Identifying Latent Structures in Panel Data

This paper provides a novel mechanism for identifying and estimating latent group structures in panel data using penalized techniques. We consider both linear and nonlinear models where the regression coefficients are heterogeneous across groups but homogeneous within a group and the group membership is unknown. Two approaches are considered—penalized profile likelihood (PPL) estimation for the general nonlinear models without endogenous regressors, and penalized GMM (PGMM) estimation for linear models with endogeneity. In both cases, we develop a new variant of Lasso called classifier‐Lasso (C‐Lasso) that serves to shrink individual coefficients to the unknown group‐specific coefficients. C‐Lasso achieves simultaneous classification and consistent estimation in a single step and the classification exhibits the desirable property of uniform consistency. For PPL estimation, C‐Lasso also achieves the oracle property so that group‐specific parameter estimators are asymptotically equivalent to infeasible estimators that use individual group identity information. For PGMM estimation, the oracle property of C‐Lasso is preserved in some special cases. Simulations demonstrate good finite‐sample performance of the approach in both classification and estimation. Empirical applications to both linear and nonlinear models are presented.     

Poverty and Self‐Control

We argue that poverty can perpetuate itself by undermining the capacity for self‐control. In line with a distinguished psychological literature, we consider modes of self‐control that involve the self‐imposed use of contingent punishments and rewards. We study settings in which consumers with quasi‐hyperbolic preferences confront an otherwise standard intertemporal allocation problem with credit constraints. Our main result demonstrates that low initial assets can limit self‐control, trapping people in poverty, while individuals with high initial assets can accumulate indefinitely. Thus, even temporary policies that initiate accumulation among the poor may be effective. We examine implications concerning the effect of access to credit on saving, the demand for commitment devices, the design of financial accounts to promote accumulation, and the variation of the marginal propensity to consume across income from different sources. We also explore the nature of optimal self‐control, demonstrating that it has a simple and behaviorally plausible structure that is immune to self‐renegotiation.     

The Effects of Multitasking on Operations Scheduling

This study considers a typical scheduling environment that is influenced by the behavioral phenomenon of multitasking. Under multitasking, the processing of a selected job suffers from interruption by other jobs that are available but unfinished. This situation arises in a wide variety of applications; for example, administration, manufacturing, and process and project management. Several classical solution methods for scheduling problems no longer apply in the presence of multitasking. The solvability of any scheduling problem under multitasking is no easier than that of the corresponding classical problem. We develop optimal algorithms for some fundamental and practical single machine scheduling problems with multitasking. For other problems, we show that they are computationally intractable, even though in some cases the corresponding problem in classical scheduling is efficiently solvable. We also study the cost increase and value gained due to multitasking. This analysis informs companies about how much it would be worthwhile to invest in measures to reduce or encourage multitasking.     

Consumption Dynamics During Recessions

Are there times when durable spending is less responsive to economic stimulus? We argue that aggregate durable expenditures respond more sluggishly to economic shocks during recessions because microeconomic frictions lead to declines in the frequency of households' durable adjustment. We show this by first using indirect inference to estimate a heterogeneous agent incomplete markets model with fixed costs of durable adjustment to match consumption dynamics in PSID microdata. We then show that aggregating this model delivers an extremely procyclical Impulse Response Function (IRF) of durable spending to aggregate shocks. For example, the response of durable spending to an income shock in 1999 is estimated to be almost twice as large as if it occurred in 2009. This procyclical IRF holds in response to standard business cycle shocks as well as in response to various policy shocks, and it is robust to general equilibrium. After estimating this robust theoretical implication of micro frictions, we provide additional direct empirical evidence for its importance using both cross‐sectional and time‐series data.     

Health Risk,Inequality Indexes,and Environmental Justice

Inequality indexes have long been used to analyze distributions of income. Studies have recently begun to use these tools to evaluate the equity of distributions of environmental harm. In response, issues have been raised regarding the appropriateness of using income-based measures in the context of undesirable outcomes. We begin from first principles, identifying a theoretical preference structure under which income-based tools can be appropriate for ranking distributions of “bads.” While some critiques of existing applications are valid, they are not a justification for rejecting the approach altogether. Instead, we show how standard income-based measures can be adjusted to accommodate bad outcomes. Rather than inequality indexes, we argue that equally distributed equivalents (EDEs) are well-suited for this purpose since they account for levels and dispersion of outcome distributions. The Kolm–Pollak EDE is particularly useful, having the advantage of consistently evaluating both bads and their complementary goods (e.g., mortality risk and survival probability). As an illustration, we show how these tools can inform an environmental justice analysis of a proposed Environmental Protection Agency (EPA) rule addressing indoor air pollution.     

Temporal Disaggregation: Methods,Information Loss,and Diagnostics

This research provides a generalized framework to disaggregate lower-frequency time series and evaluate the disaggregation performance. The proposed framework combines two models in separate stages: a linear regression model to exploit related independent variables in the first stage and a state–space model to disaggregate the residual from the regression in the second stage. For the purpose of providing a set of practical criteria for assessing the disaggregation performance, we measure the information loss that occurs during temporal aggregation while examining what effects take place when aggregating data. To validate the proposed framework, we implement Monte Carlo simulations and provide two empirical studies. Supplementary materials for this article are available online.     

Trustworthiness in evaluation practice: an emphasis on the relational

As canons for trustworthiness developed explicitly in the discourse of qualitative inquiry, the emphasis was on procedural matters rather than fundamentally relational ones. A nod was made to the relational in such strategies as “member checks” but the issues of how the evaluator actually relates to participants and to the larger communities of practice and discourse—matters subsumed under moral principles and ethical standards—were often marginalized. This chapter posits that the first consideration in designing and conducting rigorous evaluation inquiry, and in critiquing the results of any research, should be the study's trustworthiness. Judging a study's trustworthiness, however, should focus on much more than procedural matters; it should also rely on moral principles and ethical standards which specifically address how we relate to an evaluation's participants. Central to these considerations are cross-cultural sensibilities about the nuanced meanings associated with any principles and standards. The chapter provides a theoretical framework for this position and offers two illustrative examples in the form of dialogues.