Lecture 23 - Economics 101A (Lecture 23) Stefano DellaVigna...

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Economics 101A (Lecture 23) Stefano DellaVigna and Nancy Tellem November 18, 2009
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Outline 1. Empirical Economics: Intro 2. Economics of The Media 3. Violent Movies and Violent Crime 4. Television Pricing
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1 Empirical Economics: Intro Sofa rwehavefocusedoneconom icmode ls For each of the models, there are important empirical questions Consumers : Savings decisions: Do Americans under-save? Attitudes toward risk: Should you purchase earthquake insurance? Self-control problems: How to incentive exercise to address obesity ‘epidemics’? Preferences: Does exposure to violent media change preferences for violent behavior?
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Producers: When do market resemble perfect competition versus monopoly/oligopoly? Also, what if market pricing is more complicated than just choice of price and quantity p ? Example of the latter: Television market model Viewers purchase cable and satellite subscription They do not pay the network How does the network make money?
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Today’s lecture provides two examples on how to apply economics 1. Example 1. Estimating the impact of violent media on violent crime Focus here is on creative and careful use of data Econometrics 140-141-142 to get started + ‘Freakonomics’ for ex- amples What do economists add to other social sciences? 2. Example 2. Discussion of pricing in the television industry How do you go from textbook examples to (complicated) reality? NancyTe l lem ’sins ightsasanins ider
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2 Economics of the Media Economic Recession: ‘ as ign i f cant decline in [the] economic activity spread across the economy Consumption Investment Recessions always have factors causing them – in this case, housing bubble and mortgage debacle However, an animal spirits factor is always crucial: If consumers expect a recession, they will cut spending and may cause a recession if there is none, or worsen one So, what a f ects consumer con f dence?
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Important factor is the media: How does media cover the economy? Di cult to study because of chicken and egg problem: Media re f ects consumer con F dence Consumer con F dence re f ects media coverage Recent research on Media Economics analyzes cases where one can esti- mate role of media
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Two main e f ects of the media First e f ect: Content (information + role models + emotions) Monitoring of politicians (Besley-Burgess QJE, Stromberg REStud) Telenovelas and fertility choices in developing countries (Jensen-Oster, La Ferrara et al.) Turnout and voting (Gentzkow QJE, DellaVigna-Kaplan QJE) Second e f ect: Time Americans spend 3+ hours per day spent with TV Even no direct impact of media, impact from substitution TV and radio reduce social gatherings in Indonesia (Olken) E f ect of violent movies on violent crime (Dahl-DellaVigna QJE)
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3E f ect of Violent Movies Key policy question: Is media violence a determinant of violent crime?
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This note was uploaded on 09/02/2010 for the course ECON 101a taught by Professor Staff during the Fall '08 term at Berkeley.

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Lecture 23 - Economics 101A (Lecture 23) Stefano DellaVigna...

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