NCPA - National Center for Policy Analysis

Using Economic Tools To Study Social Issues

April 27, 2001

Traditional economists have been concerned with trends in unemployment, national productivity, wages, money supply and trade policy. But observers have noticed a new breed of young economists emerging who are applying mathematical models and behavioral economic theories to a range of social problems.

Using a set of statistical tools and a view of how people respond to incentives, they are helping to define the debate in a variety of issues outside the traditional sphere of economics.

  • The University of Chicago's Steven Levitt has produced papers on such topics as corruption in sumo wrestling, cheating at Chicago schools and the economics of gang life.
  • Harvard University's Caroline Hoxby is widely known for her writings on the merits of competition in education.
  • Also from Harvard, Michael Kremer has looked into inefficiencies in the market for the development of AIDS and malaria vaccines.
  • At the University of California-Berkeley, Matthew Rabin has written papers explaining procrastination.

Although many of these scholars avoid promoting a political viewpoint, their work can incite heated debate. Levitt found this out when he searched for an explanation of why the U.S. crime rate decreased so dramatically during the 1990s. His explanation cited the legalization of abortion in the early 1970s -- which reduced the number of unwanted youths.

Source: Jon E. Hilsenrath, "In the New Economics, the Economy Has Little to Do With It," Wall Street Journal, April 27, 2001.

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