Economic Perspectives
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2 The Journal of Economic Perspectives A journal of the American Economic Association Editor David H. Autor, Massachusetts Institute of Technology Co-editors Chang-Tai Hsieh, University of Chicago Ulrike Malmendier, University of California at Berkeley Associate Editors Benjamin G. Edelman, Harvard University Amy Finkelstein, Massachusetts Institute of Technology Gordon Hanson, University of California at San Diego Anil K Kashyap, University of Chicago Adam Looney, US Department of the Treasury David McKenzie, World Bank Richard Newell, Duke University Chad Syverson, University of Chicago Christopher Udry, Yale University Managing Editor Timothy Taylor Assistant Editor Ann Norman Editorial offices: Journal of Economic Perspectives American Economic Association Publications 2403 Sidney St., #260 Pittsburgh, PA jep@jepjournal.org The Journal of Economic Perspectives gratefully acknowledges the support of Macalester College. Registered in the US Patent and Trademark Office ( ). Copyright 2014 by the American Economic Association; All Rights Reserved. Composed by American Economic Association Publications, Pittsburgh, Pennsylvania, USA. Printed by R. R. Donnelley Company, Jefferson City, Missouri, 65109, USA. No responsibility for the views expressed by the authors in this journal is assumed by the editors or by the American Economic Association. THE JOURNAL OF ECONOMIC PERSPECTIVES (ISSN ), Summer 2014, Vol. 28, No. 3. The JEP is published quarterly (February, May, August, November) by the American Economic Association, 2014 Broadway, Suite 305, Nashville, TN Annual dues for regular membership are $20.00, $30.00, or $40.00 depending on income; for an additional $15.00, you can receive this journal in print. E-reader versions are free. For details and further information on the AEA go to Periodicals postage paid at Nashville, TN, and at additional mailing offices. POSTMASTER: Send address changes to the Journal of Economic Perspectives, 2014 Broadway, Suite 305, Nashville, TN Printed in the U.S.A.
3 The Journal of Economic Perspectives Contents Volume 28 Number 3 Summer 2014 Symposia Entrepreneurship Ryan Decker, John Haltiwanger, Ron Jarmin, and Javier Miranda, The Role of Entrepreneurship in US Job Creation and Economic Dynamism....3 William R. Kerr, Ramana Nanda, and Matthew Rhodes-Kropf, Entrepreneurship as Experimentation Thomas Åstebro, Holger Herz, Ramana Nanda, and Roberto A. Weber, Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics Classic Ideas in Development Douglas Gollin, The Lewis Model: A 60-Year Retrospective Chang-Tai Hsieh and Benjamin A. Olken, The Missing Missing Middle...89 Rafael La Porta and Andrei Shleifer, Informality and Development Aart Kraay and David McKenzie, Do Poverty Traps Exist? Assessing the Evidence Academic Production David Card and Stefano DellaVigna, Page Limits on Economics Articles: Evidence from Two Journals Raj Chetty, Emmanuel Saez, and László Sándor, What Policies Increase Prosocial Behavior? An Experiment with Referees at the Journal of Public Economics Kristin F. Butcher, Patrick J. McEwan, and Akila Weerapana, The Effects of an Anti-Grade-Inflation Policy at Wellesley College John P. Conley and Ali Sina Önder, The Research Productivity of New PhDs in Economics: The Surprisingly High Non-Success of the Successful Articles Raluca Dragusanu, Daniele Giovannucci, and Nathan Nunn, The Economics of Fair Trade John Mueller and Mark G. Stewart, Evaluating Counterterrorism Spending Features Timothy Taylor, Recommendations for Further Reading
4 Statement of Purpose The Journal of Economic Perspectives attempts to fill a gap between the general interest press and most other academic economics journals. The journal aims to publish articles that will serve several goals: to synthesize and integrate lessons learned from active lines of economic research; to provide economic analysis of public policy issues; to encourage cross-fertilization of ideas among the fields of economics; to offer readers an accessible source for state-of-the-art economic thinking; to suggest directions for future research; to provide insights and readings for classroom use; and to address issues relating to the economics profession. Articles appearing in the journal are normally solicited by the editors and associate editors. Proposals for topics and authors should be directed to the journal office, at the address inside the front cover. Policy on Data Availability It is the policy of the Journal of Economic Perspectives to publish papers only if the data used in the analysis are clearly and precisely documented and are readily available to any researcher for purposes of replication. Details of the computations sufficient to permit replication must be provided. The Editor should be notified at the time of submission if the data used in a paper are proprietary or if, for some other reason, the above requirements cannot be met. Policy on Disclosure Authors of articles appearing in the Journal of Economic Perspectives are expected to disclose any potential conflicts of interest that may arise from their consulting activities, financial interests, or other nonacademic activities. Journal of Economic Perspectives Advisory Board Tim Besley, London School of Economics Robert E. Hall, Stanford University Greg Ip, The Economist Christopher Jencks, Harvard University Carmen Reinhart, Peterson Institute John Roemer, Yale University Paul Romer, New York University Howard Rosenthal, New York University
5 The American Economic Association Correspondence relating to advertising, business matters, permission to quote, or change of address should be sent to the AEA business office: edu. Street address: American Economic Association, 2014 Broadway, Suite 305, Nashville, TN For membership, subscriptions, or complimentary JEP for your e-reader, go to the AEA website: Annual dues for regular membership are $20.00, $30.00, or $40.00, depending on income; for an additional fee, you can receive this journal, or any of the Association s journals, in print. Change of address notice must be received at least six weeks prior to the publication month. Copyright 2014 by the American Economic Association. Permission to make dig ital or hard copies of part or all of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or direct commercial advantage and that copies show this notice on the first page or initial screen of a display along with the full citation, including the name of the author. Copyrights for components of this work owned by others than AEA must be honored. Abstracting with credit is permitted. The author has the right to republish, post on servers, redistribute to lists, and use any component of this work in other works. For others to do so requires prior specific permission and/or a fee. Per missions may be requested from the American Economic Association, 2014 Broadway, Suite 305, Nashville, TN 37203; aeainfo@vanderbilt.edu. Founded in 1885 EXECUTIVE COMMITTEE Elected Officers and Members President WILLIAM D. NORDHAUS, Yale University President-elect RICHARD H. THALER, University of Chicago Vice Presidents DAVID CARD, University of California at Berkeley N. GREGORY MANKIW, Harvard University Members ANIL K KASHYAP, University of Chicago ROSA L. MATZKIN, University of California at Los Angeles AMY N. FINKELSTEIN, Massachusetts Institute of Technology JONATHAN LEVIN, Stanford University DORA L. COSTA, University of California at Los Angeles GUIDO W. IMBENS, Stanford University Ex Officio Members CLAUDIA GOLDIN, Harvard University CHRISTOPHER A. SIMS, Princeton University Appointed Members Editor, The American Economic Review PINELOPI KOUJIANOU GOLDBERG, Yale University Editor, The Journal of Economic Literature STEVEN N. DURLAUF, University of Wisconsin Editor, The Journal of Economic Perspectives DAVID H. AUTOR, Massachusetts Institute of Technology Editor, American Economic Journal: Applied Economics ESTHER DUFLO, Massachusetts Institute of Technology Editor, American Economic Journal: Economic Policy MATTHEW D. SHAPIRO, University of Michigan Editor, American Economic Journal: Macroeconomics JOHN LEAHY, New York University Editor, American Economic Journal: Microeconomics ANDREW POSTLEWAITE, University of Pennsylvania Secretary-Treasurer PETER L. ROUSSEAU, Vanderbilt University OTHER OFFICERS Editor, Resources for Economists WILLIAM GOFFE, Pennsylvania State University Director of AEA Publication Services JANE EMILY VOROS, Pittsburgh Managing Director of EconLit Product Design and Content STEVEN L. HUSTED, University of Pittsburgh Assistant Secretary-Treasurer JOHN J. SIEGFRIED, Vanderbilt University and University of Adelaide Counsel TERRY CALVANI, Freshfields Bruckhaus Deringer LLP Washington, DC ADMINISTRATORS Administrative Director REGINA H. MONTGOMERY Convention Manager MARLENE HIGHT
6 The Journal of Economic Perspectives Summer 2014, Volume 28, Number 3 Symposia Entrepreneurship Ryan Decker, John Haltiwanger, Ron Jarmin, and Javier Miranda, The Role of Entrepreneurship in US Job Creation and Economic Dynamism William R. Kerr, Ramana Nanda, and Matthew Rhodes-Kropf, Entrepreneurship as Experimentation Thomas Åstebro, Holger Herz, Ramana Nanda, and Roberto A. Weber, Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics Classic Ideas in Development Douglas Gollin, The Lewis Model: A 60-Year Retrospective Chang-Tai Hsieh and Benjamin A. Olken, The Missing Missing Middle Rafael La Porta and Andrei Shleifer, Informality and Development Aart Kraay and David McKenzie, Do Poverty Traps Exist? Assessing the Evidence Academic Production David Card and Stefano DellaVigna, Page Limits on Economics Articles: Evidence from Two Journals Raj Chetty, Emmanuel Saez, and László Sándor, What Policies Increase Prosocial Behavior? An Experiment with Referees at the Journal of Public Economics Kristin F. Butcher, Patrick J. McEwan, and Akila Weerapana, The Effects of an Anti-Grade-Inflation Policy at Wellesley College John P. Conley and Ali Sina Önder, The Research Productivity of New PhDs in Economics: The Surprisingly High Non-Success of the Successful Articles Raluca Dragusanu, Daniele Giovannucci, and Nathan Nunn, The Economics of Fair Trade John Mueller and Mark G. Stewart, Evaluating Counterterrorism Spending Recommendations for Further Reading
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