Recent Publications
On the Joint Dynamics of Culture and Political Institutions: Elites and Civil Society,
with Thierry Verdier, Journal of Political Economy, forthcoming 2024 (first draft 2015)
We provide an abstract model of the interaction between culture and political institutions.The model is designed to study the political economy of elites and civil society on the determination of long-run socio-economic activity. We characterize conditions such that the cultural traits of elites and civil society and the institutions determining their relative political power complement (resp. substitute) each other, giving rise to a multiplier effect which amplifies (resp. dampens) their combined ability to spur socio-economic activity. We show how the joint dynamics may display hysteresis, oscillations, depending on the form of the interactionbetween elites and civil society.
Review of “Modeling Social Behavior: Mathematical and Agent-Based Models of Social Dynamics and Cultural Evolution,” by Paul E. Smaldino. Princeton: Princeton University Press, 2023,
Journal of Economic Literature, forthcoming 2024.
The book is very successful in its aim of introducing the reader to agent-based models, bringing him/her to develop the theoretical skills necessary to apply them to interesting problems. It is less successful, however, as an introduction to the broader study of social dynamics and cultural evolution, in that it disregards any contribution which is does not fit into Agent-Based modeling. In Agent-based models agents move and act as particles, without any rational (or less-than-rational) choice, without any forward-looking calculus, and independent of the specifics of the environment they find themselves in. The severity of this limitation obviously depends on the problem at hand. Given the problem, the intellectual—or even ideological—priors of the (discipline of the) researcher also contribute to evaluating the explanatory power of agent-based models: generally, economists, more than other social scientists, tend to consider rational (or less-than-rational) choice and some forward-looking behavior as fundamental dimensions of models dealing with most socioeconomic phenomena.
Culture, Institutions & the Long Divergence,
with Jared Rubin, Avner Seror, and Thierry Verdier, Journal of Economic Growth, 1-40, 2023.
During the medieval and early modern periods the Middle East lost its economic advantage relative to the West. Recent explanations of this historical phenomenon—called the Long Divergence—focus on these regions’ distinct political economy choices regarding religious legitimacy and limited governance. We study these features in a political economy model of the interactions between rulers, secular and clerical elites, and civil society. The model induces a joint evolution of culture and political institutions converging to one of two distinct stationary states: a religious and a secular regime. We then map qualitatively parameters and initial conditions characterizing the West and the Middle East into the implied model dynamics to show that they are consistent with the Long Divergence as well as with several key stylized political and economic facts. Most notably, this mapping suggests non-monotonic political economy dynamics in both regions, in terms of legitimacy and limited governance, which indeed characterize their history.
Advances in the Economic Theory of Cultural Transmission,
with Thierry Verdier, Annual Review of Economics, 15, 63–89 2023.
In this paper we survey recent advances in the economic theory of cultural transmission. We highlight three main themes on which the literature has made great progress in the last ten years: the domain of traits subject to cultural transmission, the micro-foundations for the technology of transmission, and feedback effects between culture, institutions, and various socio-economic environments. We conclude suggesting interesting areas for future research.
Learning Epidemiology by Doing: The Empirical Implications of a Spatial-SIR Model with Behavioral Responses,
with Andrea Moro, Journal of Urban Economics, forthcoming 2022.
We simulate a spatial behavioral model of the diffusion of an infection to understand the role of geographic characteristics: the number and distribution of outbreaks, population size, density, and agents’ movements. We show that several invariance properties of the SIR model concerning these variables do not hold when agents interact with neighbors in a (two dimensional) geographical space. Indeed, the spatial model’s local
interactions generate matching frictions and local herd immunity effects, which play a fundamental role in the infection dynamics. We also show that geographical factors change how behavioral responses affect the epidemic. We derive relevant implications for estimating the effects of the epidemic and policy interventions that use panel data from several geographical units.
Spatial-SIR with Network Structure and Behavior: Lockdown Rules and the Lucas Critique,
with Andrea Moro, Journal of Economic Behavior and Organization, forthcoming 2022.
We extend a Spatial-SIR model of the diffusion of an infection to include heterogeneous agents interacting socially in three different types of location every day: City, School/Work, and Home. Contagion-risk averse agents respond behaviorally to the diffusion of the epidemic by limiting their social interactions. Firms also respond, by allowing employees to work remotely depending on their productivity. We study the effects of several non-pharmaceutical intervention on epidemic dynamics, e.g. selective lockdowns. Simulations illustrate how the network structure generates local herd immunities along socio-demographic dimensions, affecting policy outcomes. Finally, substantiating a “Lucas critique” argument, we assess the cost of naive policies ignoring the behavioral responses of agents and firms.
Heterogeneous Dynasties and Long-Run Mobility,
with Jess Benhabib and Ricardo Fernholz, Economic Journal, 132(643), 906–925, April 2021.
Recent empirical work has demonstrated a positive correlation between grandparent- child wealth-rank, even after controlling for parent-child wealth-rank, as well as a positive correlation between dynastic wealth-ranks across almost 600 years. We show that a simple heterogeneous agents model with idiosyncratic returns to wealth generates a realistic wealth distribution but fails to capture these long-run patterns of wealth mobility. However, an extension of the basic model which includes persistent heterogeneity in returns to wealth is able to simultaneously match the wealth distribution, short-run wealth mobility, and long-run wealth mobility.parameters.
Procrastination, Self-Imposed Deadlines, and Other Commitment Devices,
with Kyle Hyndman, Economic Theory, forthcoming 2022.
Recent empirical work has demonstrated a positive correlation between grandparent- child wealth-rank, even after controlling for parent-child wealth-rank, as well as a positive correlation between dynastic wealth-ranks across almost 600 years. We show that a simple heterogeneous agents model with idiosyncratic returns to wealth generates a realistic wealth distribution but fails to capture these long-run patterns of wealth mobility. However, an extension of the basic model which includes persistent heterogeneity in returns to wealth is able to simultaneously match the wealth distribution, short-run wealth mobility, and long-run wealth mobility.
Efficient Policy Interventions in an Epidemic,
with Piero Gottardi, Journal of Public Economics, forthcoming 2022.
In the context of an epidemic, In the context of an epidemic, a society is forced to face a system of externalities in consumption and in production. Command economy interventions can support efficient allocations at the cost of severe information requirements. Competitive markets for infection rights (alternatively, Pigouvian taxes) can guarantee efficiency without requiring direct policy interventions on socio-economic activities. We demonstrate that this is the case also with moral hazard, when the infections cannot be associated to the specific activities which originated them. Finally, we extend the analysis to situations where governments have only incomplete information regarding the values of the parameters of the infection or of firms’ production.
Merger or Acquisition? Introduction to the Handbook of Historical Economics,
with Giovanni Federico, Handbook of Historical Economics, Alberto Bisin and Giovanni Federico, Eds., Academic Press, 2021.
Historical Economics was born arguably in the 1960s, with the so-called Cliometric revolution. Now, arguably, a second revolution is unfolding, as the field is attracting the renewed interest of economists. Good Historical Economics needs a combination of
the knowledge of sources and detailed historical events and phenomena, the capability of distilling complex historical processes into a model to put forward alternative testable hypotheses, the statistical/econometric skills for identification, causal inference, structural estimation, and testing, the detailed knowledge of specific political
and socio-economic institutions, an understanding of the role of cultural traits, e.g., ethnic/religious, and of their evolution. This Handbook is a step in this direction, and this Introduction written jointly by an economist and an historian, discussing the pitfalls of their own disciplines, should serve as a suggestion that it can be done.
Late for History,
with Andrea Moro, Handbook of Historical Economics, Alberto Bisin and Giovanni Federico, Eds., Academic Press, 2021.
In Historical Economics, Persistence studies document the persistence of some historical phenomenon or leverage this persistence to identify causal relationships of interest in the present. In this chapter, we analyze the implications of allowing for heterogeneous treatment effects in these studies. We delineate their common empirical structure, argue that heterogeneous treatment effects are likely in their context, and propose minimal abstract models that help interpret results and guide the development of empirical strategies to uncover the mechanisms generating the effects.
Phase Diagrams in Historical Economics: Culture and Institutions,
with Thierry Verdier, Handbook of Historical Economics, Alberto Bisin and Giovanni Federico, Eds., Academic Press, 2021.
In this paper we discuss the role of explicit formal dynamic models in our understanding of socio-economic history. Specifically, to illustrate the methodological issue, we center our analysis on studies of institutional and cultural change. Finally, we study in detail a dynamic model of institutions for property rights protection and culture of conflict as an example.
A Comment on: State Capacity, Reciprocity, and the Social Contract, by Timothy Besley,
Econometrica, Vol. 88(4), 1345-1349, July 2020.
Besley’s paper studies the role of civic culture in expanding fiscal capacity. I read this paper through the eyes of models of institutions and culture in economic development. First of all, I will argue that the results of the paper hold qualitatively in different models displaying complementarity between civic culture and public good provision. I will then illustrate how an analysis of the institutional design of the polity of the state in the context of the model produces a rich set of novel implications with regards to institutional change and to the institutional correlates of civic capital, state capacity and public goods provision. I will then show that relaxing the assumption that elites have commitment also produces interesting implications for the study o culture and institutions. Finally, I will briefly speculate on the dynamics of civic culture if inter-generational cultural transmission is characterized by some form of imperfect altruism on the parts of the parents.
Review of The Deficit Myth, by S. Kelton, Perseus Books, 2020,
Journal of Economic Literature, 58(4), 1199-1201, December 2020.
The book aims at explaining the Modern Monetary Theory (MMT). It should be seen as a rhetorical exercise. Indeed it is the core of MMT that appears as merely a rhetorical exercise. As such it is interesting but not a theory in any meaningful sense I can make of the word. The T in MMT is more like a collection of interrelated statements floating in fluid arguments. It is very hard for the reader to capture all the moving parts in a coherent structure, which would allow for some sort of confutation. I will try, rather, to expose what seems to me the logic behind the rhetoric of the floating statements.
Wealth Distribution and Social Mobility: A Quantitative Analysis of U.S Data,
with Jess Benhabib and Mi Luo, American Economic Review, 109(5), 1623-1647, 2019.
We quantitatively identify the factors that drive wealth dynamics in the United States and are consistent with its skewed cross-sectional distribution and with social mobility. We concentrate on three critical factors: (i) skewed earnings, (ii) differential saving rates across wealth levels, and (iii) stochastic idiosyncratic returns to wealth. All of these are fundamental for matching both distribution and mobility.
The stochastic process for returns which best fits the cross-sectional distribution of wealth and social mobility in the United States shares several statistical properties with those of the returns to wealth uncovered by Fagereng et al. (2017) from tax records in Norway.