Economics

Research co-authored by Prof. Christopher Palmer in Sloan found that loan rates vary substantially, even when two borrowers are relatively similar, due primarily to the variations in the lender’s markup. “You would never get away with this if you were selling milk,” Palmer told Jo Craven McGinty of The Wall Street Journal. “It would be the same price for everyone.”

Research led by Prof. Amy Finkelstein found that just 4% of “bankruptcy filings by non-elderly adults” were associated with medical expenses. “Medical bankruptcy…wasn’t nearly as common as anticipated,” writes Alex Kingsbury for The Boston Globe. “Public policy aimed at fighting it might not have the anticipated results, either.”

A study co-authored by researchers at MIT finds that hospitalizations only cause about 4 percent of bankruptcies among nonelderly adults in the U.S., reports Tom Murphy of the Associated Press. Researchers gathered data from “more than a half million adults under 65 in California who had a hospitalization between 2003 and 2007 that wasn't tied to childbirth.”

Senior Lecturer Robert Pozen and Sloan Fellow Kashif Qadeer write for The Wall Street Journal about flaws in the SEC’s methodology for requiring companies to disclose “pay ratios”, which is “the CEO’s compensation divided by the median employee’s.” They point out adjustments must be made especially “for companies that depend heavily on part-time workers.”

Robert C. Pozen, a senior lecturer at Sloan, writes for The Boston Globe about how the new tax act would create potentially major fiscal challenges for “cities with large unfunded liabilities for pension benefits and retiree health care.” He addresses several ways in which cities might make adjustments to mitigate the losses, citing data from JP Morgan. 

A study co-authored by Prof. David Autor finds that over the past five decades, automation has helped increase total employment, but wages have not increased, reports The Wall Street Journal’s Eric Morath. According to Autor, the findings help explain “why inequality between the world’s wealthiest and everyday workers has increased.”

A working paper published by MIT’s Center for Energy and Environmental Policy Research found that 74% of rideshare drivers earn less than the minimum wage for their state. “The report also showed a huge turnover rate among drivers, with half to 90 percent quitting after a short time,” writes Carolyn Said for the San Francisco Chronicle.

Sam Levin writes for The Guardian about a new working paper published by MIT’s Center for Energy and Environmental Policy Research that has "raised fresh concerns about labor standards in the booming sharing economy." The study found that after incurred costs associated with driving, U.S. rideshare employees "make a median profit of $3.37 per hour before taxes."

Paul Solman of PBS Newshour speaks to Prof. Andrew Lo about getting investors to finance research into treatments for cancer and genetic diseases. “We now have the opportunity to treat disease in many, many different ways. We just don’t have enough money to explore all of the different pathways,” explains Prof. Lo.

In an article for the Financial Times, Robin Wigglesworth highlights Profs. Alberto Cavallo and Roberto Rigobon’s work with the Billion Prices Project. Wigglesworth notes that the project is an, “example of a broader trend of trawling the swelling sea of big data for clues on how companies, industries or entire economies are performing.”

Using recent analyses by Prof. Frank Levy, Eduardo Porter of The New York Times explores the notion that AI will eliminate jobs and negatively impact American politics. Prof. Daron Acemoglu suggests that with more employment options in large cities, the backlash “will be more muted than it was when trade took out the jobs of single-industry company towns.”

In an article co-written for Smithsonian, Prof. John Van Reenen writes about an analysis he and his colleagues conducted examining how socioeconomic background, race and gender can impact a child’s chances of becoming an inventor. The researchers found that, “young people’s exposure to innovators may be an important way to reduce these disparities and increase the number of inventors.”

Writing for The New York Times, Thomas Edsall highlights research by Profs. Daron Acemoglu and David Autor examining how automation and trade impacted the 2016 presidential election. “The swing to Republicans between 2008 and 2016 is quite a bit stronger in commuting zones most affected by industrial robots,” explains Acemoglu. “You don’t see much of the impact of robots in prior presidential elections.”

In a letter to the Financial Times, graduate student Daniel Aronoff writes about what he sees as the root causes of populist discontent in America. Aronoff notes that, “Those who wish to preserve the rules-based order — and I count myself among them — need to climb out of their echo chamber, open their minds and listen.”

Wall Street Journal reporter Philip Delves Broughton spotlights Visiting Professor and MIT alumnus Jean Tirole’s new book, “Economics for the Common Good.” The book offers, “an ambitious yet accessible summary of his ideas on the proper role of economists and the value of their ideas in informing government, business and social life.”