Why do We Dislike Inflation?

This paper provides new evidence on a long-standing question asked by Shiller (1997): Why do we dislike inflation? I conducted two surveys on representative samples of the US population to elicit people’s perceptions about the impacts of inflation and their reactions to it. The predominant reason for people’s aversion to inflation is the widespread belief that it diminishes their buying power, as neither personal nor general wage increases seem to match the pace of rising prices. As a result, respondents report having to make costly adjustments in their budgets and behaviors, especially among lower-income groups. Inflation also provokes stress, emotional responses, and a sense of inequity, as the wages of high-income individuals are perceived to grow more rapidly amidst inflation. Many respondents believe that firms have considerable discretion in setting wages, opting not to raise them in order to boost profits, rather than being compelled by market dynamics. The potential positive associations of inflation, such as with reduced unemployment or enhanced economic activity, are typically not recognized by respondents. Inflation ranks high in priority among various economic and social issues, with respondents blaming the government and businesses for it. I also highlight a substantial polarization in attitudes towards inflation along partisan lines, as well as across income groups.

The How and Why of Household Reactions to Income Shocks

This paper studies how and why households adjust their spending, saving, and borrowing in response to transitory income shocks. We leverage new large-scale survey data to first quantitatively assess households’ intertemporal marginal propensities to consume (MPCs) and deleverage (MPDs) (the “how”), and second to dive into the motivations and decision-making processes across households (the “why”). The combination of the quantitative estimation of household response dynamics with a qualitative exploration of the mental models employed during financial decisions provides a more complete view of household behavior.

Zero-Sum Thinking and the Roots of U.S. Political Divides

Working Papers - Zero-Sum Thinking and the Roots of U.S. Political Divides

We investigate the origins and implications of zero-sum thinking — the belief that gains for one individual or group tend to come at the cost of others. Using a new survey of a representative sample of 20,400 US residents, we measure zero-sum thinking, political preferences, policy views, and a rich array of ancestral information spanning four generations.

Understanding of Trade

Working Papers - Understanding of Trade

I study how people understand and reason about trade, and what factors shape their views on trade policy.

Understanding Economics

Working Papers - Understanding of Economics

Using large-scale online surveys and experiments on representative U.S. samples, we study how well people understand, reason, and learn about four economic policies: i) Personal income taxation, ii) Estate taxation, iii) Health insurance, and iv) Trade.

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