulators chose to reveal detailed information to the public about the state of the banks. They were able to be so transparent, without triggering a run, because of a strong fiscal backstop.Miguel Faria-e-Castro, PhD Student in Economics, New York UniversityJoseba Martinez, PhD Student in Economics, New York UniversityThomas Philippon, Professor of Finance , New York UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/429872015-06-30T10:18:24Z2015-06-30T10:18:24ZDo greener cars lead consumers to hit the road more often?<figure><img src="https://images.theconversation.com/files/86394/original/image-20150625-13008-r8cv6r.jpg?ixlib=rb-1.1.0&rect=205%2C25%2C838%2C760&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">While the higher gas mileage may lead people to drive a green car more often, its other attributes may be less appealing. </span> <span class="attribution"><span class="source">Green car via www.shutterstock.com</span></span></figcaption></figure><p>Energy policy today has garnered an arguably unprecedented level of global attention, with headlines appearing daily. </p>
<p>Domestically, it’s no secret that the Obama Administration views environmental policy as a top priority. Speaking in 2009, the president <a href="http://www.nytimes.com/2009/05/19/us/politics/19obama.text.html?pagewanted=all">said</a>: “Ending our dependence on oil, indeed, ending our dependence on fossil fuels, represents perhaps the most difficult challenge we have ever faced.”</p>
<p>Much of President Obama’s policy focuses on energy production, such as subsidies and regulation to expand renewable energy technologies like wind and solar power. But targeting energy consumption is equally if not more <a href="https://www.energy-community.org/portal/page/portal/ENC_HOME/DOCS/3470163/IEA_EnergyEfficiencyIndicators_EssentialsforPolicyMaking.pdf">important</a> in meeting goals for greenhouse gas emissions. </p>
<p>And just recently, the White House <a href="http://www.nytimes.com/2015/06/20/business/energy-environment/epa-rules-carbon-pollution-heavy-trucks.html?hp&action=click&pgtype=Homepage&module=second-column-region&region=top-news&WT.nav=top-news">unveiled</a> another plan to do just that. The new rules for heavy-duty trucks that haul goods from steel to oil across the country require them to increase their fuel efficiency by one-third in a bid to reduce overall energy consumption. </p>
<p>One concern is that by making vehicles (and other durable goods) more energy-efficient, they become cheaper to use, leading consumers to increase their usage. Thus the hoped-for benefits of higher fuel efficiency begin to evaporate. </p>
<p>We tested this notion using the 2009 Cash for Clunkers program, in which the government used subsidies to encourage consumers to trade in their old vehicles for new, more fuel-efficient ones. </p>
<h2>Energy efficiency versus price</h2>
<p>Policies that aim to reduce energy consumption typically operate either by increasing the price of using energy (for example, by placing a tax on gasoline) or by improving the efficiency of energy-using goods (by implementing fuel economy standards). For the transportation sector – which <a href="http://www.epa.gov/climatechange/ghgemissions/sources/transportation.html">accounts</a> for 27% of US greenhouse gas emissions – policymakers have overwhelmingly opted for the latter option. The federal gasoline tax rate has not changed since 1993, and historically there has been <a href="http://web.mit.edu/knittel/www/papers/embargo_pp_latest.pdf">little political appetite</a> for raising gasoline taxes. </p>
<p>In contrast, while corporate average fuel economy (CAFE) standards also remained largely unchanged over the prior 30 years, since 2010 they have been <a href="http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/CAFE-GHG_MY_2012-2016_Final_Rule_FR.pdf">increased</a> substantially. By 2025, fuel economy for new passenger cars <a href="http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/CAFE_2017-25_Fact_Sheet.pdf">is projected to exceed</a> 55 miles per gallon (MPG), compared with 35 MPG last year.</p>
<p>The chart below shows historical and future levels for federal gasoline <a href="http://taxfoundation.org/article/federal-gasoline-excise-tax-rate-1932-2008">taxes</a> and CAFE <a href="http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/2011_Summary_Report.pdf">standards</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/85474/original/image-20150618-23217-18c1wyn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/85474/original/image-20150618-23217-18c1wyn.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=436&fit=crop&dpr=1 600w, https://images.theconversation.com/files/85474/original/image-20150618-23217-18c1wyn.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=436&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/85474/original/image-20150618-23217-18c1wyn.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=436&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/85474/original/image-20150618-23217-18c1wyn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=548&fit=crop&dpr=1 754w, https://images.theconversation.com/files/85474/original/image-20150618-23217-18c1wyn.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=548&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/85474/original/image-20150618-23217-18c1wyn.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=548&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Changes in the US federal gasoline tax and fuel economy standards.</span>
<span class="attribution"><span class="source">Sources: NHTSA, TaxFoundation.org and authors' calculations</span></span>
</figcaption>
</figure>
<h2>The ‘rebound effect’ (and why should you care)</h2>
<p>A major component of US energy policy in recent years has been improving the energy efficiency of durable goods, such as <a href="http://energy.gov/eere/buildings/appliance-and-equipment-standards-program">appliances</a>, <a href="https://www.energycodes.gov/regulations">buildings</a> and <a href="http://www.epa.gov/fueleconomy/regulations.htm">motor vehicles</a>. </p>
<p>Opponents of these policies are quick to <a href="http://www.nytimes.com/roomfordebate/2012/03/19/the-siren-song-of-energy-efficiency/efficiencys-promise-is-too-good-to-be-true">warn</a> of the so-called “rebound effect,” <a href="http://www.theguardian.com/environment/blog/2011/feb/22/rebound-effect-climate-change">lamenting</a> that energy savings from these policies are unlikely to be as large as intended. </p>
<p>Conceptually, the rebound effect suggests that a policy designed to make goods more energy-efficient also lowers the cost of using the good (US$30 worth of gasoline will get you much farther in a Dodge Dart than in a Dodge Durango). As a result, consumers increase their usage of these energy-efficient cars and appliances, “taking back” some of the fuel savings and undermining the policy.</p>
<p>To illustrate this concern, the following chart shows the fuel cost per mile (in inflation-adjusted 2014 dollars) for driving a car with the CAFE-level fuel economy in each year. Assuming gasoline <a>prices</a> don’t change in the next ten years, fuel costs for driving the average new car in 2025 would be about half of what they were for the average new vehicle in 2014, due mainly to the much higher fuel economy. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/85475/original/image-20150618-23252-1adysig.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/85475/original/image-20150618-23252-1adysig.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=436&fit=crop&dpr=1 600w, https://images.theconversation.com/files/85475/original/image-20150618-23252-1adysig.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=436&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/85475/original/image-20150618-23252-1adysig.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=436&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/85475/original/image-20150618-23252-1adysig.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=548&fit=crop&dpr=1 754w, https://images.theconversation.com/files/85475/original/image-20150618-23252-1adysig.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=548&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/85475/original/image-20150618-23252-1adysig.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=548&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Fuel cost of driving the average new vehicle.</span>
<span class="attribution"><span class="source">Sources: NHTSA, EIA and authors' calculations</span></span>
</figcaption>
</figure>
<p>The implication of the rebound effect is that this reduced cost of driving will result in more miles traveled, so that the 37% increase in fuel economy over these 11 years will not result in a full 37% decrease in gasoline consumption. </p>
<p>Clearly, a larger rebound effect is unfavorable for the policy, but increased driving comes with other downsides – what economists call “externalities” – as well, such as more vehicle accidents and road congestion.</p>
<h2>Cash for Clunkers tests the theory</h2>
<p>In a recent <a href="http://econweb.tamu.edu/puller/AcadDocs/WHMP_Rebound_latest.pdf">paper</a>, “Vehicle Miles (Not) Traveled: Why Fuel Economy Requirements Don’t Increase Household Driving,” we study the rebound effect for vehicle fuel economy. </p>
<p>We show that when people buy more fuel-efficient cars, they get more than just vehicles with a lower price-per-mile of driving. The most frequently purchased fuel-efficient cars are also smaller and lighter, and boast less horsepower – not the type of features most consumers prefer. Some of this is likely driven by <a href="http://web.mit.edu/knittel/www/papers/steroids_latest.pdf">technological tradeoffs</a> of sacrificing size and power in order to make cars more fuel efficient.</p>
<p>But regardless of the cause, these features translate into a less comfortable ride, lower driving performance and <a href="http://restud.oxfordjournals.org/content/81/2/535.full.pdf?keytype=ref&ijkey=2TmkIv7e24pFVFv">higher fatality risk</a> in the event of an accident. These features reduce the desire to drive more miles. </p>
<p>Thus the effect of more fuel-efficient cars on total driving can go either way. Reducing the price-per-mile of driving encourages people to drive more. But owning a car that is less comfortable, enjoyable and safe discourages driving.</p>
<p>So what is the net effect? </p>
<p>We studied this question empirically by using the 2009 Cash for Clunkers program as a “natural experiment.” Cash for Clunkers offered households subsidies to citizens to scrap old “clunkers” and purchase more fuel-efficient, new cars. We exploited the program’s eligibility cutoff – only “clunkers” that got 18 miles per gallon or less were eligible – to compare the purchasing decisions and subsequent driving of barely eligible versus barely ineligible households.</p>
<p>We used a large database of Texas households’ vehicle fleets and the number of miles those households drive annually. We found that program eligibility induced consumers to purchase vehicles that have higher fuel economy. But as we expected, the new cars were “worse” in other characteristics; that is, they were smaller and lighter than their previous vehicles, with lower horsepower and engine displacement. Empirically more fuel economy translated into “downsizing.”</p>
<p>And what is the impact on driving? We found that in the year after purchasing the new cars, households that picked more fuel-efficient and “downsized” cars did not drive more miles. There was no rebound effect.</p>
<h2>Implications for policy</h2>
<p>Our findings suggest that policies that focus on reducing energy consumption by increasing energy efficiency can succeed without a significant rebound effect. </p>
<p>When the National Highway Traffic Safety Administration <a href="http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/FRIA_2017-2025.pdf">designed</a> the current set of CAFE standards, it assumed there would be a rebound effect of 10%. Our findings suggest that, at least in the short run, energy efficiency policies such as CAFE can reduce gasoline consumption without being undermined by a significant rebound effect.</p><img src="https://counter.theconversation.com/content/42987/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeremy West receives funding from the Center for Energy and Environmental Policy Research at the Massachusetts Institute of Technology. This work was also supported by the National Science Foundation EV-STS research center.</span></em></p><p class="fine-print"><em><span>Jonathan Meer has received funding from the National Science Foundation and the W.E. UpJohn Institute for Employment Research.</span></em></p><p class="fine-print"><em><span>Steven L Puller receives funding from the National Science Foundation EV-STS research center and the National Science Foundation PSERC research center.</span></em></p><p class="fine-print"><em><span>Mark Hoekstra does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Some worry that efforts to reduce energy consumption by increasing fuel efficiency cause a so-called rebound effect that eats into the expected savings. We tested the theory.Jeremy West, Postdoctoral Associate in Economics, Massachusetts Institute of Technology (MIT)Jonathan Meer, Associate Professor of Economics, Texas A&M UniversityMark Hoekstra, Associate Professor of Economics, Texas A&M UniversitySteven L Puller, Associate Professor of Economics, Texas A&M UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/405292015-06-04T14:27:49Z2015-06-04T14:27:49ZConsumers love rankings, but they may end up doing more harm than good<p>This week, El Celler de Can Roca in Girona, Spain, became the world’s finest eatery – at least according to the <a href="http://www.theworlds50best.com/list/1-50-winners">2015 World’s 50 Best Restaurant</a> awards – thanks to the “curiosity and creativity” of the three brothers who own it. </p>
<p>Earning such a prestigious award is a sure way to guarantee El Celler and others on the list have packed dining rooms for many years, bestowing on them success and profits. When Noma became the “world’s best” for the first time in 2010, the designation “is <a href="http://www.cnn.com/2015/06/01/travel/worlds-50-best-restaurant-awards-2015/">credited</a> with catapulting the restaurant to international stardom, resulting in enough booking requests to fill its tables for years to come.”</p>
<p>Such rankings abound in today’s society, whether organized by a group like the World’s 50 Best or based on the preferences of consumers on Trip Advisor. Typically they’re considered useful and beneficial, providing incentives for restaurants and other businesses to improve their services and products while giving the rest of us more information to make decisions. </p>
<p>But can they do harm as well and actually make us all worse off than before? New <a href="http://www.nber.org/papers/w21083">research</a> we’ve conducted shows the answer may, surprisingly, be yes. In some cases, we might be better off without them. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/83856/original/image-20150603-2966-8g5ip6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/83856/original/image-20150603-2966-8g5ip6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=314&fit=crop&dpr=1 600w, https://images.theconversation.com/files/83856/original/image-20150603-2966-8g5ip6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=314&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/83856/original/image-20150603-2966-8g5ip6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=314&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/83856/original/image-20150603-2966-8g5ip6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=395&fit=crop&dpr=1 754w, https://images.theconversation.com/files/83856/original/image-20150603-2966-8g5ip6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=395&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/83856/original/image-20150603-2966-8g5ip6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=395&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Do rankings have a dark side?</span>
<span class="attribution"><span class="source">Trophies via www.shutterstock.com</span></span>
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<h2>Rankings, their critics and sour grapes</h2>
<p>Such rankings have long been the target of criticism, especially from those being ranked and when the designation is particularly influential, as is the case with the World’s 50 Best Restaurants. </p>
<p>An “Occupy50best” petition has been circulating recently, signed by more than 400 chefs, restaurateurs and others who have attacked the methodology underlying the World’s Best rankings. They <a href="http://occupy50best.com">claim</a> there are no established criteria and no consistent and objective gastronomical requirements, while jury members are “appointed by backroom politics, vote anonymously, without ever having to justify their choice of a restaurant or even to prove that they actually ate there!”</p>
<p>Such criticism of the methodology underlying rankings is probably as widespread as rankings themselves. One need to look no further than the never-ending <a href="http://www.washingtonpost.com/blogs/answer-sheet/wp/2013/09/10/why-u-s-news-college-rankings-shouldnt-matter-to-anyone/">debate</a> about rankings of education programs and <a href="http://www.cbsnews.com/news/why-us-news-college-rankings-hurt-students/">universities</a>.</p>
<p>The key question is usually about quality and whether the ranking accurately reflects it. And criticism may be just sour grapes among the unranked (or low-listed).</p>
<p>But even if the ranking method is good and correctly reflects quality, a more basic question ought to be asked: is it good for consumers? To put it another way: is better information (as provided by a correct ranking) good for consumers’ welfare? </p>
<h2>The interplay among consumer decisions</h2>
<p>If rankings were used only in situations where an individual decision affects only the decision-maker, more information would indeed always be better and never harm consumers. </p>
<p>However, in many markets where rankings play a role, consumers’ choices do not exist in a vacuum as purely individual decision problems; they affect others’ welfare and their decisions in often complex ways. </p>
<p>Consider restaurants. For many customers, the value of a dinner is influenced by the identity of the other patrons of the restaurant. Or education programs. Students learn from their peers, and the network generated at a school is crucial for future professional success. </p>
<p>In other words, these markets are characterized by “consumption externalities” – when consuming a product or service has a positive or negative affect on others. </p>
<p>Furthermore, in some markets, prices are rigid, leading to rationing so that not everyone who wants a product or service gets it. For instance, in many good restaurants, one has to book a table well in advance. </p>
<p>Last but not least, in markets with fully flexible prices and without externalities, firms’ price-setting behavior is influenced by demand, and hence again agents’ choices can’t be described as individual decision problems.</p>
<h2>Foodies and normal consumers</h2>
<p>In our recent research, we investigated the welfare effects of rankings in such markets where consumers’ choices are interdependent. We show that in such cases rankings may be harmful for consumers.</p>
<p>How could this be? To understand, let’s focus on markets with rationing (which fits quite well the case of restaurants, especially if one acknowledges that prices are the same every day of the week, but demand is much higher on the weekend). </p>
<p>Now, consider a hypothetical market with two restaurants and no rankings. One of the restaurants, let’s call it A, is more expensive and of higher (expected) quality, while the other, B, is less expensive and of lower (expected) quality. Because there is no ranking, there is uncertainty about which restaurant is indeed of higher quality. There are also two types of consumers: the foodies who value quality highly and the normal consumers who don’t.</p>
<p>Without the ranking, the expected quality difference between restaurants A and B is not sufficient for normal consumers to be willing to pay the extra cost of restaurant A. They therefore book a table at restaurant B. The foodies, on the other hand – because they are all about quality – are willing to pay the extra cost, and so they all book a table at restaurant A. </p>
<p>What happens when a (correct) ranking is published? That depends. Does it confirm that restaurant A is better? Or does it surprise consumers by ranking B higher?</p>
<h2>Rankings and welfare</h2>
<p>Let’s start with the case in which restaurant A ranks first. </p>
<p>Consumers now know with certainty that restaurant A is better than restaurant B. While this information doesn’t change what foodies would do (they are even more eager to check out the higher-priced joint), it does affect the choice of normal consumers. Indeed, being certain about the quality difference, normal consumers are willing to pay for the extra cost: they thus all call restaurant A to book a table.</p>
<p>The issue is that restaurant A is too small to accommodate both foodies and normal consumers. Therefore, it has to decline some consumers. The foodies that cannot get a table at restaurant A are made worse off by the publication of the ranking, whereas the normal consumers who do get a table are made better off.</p>
<p>Now, let’s consider the case in which the ranking outcome is a surprise: it reveals that restaurant B is better. In that case, the ranking affects the behavior of foodies who all want a table at restaurant B. The same capacity constraint problem arises and only some foodies are made better off by the publication of the ranking (whereas the normal consumers who cannot get a table anymore are made worse off).</p>
<h2>Consumers lose in the end</h2>
<p>What we show is that, once we take into account the probability of whether the ranking will confirm what we know or surprise us, and the rationing procedure used by restaurant (usually first-come first-serve), the welfare effect of the ranking might be negative for all consumers. A similar negative welfare effect is present in case of consumption externalities.</p>
<p>With flexible prices, neither rationing nor externalities are needed to reach the same conclusion. The reason is that the “winner” faces higher demand and can thus lift prices. If the level of demand depends a lot on quality (and hence on the ranking outcome), this rise in prices can be so large that every consumer loses in the end. </p>
<p>Far from suggesting that rankings are always harmful, our results propose a cautionary tale: contrary to the mantra, more information is not always better.</p>
<p>The question that remains is: when are rankings likely to be harmful? One of the conditions we identify is that consumers care sufficiently about quality. Ironically, it is when the information provided by the ranking is very important for consumers that it is most probable that it will hurt them.</p><img src="https://counter.theconversation.com/content/40529/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Laurent Bouton is a member of the American Economic Association, the Econometric Society, and the European Economic Association.
He has been selected to receive an European Reseach Council Starting Grant for his project "Political Economy with Many Parties".
</span></em></p><p class="fine-print"><em><span>Georg Kirchsteiger is also affiliated with Centre for Economic Policy Research, the Center for Economic Studies and Ifo Institute, and the Vienna Center for Experimental Economics.</span></em></p>Even when a hotel or restaurant ranking accurately reflects quality, consumers may be better off not knowing.Laurent Bouton, Assistant Professor of Economics, Georgetown UniversityGeorg Kirchsteiger, Professor of Microeconomics, Université Libre de Bruxelles (ULB)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/392812015-04-23T09:58:09Z2015-04-23T09:58:09ZWhy do poor children perform more poorly than rich ones?<figure><img src="https://images.theconversation.com/files/77024/original/image-20150403-9332-kvo5kj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Investments like reading to a child can make a big difference to how she performs later in life. </span> <span class="attribution"><span class="source">Reading a book from www.shutterstock.com</span></span></figcaption></figure><p><a href="http://www.jstor.org/stable/10.1086/262080">Research</a> has shown that children of poorer parents display substantially worse math and reading skills by the time they start grade school. Other <a href="http://onlinelibrary.wiley.com/doi/10.1111/1468-0297.00075/abstract">studies</a> have revealed that these wide gaps in pre-school skills persist into adulthood and help <a href="http://jenni.uchicago.edu/papers/Cunha_Heckman_etal_2006_HEE_v1_ch12.pdf">explain</a> low educational attainment and lifetime earnings. </p>
<p>Put together, these findings paint a bleak picture of how the fates of generations of poor children are largely sealed before they even set foot in a classroom, suggesting the current K-12 school system is ineffective as a springboard for opportunity. </p>
<p>So if we want a society that is meritocratic, we need to answer a fundamental and vexing question: why do less well-off children perform so poorly? Once we get a better sense of the answer, we can begin to understand how to improve mobility from generation to generation and craft appropriate economic and social policies to close the yawning income-related gap in ability. </p>
<h2>A rich investment</h2>
<p>These income-based achievement gaps are at least partially caused by substantial differences in how much rich and poor parents invest in their children. For example, parents of very young children among the top 25% of earners are more than twice as likely to have at least ten books in the home than those from the bottom quartile. Wealthier mothers are also more than 50% more likely to read to their child three or more times a week. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=376&fit=crop&dpr=1 600w, https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=376&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=376&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=473&fit=crop&dpr=1 754w, https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=473&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/78805/original/image-20150421-9012-baxrck.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=473&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><span class="source">TKTK</span>, <span class="license">Author provided</span></span>
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<p>In addition, children aged 6 to 7 from richer families are more than twice as likely to be enrolled in special lessons or extracurricular activities compared with their lower-income counterparts.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=479&fit=crop&dpr=1 600w, https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=479&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=479&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=603&fit=crop&dpr=1 754w, https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=603&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/78807/original/image-20150421-9012-1hl4gp5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=603&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><span class="source">tktktk</span>, <span class="license">Author provided</span></span>
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<p>That leads us to the next question: why do rich and poor parents invest so differently in their children? </p>
<h2>Career investment</h2>
<p>One important reason parents invest so much time and money in their children’s development is to improve their career prospects when they grow up. </p>
<p><a href="http://www.jstor.org/stable/2534952?seq=1#page_scan_tab_contents">Economic theory</a> tells us that if this were the only reason families invested in their children (and all parents had sufficient access to borrowing), then all families would invest time and money up to the point where the labor market returns to the last dollar of investment equals what the family could earn from putting that same dollar in the bank. </p>
<p>Put simply, they’d invest in their kids until stashing cash in a savings account offered the same return. </p>
<p>This does not necessarily mean that all families should invest the same amount in their children, as not all children earn the same labor market return from the same investment. Indeed, children with higher ability have higher marginal returns at every level of investment. So, it takes more investment in them before the return on this additional investment equals the gains from savings.</p>
<p>This suggests one potential reason children from higher-income families receive greater investments and perform better academically: the natural ability of children and parents may be positively correlated. Higher-ability parents will tend to earn more and have more able children leading to a positive correlation between parental income and child investments and achievement. </p>
<p>The fact that these investment and achievement gaps shrink considerably when accounting for differences in maternal ability and education suggests that this is likely an important part of the story. However, the fact that significant gaps remain even after accounting for these characteristics suggests that other factors are also likely to be important.</p>
<h2>The joy of reading to a child</h2>
<p>First, parents may care about more than their children’s future careers. Parents may simply take pleasure in reading stories to their children or watching them learn to play a new musical instrument. They might enjoy bragging to their friends about their children’s success in school. In other words, if investments in children provide a direct benefit above and beyond the future labor market returns, parents will choose to invest more as their income rises – just as they tend to purchase more of other goods or services as their earnings increase. </p>
<p>Another explanation for the difference is that low-income parents may be poorly informed about the value of investment activities. They may face uncertainty about (or under-estimate) the value of investing in their children. </p>
<p>A third possibility is that poor parents may be unable to finance desired investments if they cannot borrow fully against their own future income or against the potentially high returns earned by their children.</p>
<p>While all of these possibilities might explain why richer parents invest more in their children than their poorer peers, it is important to understand which ones actually do, because they have very different policy implications. </p>
<p>If parents are investing in their children up until the return is the same as saving elsewhere, then there is no way to shift spending to increase future income, and the investment level is efficient. On the other hand, if they are investing too little in their children, so that the labor market returns are higher than saving elsewhere, the investment level is inefficient. In this case, policies that shift spending to education investment for these children increase future income. </p>
<p>If investment gaps result only from a strong correlation between the abilities of parents and children and/or the pure pleasure gained from activities like reading to a child, policies designed to reduce the income-related gap may be equitable but inefficient (that is, they may reduce overall US output). </p>
<p>By contrast, if low-income families are poorly informed or constrained in their capacity to borrow, then they may make inefficiently low investments in their children. In this case, well-designed policies can improve both equity and efficiency. </p>
<h2>Finding the right policy response</h2>
<p>In order to help sort this out, University of Western Ontario colleagues Lance Lochner, Youngmin Park and I <a href="http://economics.uwo.ca/cibc/workingpapers_docs/wp2015/Caucutt_Lochner_Park03.pdf">examined</a> the extent to which these explanations are consistent with other important empirical findings in the child development literature. We started with four facts: </p>
<ul>
<li><p>fact 1: the return to additional investment for poor children is high relative to the return on savings</p></li>
<li><p>fact 2: the return to additional investment is lower for higher-income children</p></li>
<li><p>fact 3: unexpected increases in family income lead to greater investments in children and improved childhood achievement</p></li>
<li><p>fact 4: income received when a child is young has a greater impact on achievement and educational attainment than income received when the child is older.</p></li>
</ul>
<p>Our research showed that to explain the high returns to additional investment among the poor (fact 1), information or credit market failures are needed. Absent these market frictions, families will invest until the returns are driven down to or below the returns on savings. </p>
<p>The timing of income is only important (fact 4) if some parents are constrained in their borrowing. Otherwise, families can always use borrowing and saving to spend money when they want regardless of when it is received. </p>
<p>If parents with young children are poorly informed about the value of investments and/or face limited borrowing opportunities, then policies designed to alleviate these market failures can improve efficiency while also improving the economic outcomes for those who are most disadvantaged. </p>
<h2>What might these policies look like?</h2>
<p>Governments can step in to directly provide credit for early child investments like they do for college students. One recent example is New York City’s pilot program, <a href="http://council.nyc.gov/html/pr/080513childcare.shtml">Middle Class Child Care Loan Initiative</a>, which provides low interest loans to middle-income families with small children to help pay for quality childcare programs. Means-tested subsidies for preschool can also help address borrowing problems. </p>
<p>Programs that help inform low-income parents about the value of talking and reading to their young children or the benefits of attending a quality preschool are steps towards confronting information problems.</p>
<p>By ensuring poorer families have access to financial resources and information about how important it is to make even modest and inexpensive investments in their children like a bedtime story, we can go a long way to shrinking this investment gap.</p><img src="https://counter.theconversation.com/content/39281/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elizabeth Caucutt receives funding from CIGI-INET.</span></em></p>Investment gaps may be key to understanding why poorer children perform so much worse throughout life.Elizabeth Caucutt, Associate Professor of Economics, Western UniversityLicensed as Creative Commons – attribution, no derivatives.