We study how altruism networks affect the demand for formal insurance. Agents with CARA utilities are connected through a network of altruistic relationships. Incomes are subject to a common shock and to a large individual shock, generating heterogeneous damages. Agents can buy formal insurance to cover the common shock, up to a coverage cap. We find that ex-post altruistic transfers induce interdependence in ex-ante formal insurance decisions. We characterize the Nash equilibria of the insurance game and show that agents act as if they are trying to maximize the expected utility of a representative agent with average damages. Altruism thus tends to increase demand of low-damage agents and to decrease demand of high-damage agents. Its aggregate impact depends on the interplay between demand homogenization, the zero lower bound and the coverage cap. We find that aggregate demand is higher with altruism than without altruism at low prices and lower at high prices. Nash equilibria are constrained Pareto efficient.

We provide the first analysis of the risk-sharing implications of altruism networks. Agents are embedded in a fixed network and care about each other. We explore whether altruistic transfers help smooth consumption and how this depends on the shape of the network. We find that altruism networks have a first-order impact on risk. Altruistic transfers generate efficient insurance when the network of perfect altruistic ties is strongly connected. We uncover two specific empirical implications of altruism networks. First, bridges can generate good overall risk sharing, and, more generally, the quality of informal insurance depends on the average path length of the network. Second, large shocks are well-insured by connected altruism networks. By contrast, large shocks tend to be badly insured in models of informal insurance with frictions. We characterize what happens for shocks that leave the structure of giving relationships unchanged. We further explore the relationship between consumption variance and centrality, correlation in consumption streams across agents, and the impact of adding links.

Many regulations with first-order economic and environmental consequences have to be adopted under significant scientific uncertainty. Examples include tobacco regulations in the second half of the 20th century, climate change regulations and current regulations on pesticides and neonicotinoid insecticides. Firms and industries have proved adept at exploiting such scientific uncertainty to shape and delay regulation. The main strategies documented include: hiring and funding dissenting scientists, producing and publicizing favorable scientific findings, ghostwriting, funding diversion research, conducting large-scale science-denying communication campaigns, and placing experts on advisory and regulatory panels while generally concealing involvement. In many cases, special interests have thus deliberately manufactured doubt and these dishonest tactics have had large welfare consequences.
Largely and unduly neglected by economists, these doubt-manufacturing strategies should now be addressed by the field. Here, we first present a simple theoretical framework providing a useful starting point for considering these issues. The government is benevolent but populist and maximizes social welfare as perceived by citizens. The industry can produce costly reports showing that its activity is not harmful, and citizens are unaware of the industry’s miscommunication. This framework raises important new questions, such as how industry miscommunication and citizens’ beliefs are related to scientific uncertainty. It also sheds new light on old questions, such as the choice of policy instrument to regulate pollution. We subsequently outline a tentative roadmap for future research, highlighting critical issues in need of more investigation.

We document strong and robust negative correlations between the length of the title of an economics article and different measures of scientific quality. Analyzing all articles published between 1970 and 2011 and referenced in EconLit, we find that articles with shorter titles tend to be published in better journals, to be more cited and to be more innovative. These correlations hold controlling for unobserved time-invariant and observed time-varying characteristics of teams of authors.