Readings

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See full citations of required readings below the table.

LEC # TOPICS READINGS
1 Overview of Class and Themes

Application 1: Minimum Wage and Employment – Theory and Evidence
Holland. "Statistics and Causal Inference."

Krugman. "The Accidental Theorist."

Wetzstein. Microeconomic Theory. Chap. 17, pp. 552–559.
2 Continuation of Minimum Wage and Employment – Theory and Evidence

Card and Krueger. "Minimum Wages and Employment: A Case Study of the Fast-food Industry in New Jersey and Pennsylvania."

Freeman. "Comment: Review Symposium on Myth and Measurement: The New Economics of the Minimum Wage."

Recommended Readings

Kennan. "The Elusive Effects of Minimum Wages."

3 Introduction to Consumer Theory Math tools for 14.03 (posted to class web site).

Wetzstein. Microeconomic Theory. Chap. 2.

Binger and Hoffman. Microeconomics with Calculus. 2nd ed. Chap. 1-3. (This is the best introduction to some fundamental mathematical tools for economists that I have seen.)
4 Utility Maximization and Constrained Optimization

Utility Maximization

Expenditure Minimization
Wetzstein. Microeconomic Theory. Chap. 3.
5

Revealed Preference

Taxation and Distortions

Consumer Sovereignty

Applications of Consumer Theory:
Lump-sum vs. In-kind Transfers, Taxes and Rebates, and The Distortionary Effects of Taxation, Price Changes and Consumer Surplus

Waldfogel. "The Deadweight Loss of Christmas."
6 Application of Consumer Theory: The Value of Food Stamps Whitmore. "What Are Food Stamps Worth?"
7 Engel’s Law

Normal, Inferior and Giffen Goods

Marshallian vs. Hicksian Demand

Slutsky Equation

Wetzstein, Chapter 4
Jensen and Miller. "Giffen Behavior: Theory and Evidence."
8 Wrap Up of Consumer Theory
9 Exam 1
10 Applied Competitive Analysis

Wetzstein, Chapter 10

Scherer. "The U.S. Sugar Program."

"Harvesting Poverty: America’s Sugar Daddies." New York Times editorial.

Malkin. "In Mexico, Sugar vs. U.S. Corn Syrup."

American Sugar Alliance. "Trade Talks in Works Could Devastate U.S. Sugar Industry."

American Sugar Alliance. "New Global Study Confirms Americans Pay Less For Sugar."

Driessche. "Sugar is Not Expensive."

11 Continuation of Applied Competitive Analysis Lutz. "Taxation with Representation: The Incidence and Efficiency of Intergovernmental Grants in a Plebiscite Democracy."
12 General Equilibrium in a Pure Exchange Economy

Edgeworth Box

Production Possibility Frontier

Fundamental Welfare Theorems
Wetzstein. Microeconomic Theory. Chap. 11.
13 General Equilibrium Continued

Comparative Advantage vs. Competitiveness

Gains from Trade
Krugman. "Ricardo’s Difficult Idea."

Kristof. "Let Them Sweat."

Recommended Readings

Krugman. "Competitiveness: A Dangerous Obsession."
14 General Equilibrium Wrap-up Frankel and Romer. "Does Trade Cause Growth?"
15 Choice Under Uncertainty: The Expected Utility Framework Wetzstein. Microeconomic Theory. Chap. 18.
16 Choice Under Uncertainty: Application to Teen Motherhood Kane and Staiger. "Teen Motherhood and Abortion Access."
17

Risk and Safety Regulation

Product Liability and Regulation

Risk Perception

Insurance Markets: Why They Exist, How They Work

Tversky and Kahneman. "The Framing of Decisions and the Psychology of Choice."

Cooter. "Economic Theories of Legal Liability."

Priest. "The Modern Expansion of Tort Liability: Its Sources, Its Effects, and Its Reform."
18 Exam 2
19 Risk and Safety Regulation Ashenfelter and Greenstone. "Using Mandated Speed Limits to Measure the Value of a Statistical Life."
20 Economics of Information I Akerlof. "The Market for ‘Lemons:’ Quality Uncertainty and the Market Mechanism."
21 Economics of Information II Rothschild and Stiglitz. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Information."

Altman, Cutler and Zeckhauser. "Adverse Selection and Adverse Retention."
22 Economics of Information III Spence. "Job Market Signaling."
23 Economics of Information IV Tyler, Murnane and Willet. "Estimating the Labor Market Signaling Value of the GED."
24 Externalities: The Problem and Three Solutions Wetzstein. Microeconomic Theory. Chap. 21.

Schmalensee, Joskow, Ellerman, Montero, and Bailey. "An Interim Evaluation of Sulfur Dioxide Emissions Trading."

Krugman. "The Tax Reform Obsession."
25 Externalities and Entry Restrictions Moretti and Hsieh. "Can Free Entry Be Inefficient? Fixed Commissions and Social Waste in the Real Estate Industry."
26 Positive Externalities Levitt and Ayres. "Measuring Positive Externalities from Unobservable Victim Precaution: An Empirical Analysis of Lojack."


Required Readings (back to top)

Akerlof, George A. "The Market for 'Lemons:' Quality Uncertainty and the Market Mechanism." Quarterly Journal of Economics 84, no. 3 (August 1970): 488-500.

Altman, Daniel, David M. Cutler, and Richard J. Zeckhauser. "Adverse Selection and Adverse Retention." American Economic Review 88, no. 2 (1998): 122-26.

American Sugar Alliance. "New Global Study Confirms Americans Pay Less For Sugar." February 21, 2003.

American Sugar Alliance. "Trade Talks in Works Could Devastate U.S. Sugar Industry." October 9, 2003.

Ashenfelter, Orley, and Michael Greenstone. "Using Mandated Speed Limits to Measure the Value of a Statistical Life." Journal of Political Economy 112, no. 1, part 2 supplement (February 2004): S226-67.

Binger, Brian R., and Elizabeth Hoffman. Microeconomics with Calculus. 2nd ed. Reading, Mass.: Addison-Wesley, 1998.

Card, David, and Alan B. Krueger. "Minimum Wages and Employment: A Case Study of the Fast-food Industry in New Jersey and Pennsylvania." American Economic Review 84 no. 4 (September 1994): 772-93.

Cooter, Robert D. "Economic Theories of Legal Liability." Journal of Economic Perspectives 5, no. 3 (Summer 1991): 11-30.

Van Driessche, "Sugar Is Not Expensive," USA Today, 23 May 2000.

Frankel, Jeffrey A., and David Romer. "Does Trade Cause Growth?" American Economic Review 89, no. 3 (June 1999): 379-99.

Freeman, Richard. "Comment: Review Symposium on Myth and Measurement: The New Economics of the Minimum Wage." Industrial and Labor Relations Review 48, no. 4 (July 1995).

"Harvesting Poverty: America's Sugar Daddies," New York Times, editorial, 29 November 2003.

Holland, Paul W. "Statistics and Causal Inference." Journal of the American Statistical Association 81, no. 396 (1986): 945-60.

Jensen, Robert, and Nolan Miller. "Giffen Behavior: Theory and Evidence." Kennedy School of Government Faculty Research Working Paper Series, no. RWP02-014 (January 2002).

Kane, Thomas J., and Douglas Staiger. "Teen Motherhood and Abortion Access." Quarterly Journal of Economics 111, no. 2 (1996): 467-506.

Nicholas D. Kristof, "Let Them Sweat," New York Times, 25 June 2002.

Paul Krugman, "The Accidental Theorist," Slate, 23 January 1997.

———. "Ricardo's Difficult Idea." Paper for Manchester Conference on Free Trade (March 1996).

———, "The Tax Reform Obsession," New York Times Magazine, 7 April 1996, 36-37.

Levitt, Steven D., and Ian Ayres. "Measuring Positive Externalities from Unobservable Victim Precaution: An Empirical Analysis of Lojack." Quarterly Journal of Economics 113, no. 1 (February 1998): 43-77.

Lutz, Byron F. "Taxation with Representation: The Incidence and Efficiency of Intergovernmental Grants in a Plebiscite Democracy." MIT mimeograph, September 2004.

Elizabeth Malkin, "In Mexico, Sugar vs. U.S. Corn Syrup," New York Times, 9 June 2004.

MacLean, Douglas. "Social Values and the Distribution of Risk." In Values at Risk, edited by Douglas MacLean. New Jersey: Rowman & Allanheld Publishers, 1986, pp. 75-93.

Moretti, Enrico, and Chang-Tai Hsieh. "Can Free Entry Be Inefficient? Fixed Commissions and Social Waste in the Real Estate Industry." Journal of Political Economy 111, no. 5 (October 2003): 1076-1122.

Priest, George L. "The Modern Expansion of Tort Liability: Its Sources, Its Effects, and Its Reform." Journal of Economic Perspectives 5, no. 3 (Summer 1991): 31-50.

Rothschild, Michael, and Joseph E. Stiglitz. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Information." Quarterly Journal of Economics 90, no. 4 (1976): 630-49.

Scherer, F. M. "The U.S. Sugar Program." Kennedy School of Government Case 1128.0 (1992).

Schmalensee, Richard, Paul L. Joskow, A. Danny Ellerman, Juan Pablo Montero, and Elizabeth M. Bailey. "An Interim Evaluation of Sulfur Dioxide Emissions Trading." Journal of Economic Perspectives 12, no. 3 (Summer 1998): 53-68.

Spence, Michael. "Job Market Signaling." Quarterly Journal of Economics 87, no. 3 (1973): 355-74.

Tversky, Amos, and Daniel Kahneman. "The Framing of Decisions and the Psychology of Choice." Science 211, no. 30 (January 1981): 453-58.

Tyler, John H., Richard J. Murnane, and John B. Willet. "Estimating the Labor Market Signaling Value of the GED." Quarterly Journal of Economics 115, no. 2 (2000): 431-68.

Waldfogel, Joel. "The Deadweight Loss of Christmas." American Economic Review 83, no. 5 (1993): 1328-36.

Amazon logo Wetzstein, Michael E. Microeconomic Theory: Concepts and Connections. Mason, Ohio: South-Western, 2004. ISBN: 0324260296.

Whitmore, Diane. "What Are Food Stamps Worth?" Princeton Industrial Relations Section Working Paper, no. 468 (July 2002).

Recommended Readings

Kennan, John. "The Elusive Effects of Minimum Wages." Journal of Economic Literature 33 (December 1995): 1950-65.

Krugman, Paul. "Competitiveness: A Dangerous Obsession." Foreign Affairs 73, no. 2 (March-April 1994): 28-44.