After a decade of research, the effect of inequality on long-run economic growth remains unresolved, in part because researchers have treated omitted variable bias as an estimation problem rather than a deeper question of causality. In this article we argue that the key omitted variable is the...

Hirschman and Rothschild's (1973) tunnel effect refers to the propensity for individuals to be pleased by the success of others if they believe this signals an improvement in their own prospects. Tunnel effects are subject to two claims in the current literature on happiness: that they partly or...

This paper provides the first comparative analysis of the preference for social status across countries. We develop and provide support for two hypotheses: the cultural foundations hypothesis, which claims that individuals' preferences for status are rooted in persistent cultural values, and the...

This paper considers the merits of two classes of profit maximization problems, those involving perfectly competitive firms with quadratic and cubic cost functions. While relatively easy to develop and solve, problems in which the firm has a quadratic cost functions are structurally too simple...

This paper develops a dynamic, general equilibrium model of specialization-driven growth in which private coordination costs are decreasing in public expenditure on physical and institutional infrastructure. The model provides an explicitly economic explanation of the secular rise of government....

In this paper I advance and empirically support the indigenous religious values hypothesis, which holds that religions espouse the values indigenous to the countries in which they develop. To identify the indigenous values of a religion's homeland, I rely on the negative relationship between...

This paper investigates the political economy of taxation and growth in a model in which individuals have preference for high levels of relative consumption. A pivotal voter determines the equilibrium tax on capital, the revenues from which fund the provision of productive public goods. The...