George Akerlof

George Akerlof
University of California, Berkeley | UCB · Department of Economics

About

85
Publications
28,515
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34,775
Citations
Introduction
Skills and Expertise

Publications

Publications (85)
Article
Full-text available
Why have the relative rates of women smoking grown so much in the last 100 years? How can the U.S. military do so well with a relatively flat pay scale? Standard economics hasn't a clue, but according to Berkeley economist George Akerlof and Duke economist Rachel Kranton, the answers lie in a new field called identity economics.
Article
Full-text available
"I want to tell my foreman to f*** off, but I can't." So says "Mike," a steel handler we meet in Stud Terkel's book Working (1974, xxxv). Many workers' stories we read in Working and in ethnographies suggest workers greatly resent supervision. As a result, they exert lower effort and may sabotage production. Mike puts dents in the steel. Ethnograph...
Article
This paper is a comment on Household Debt in the Consumer Age: Source of Growth - Risk of Collapse by Barry Z. Cynamon and Steven M. Fazzari which can be found at: http://ssrn.com/abstract=1153180.
Chapter
A person’s identity is broadly defined as a person’s self-image or sense of self. The concept of identity has wide use in most social sciences outside economics, especially sociology, anthropology and psychology. Many social scientists hold that preserving or enhancing identity is a prime motivation for individual and group behaviour. At the time o...
Article
The assumptions that dominate current mainstream economics are challenged by this Nobel laureate. If we adjust our views to be more realistic about why and how market participants make decisions, we begin to see that Keynesian principles are readily justified. Government policy does have a critical place in the management of the economy. In fact, w...
Article
The discovery of five neutralities surprised the economics profession and forced the re-thinking of macroeconomic theory. Those neutralities are: the independence of consumption and current income (given wealth); the independence of investment and finance decisions (the Modigliani- Miller theorem); inflation stability only at the natural rate of un...
Article
Should stabilization policy be a macroeconomic priority? Most central banks consider it a goal, but Robert Lucas has contended that policies to stabilize output, even if effective, yield negligible welfare gains. This article critiques Lucas's argument. Existing literature suggests nontrivial benefits from stabilization due to nonlinearity of the s...
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Full-text available
Unfortunately, many M&A deals fail to generate real value for shareholders - still others end up eroding corporate wealth. Much of the problem, says the author, stems from two inherent features of many deals - the acquiring company's difficulty in putting a value on the target's resources and the need for both parties to agree on a price. Obtaining...
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Full-text available
The economics of organizations is replete with the pitfalls of monetary rewards and punishments to motivate workers. If economic incentives do not work, what does? This paper proposes that workers' self-image as jobholders, coupled with their ideal as to how their job should be done, can be a major work incentive. It shows how such identities can f...
Book
Akerlof illustrates how his 'modern', Nobel Prize-winning methodology of using 'tailor-made' economic models to solve problems differs from the standard, benchmark, all-encompassing general-equilibrium-perfect competition-based methodology.
Article
Economists argue that there is no clear economic rationale for regulating interstate shipments of wine.
Article
This paper proposes that workers' self-image as jobholders, coupled with their ideal as to how their job should be done, can be amajor work incentive. It shows how such identities can flatten reward schedules, as they solve the "principal-agent" problem. The paper also identifies and explores a new tradeoff: supervisors may provide information to p...
Article
I wrote "The Market for 'Lemons,'" (a 13-page paper for which I was awarded the Prize in Economics) during my first year as assistant professor at Berkeley, in 1966-67.* "Lemons" deals with a problem as old as markets themselves. It concerns how horse traders respond to the natural question: "if he wants to sell that horse, do I really want to buy...
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Full-text available
This review culls noneconomic literature on education--by sociologists, anthropologists, and practitioners to present a new economic theory of students and schools. This theory elaborates two themes that have eluded economic analysis. First is the student as decision-maker whose primary motivation is her identity. Second is a conception of the scho...
Article
Think about Richard Scarry’s Cars and Trucks and Things That Go. Think about what that book would have looked like in sequential decades of the last century had Richard Scarry been alive in each of them to delight and amuse children and parents. Each subsequent decade has seen the development of ever more specialized vehicles. We started with the m...
Article
This paper calculates indices of central bank autonomy (CBA) for 163 central banks as of end-2003, and comparable indices for a subgroup of 68 central banks as of the end of the 1980s. The results confirm strong improvements in both economic and political CBA over the past couple of decades, although more progress is needed to boost political auton...
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Interviewers are Professor Karl-Gustaf Lofgren and Anne-Sophie Crepin, graduate student, Umea University.
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Full-text available
This paper considers how identity, a person's sense of self, affects economic outcomes. We incorporate the psychology and sociology of identity into an economic model of behavior. In the utility function we propose, identity is associated with different social categories and how people in these categories should behave. We then construct a simple g...
Article
Full-text available
OVER THIRTY YEARSago, in his presidential address to the American Economic Association, Milton Friedman asserted that in the long run the Phillips curve was vertical at a natural rate of unemployment that could be identified by the behavior of inflation. 1 Unemployment below the natural rate would generate accelerating inflation, and unemployment a...
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Full-text available
We develop a procedure to rank-order objects using censored panel data sets. We illustrate this by ranking countries and commodities using dis-aggregated American import data. We find evidence that countries and commodities can be ranked. Countries habitually begin to export goods to the United States according to an ordering; goods are also export...
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This essay is concerned with the impact on society of the fact that an increasing number of men in the United States neither marry nor live with children. The author notes that between 1986 and 1993 the fraction of men 25 to 34 who are householders living with children declined from 66% to 40%. He makes the case that the increase in social patholog...
Article
A model of social distance is presented that is useful for understanding social decisions. An example is constructed of class stability. Agents who are initially close interact strongly while those who are socially distant have little interaction. In this example, inherited social position, which may be interpreted as social class, plays a dominant...
Article
This paper relates the erosion of the custom of shotgun marriage to the legalization of abortion and the increased availability of contraception to unmarried women in the United States. The decline in shotgun marriage accounts for a significant fraction of the increase in out-of-wedlock first births. Several models illustrate the analogy between wo...
Article
During the 1980s, a number of unusual financial crises occurred. In Chile, for example, the financial sector collapsed, leaving the government with responsibility for extensive foreign debts. In the United States, large numbers of government-insured savings and loans became insolvent - and the government picked up the tab. In Dallas, Texas, real es...
Article
This paper introduces the fair wage-effort hypothesis and explores its implications. This hypothesis is motivated by equity theory in social psychology and social exchange theory in sociology. According to the fair wage-effort hypothesis, workers proportionately withdraw effort as their actual wage falls short of their fair wage. Such behavior caus...
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Full-text available
This paper explains upward job mobility and observed patterns of unemployment by skill as an economy recovers from a recession. Skilled unemployment is due to rational waiting by workers looking for long-term jobs when there is a "lock-in" effect. Lock-in occurs if the conditions in the labor market when a worker first accepts a job have a persiste...
Article
When individuals choose not only goods, but also how to process information, there is a bias: people tend to process information so that they feel good about themselves. This bias is particularly important in voting behavior, where agents have almost no individual effect on public choice outcomes, and therefore almost no incentive for unbiased use...
Article
This paper defines a concept, a worker's trust fund, which is useful in analyzing optimal age-earnings profiles. The trust fund represents what a worker loses if dismissed from a job for shirking. In considering whether to work or shirk, a worker weighs the potential loss due to forfeiture of the trust fund if caught shirking against the benefits f...
Article
In the most widely analyzed type of efficiency wage model of involuntary unemployment, firms pay wages in excess of market clearing to give workers an incentive not to shirk. Such payments in excess of market clearing and the resultant equilibrium unemployment act as a worker discipline device. This paper concerns what is usually considered the mos...
Article
This paper uses data from the annual Work Experience Survey to construct a new unemployment series based on respondents' recollection of unemployment over the previous year. It is argued that the ratio of this new series to the official series computed from the monthly Current Population Survey provides an index of the “salience” or painfulness of...
Article
This paper presents a model in which insignificantly suboptimal behavior causes aggregate demand shocks to have significant real effects. The individual loss to agents with inertial price-wage behavior is second-order in terms of the parameter describing the shock, while the effect on real economic variables is first-order. Thus, significant change...
Article
We show that immigrant managers are substantially more likely to hire immigrants than are native managers. The finding holds when comparing establishments in the same 5-digit industry and location, when comparing different establishments within the same firm, when analyzing establishments that change management over time, and when accounting for wi...
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Full-text available
The research agendas of psychologists and economists now have several overlaps, with behavioural economics providing theoretical and experimental study of the relationship between behaviour and choice, and hedonic psychology discussing appropriate measures of outcomes of choice in terms of overall utility or life satisfaction. Here we model the rel...
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This paper explains involuntary unemployment in terms of the response of firms to workers' group behavior. Workers' effort depends upon the norms determining a fair day's work. In order to affect those norms, firms may pay more than the market-clearing wage. Industries that pay consistently more than the market-clearing wage are primary, and those...
Article
This paper examines adherence to social customs. Models of social customs are found to be inherently multi-equilibrial. It is found that social customs which are disadvantageous to the individual may nevertheless persist without erosion, if individuals are sanctioned by loss of reputation for disobedience of the custom. One example of such a social...
Article
This paper explores the consequences of the timing of payments for the demand for money. It is found that if payments are the minimum of the money in the bank account or bills due, the demand for money will respond slowly to changes in income. This prediction disagrees with some formulations of the short-run demand for money (e.g., Irving Fisher's)...
Article
I. Introduction, 169. — II. Relation between payments flows and money demand with threshold-target monitoring, 173. — III. Comments on the model, 178. — IV. Agreement with empirical evidence, 180. — V. Summary and conclusion, 182. — Appendix, 182.
Article
I. Introduction, 599.—II. Sharecropping, 601.—III. Work conditions: the rat race, 603.—IV. Statistical discrimination, 606.—V. Caste and group organizations, 608.—VI. Conclusions, 617.
Article
I. Introduction, 488. — II. The model with automobiles as an example, 489. — III. Examples and applications, 492. — IV. Counteracting institutions, 499. — V. Conclusion, 500.
Article
Full-text available
We examine the consequences of ethnic identity on getting a job. We define ethnic identity as the attachment to the group who shares one's ancestral heritage, and use a direct measure of the depth of ethnic identity based on a survey question which asks "is your ethnic origin very important to you, somewhat important, not very important or not at a...
Article
Exxon Mobil and ConocoPhillips stock price has been predicted using the difference between core and headline CPI in the United States. Linear trends in the CPI difference allow accurate prediction of the prices at a five to ten-year horizon.
Article
I. Introduction, 353. — II. A price-price inflation, 355. — III. A wage-wage inflation, 363. — IV. Spontaneous inflations and general equilibrium, 371. — V. Conclusions, 373.

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