ALBERT

Description: Aging occurs in all sexually reproducing organisms. That is, physical degradation over time occurs from conception until death. While the life span of a species is often viewed as a benchmark of aging, the pace and intensity of physical degradation over time varies owing to environmental influences, genetics, allocation of energetic investment, and phylogenetic history. Significant variation in aging within mammals, primates, and great apes, including humans, is therefore common across species. The evolution of aging in the hominin lineage is poorly known; however, clues can be derived from the fossil record. Ongoing advances continue to shed light on the interactions between life-history variables such as reproductive effort and aging. This review presents our current understanding of the evolution of aging in humans, drawing on population variation, comparative research, trade-offs, and sex differences, as well as tissue-specific patterns of physical degradation. Implications for contemporary health challenges and the future of human evolutionary anthropology research are also discussed.

Description: This article positions types at the center of anthropological knowledge production, considering them both from the abstract, analytical perspective of expert typologies and from the tacit, phenomenological perspective of everyday practices of typification. Proposing what an “anthropology of types,” broadly construed and across these two scales, might look like, I examine the histories and uses of types and typological thinking in anthropology, highlighting the empirical, analytical, methodological, ethical, and political questions they have raised. I then describe the phenomenological foundations of typification, how sociocultural and linguistic anthropologists have approached it, and the accompanying challenges related to translation and representation. Finally, I review ethnographies of expert practices of type production, tracing the circuit of typification–typology–type and back again to show how forms of expertise institutionalize lay knowledge in ways that further solidify the misrecognition of types as natural, and examine visual and arts-based interventions that draw attention to these processes.

Description: Fleeing violence, poverty, abuse, war, and climatic change, tens of millions of people have fled their homes in the Global South seeking refuge in adjacent nations and in the Global North. This modern migration entails a material, sensual experience in time. The craft of archaeology has traditionally engaged with the material, the sensual, and the temporal. Archaeologists who study the materiality of modern undocumented migration embrace activist-engaged research that applies the craft of archaeology to the contemporary world. They study the materiality of migration to reveal and comprehend the lived experience of displaced persons. They seek to understand the barriers erected to that journey, the things migrants acquire and leave on the trail, migrant placemaking, their stranded lives, how they build new lives, what the migrants have left behind in their home countries, and the heritage of forced migration. They approach this work in critical solidarity with displaced peoples.

Description: The prehistory of the Aegean, Balkans, and Carpathian Basin has changed dramatically in the last two decades. This review covers five aspects of these changes: ( a) the development of theoretical approaches, in which diversification from cultural archaeology has seen the spread of processual, postprocessual and later approaches; ( b) the acquisition of data, with the key major development being the proliferation of large-scale infrastructure projects; ( c) the synthesis of data, the most significant challenge being to make sense of the massive increase in paleo-environmental research, materials science, regional surveys, and site monographs; ( d) thematic questions, whose very diversity underscores the discipline's growth in these regions; and ( e) emergent trends, such as the creation of new forms of synthesis at the local, regional, and interregional scales, the theorizing and differentiation of new ways of relating people, places, plants, and animals and objects, and continuing diversification in the application of scientific techniques.

Description: While the proliferation of industrial toxic substances over the past century has had drastic environmental and bodily effects, conventional methods of measuring and mitigating those effects continue to produce uncertainty. The project of living in a toxic world entails ethical, technical, and aesthetic efforts to understand toxicity as a contingent encounter among beings, systems, and things, rather than as a fundamental characteristic of particular substances. Anthropologists do not just observe such encounters; they live and work within them. This review examines recent anthropological research on toxicity, proposing that responses to toxic disaster and occupational exposure, as well as acts of familial, state, or corporate care, are all modes of “toxic worlding.” The review concludes with a summary of recent research in collaborative and engaged anthropology, suggesting that such approaches are essential not so much for purifying or detoxifying the world as for making it otherwise.

Description: Unlike most mammals, human fathers cooperate with mothers to care for young to an extraordinary degree. Human paternal care likely evolved alongside our unique life history strategy of raising slow-developing, energetically costly children, often in rapid succession. Adaptive frameworks generally assume that paternal provisioning played a critical role in this pattern's emergence. We draw on nonhuman primate data to propose that nonprovisioning forms of low-cost hominin male care were potentially foundational and ratcheted up through evolutionary time, helping facilitate social contexts for later subsistence specialization and sharing. We then argue for expanding the breadth of anthropological research on paternal effects in families, particularly in three domains: direct care and teaching;social capital cultivation; and reduction of family conflict. Anthropologists can greatly contribute to conversations about the determinants of children's development across contexts, but we need to ask more expansive questions about the pathways through which caregivers (including fathers) affect child outcomes.

Description: Amenorrhea, anovulatory cycles, miscarriages, and other reproductive outcomes are often seen as pathological. Life history theory, in contrast, treats those outcomes as adaptations that helped women optimize the timing of reproductive ventures across our evolutionary history. Women's bodies adjust their reproductive strategies in response to socio-ecological conditions, a process mediated by the hypothalamic-pituitary-adrenal axis (HPAA). Here, we review the links between socio-ecological conditions, HPAA activity, and the pace of women's reproductive transitions such as puberty, age at first birth, interbirth interval, and perimenopause. We also discuss the HPAA's role as a modulator of reproductive function: It not only suppresses it but may also prime women's bodies for future reproductive ventures. We conclude by reviewing challenges and opportunities within our subfield, including the need for transdisciplinary teams to develop longitudinal studies to improve our understanding of women's reproductive trajectories and outcomes from the moment they are conceived.

Description: The Anthropocene, a proposed name for a geological epoch marked by human impacts on global ecosystems, has inspired anthropologists to critique, to engage in theoretical and methodological experimentation, and to develop new forms of collaboration. Critics are concerned that the term Anthropocene overemphasizes human mastery or erases differential human responsibilities, including imperialism, capitalism, and racism, and new forms of technocratic governance. Others find the term helpful in drawing attention to disastrous environmental change, inspiring a reinvigorated attention to the ontological unruliness of the world, to multiple temporal scales, and to intertwined social and natural histories. New forms of noticing can be linked to systems analytics, including capitalist world systems, structural comparisons of patchy landscapes, infrastructures and ecological models, emerging sociotechnical assemblages, and spirits. Rather than a historical epoch defined by geologists, the Anthropocene is a problem that is pulling anthropologists into new forms of noticing and analysis, and into experiments and collaborations beyond anthropology.

Description: Alloparental or extramaternal care is an integral aspect of human childrearing. This behavior has been explored both as an extension of the primary mother–infant dyad that evolved to meet the demands of altricial offspring and as an economic exchange of energy and resources. Much of this research centers on foraging or small-scale communities and positions the household as the central unit through which to explore negotiations of care. In this review, I use evidence from Black Caribbean communities living in industrialized countries to challenge the broad applicability of the analytical model of the bounded household and to question whether our current articulations of theory and empirical assessments of extramaternal care are well suited to investigations of these behaviors in the vast majority of contemporary human populations. Alloparental practices in the Caribbean reflect dynamic responses to maternal migration and the local influence of global labor markets. The children who remain at home experience variability in the care received from their surrogate parents. The dynamic aspect of the care practices enacted by these transnational families reveals the behavioral flexibility that has been integral to human survival.

Description: This review demonstrates that recent contributions by archaeologists to the study of cuisine and cooking present a new addition to the field of anthropology. Archaeologists situate their work historically and contextually by examining cuisines that are culturally constructed. Studying cooking and food preparation helps elucidate relationships among material practices, understandings of taste, identity, power, and meaning in a society. Archaeologists can not only discover specific ingredients in food, but also reconstruct recipes, decipher regional cuisines, ascertain sensory experiences, recover the tools in spatial context, recreate techniques used to prepare food in the past, and overall learn more about the social and cultural contexts of the human experience. This type of investigation is possible because archaeological work uses complementary data to explain social practices and because advances in archaeological methods make accessible previously undetectable data. Experimental archaeology focused on cooking in the past has not only revealed important social information but also captured the imagination of the public. Archaeological research on cooking and cuisine reveals social, political, religious, and economic practices in the past, and it has a unique ability to engage the present with the past through public outreach and solutions to food-related problems.

Description: Everyday life is critical in the constitution of selves and societies alike. Archaeology, with its attention to material and spatial remains, is in a unique position to further studies of everyday life, as ordinary materials and spaces formalize how people learn about themselves and their world. This review defines an archaeology of everyday life, examines its historical roots, synthesizes new literature on the topic, and outlines future directions. Although there is no established subfield called “everyday archaeology,” a rich and ever-growing body of recent research illustrates the impact of everyday life studies on archaeological interpretations and practice. Research on everyday life peoples the past in a way that few other paradigms do.

Description: The adaptive origins of primates and anthropoid primates are topics of enduring interest to biological anthropologists. A convention in these discussions is to treat the light environment as binary—night is dark, day is light—and to impute corresponding selective pressure on the visual systems and behaviors of primates. In consequence, debate has tended to focus on whether a given trait can be interpreted as evidence of nocturnal or diurnal behavior in the primate fossil record. Such classification elides the variability in light, or the ways that primates internalize light in their environments. Here, we explore the liminality of light by focusing on what it is, its many sources, and its flux under natural conditions. We conclude by focusing on the intensity and spectral properties of twilight, and we review the mounting evidence of its importance as a cue that determines the onset or offset of primate activities as well as the entrainment of circadian rhythms.

Description: On November 16, 1990, US President George H.W. Bush signed into law the Native American Graves Protection and Repatriation Act (NAGPRA). This federal legislation marked the culmination of decades of debate among scientists, curators, and Native American leaders and activists over the control of ancestral human remains and sacred, funerary, and communally owned objects. Anthropologists have now investigated myriad aspects of NAGPRA, from its underlying philosophical arguments; to its legislative history, its legal ramifications and political effects, and the methods of its implementation; to how it has remade American museums, archaeologists, tribes, and federally funded repositories; and to how it has ushered in a new (even if imperfect) period of collaboration and partnership. This article reviews the last 50 years of scholarship on repatriation, with a particular focus on NAGPRA's last 30 years.

Description: Previous research on language and emotion in anthropology has demonstrated that rather than being a private, subjective, and prediscursive experience belonging to individuals, emotion is an intersubjective, emergent process that is not only everywhere in language but also everywhere language is. In this review, I discuss how recent research in linguistic anthropology and related fields has continued to build on such insights in investigations of the flow of affect across bodies, the ways in which politically situated ideologies of language and emotion function at various institutional scales, and the role of language and emotion in the enactment of agency. Overall, my discussion is framed in a consideration of how this body of work contributes both theoretically and methodologically to understanding the role that language and emotion play in mediating the dynamic relationship between vulnerability and political agency.

Description: As complex institutions extend into and govern greater spheres of social life, ethnographers contend with policy in an ever-widening range of fieldsites. This review examines anthropology of policy as an emerging subfield of political anthropology, focusing on policy making as central to contemporary governance in English-language ethnographies. Broadening the analytical field in the study of policy to include the targets of policy and their allies is one of the central contributions of an anthropological approach to policy making. Anthropological studies of policy production, implementation, and effects face significant methodological and ethical challenges. Scholarly debates in the United States and Europe continue to erupt over the production of scholarship intended to inform policy making, including the co-option of ethnography. While turning the anthropological gaze on powerful political actors could contribute to decolonization efforts within the discipline, ethically adopting ethnographic research into policy making requires complex alliances with communities targeted by policy.

Description: Climate anthropology has broadened over the past decade from predominately locally focused studies on climate impacts to encompass new approaches to climate science, mitigation, sustainability transformations, risks, and resilience. We examine how theoretical positionings, including from actor–network theory, new materialisms, ontologies, and cosmopolitics, have helped expand anthropological climate research, particularly in three key interrelated areas. First, we investigate ethnographic approaches to climate science knowledge production, particularly around epistemic authority, visioning of futures, and engagements with the material world. Second, we consider climate adaptation studies that critically examine discourses and activities surrounding concepts of vulnerability, subjectivities, and resilience. Third, we analyze climate mitigation, including energy transitions, technological optimism, market-based solutions, and other ways of living in a carbon-constrained world. We conclude that anthropological approaches provide novel perspectives, made possible through engagements with our uniquely situated research partners, as well as opportunities for opening up diverse solutions and possible transformative futures.

Description: Archaeological investigations of late prehistoric Iberia between the Neolithic and Bronze Age (6000–1500 BCE) have long been a battleground between indigenist and exogenous models, and understandings of mobility and alterity have played an important role in these debates. Prior to the development of radiocarbon dating, key cultural transformations, such as megaliths, copper metallurgy, fortified hilltop settlements, and Beakers, were generally associated with nonlocal peoples, migrants, or colonizers. With the incorporation of radiocarbon dating to Iberian archaeological contexts in the 1980s and the determination of the antiquity of many of these cultural changes, the pendulum swung in the other direction, with a marked shift toward viewing autochthonous origins for these watershed transitions. In recent years, developments in strontium isotope analyses, genetics, and raw material characterization studies have provided new evidence for the mobility of peoples and things, and diffusionist models, sometimes without critical theorization, have once again reemerged.

Description: The study of ancient genomes has burgeoned at an incredible rate in the last decade. The result is a shift in archaeological narratives, bringing with it a fierce debate on the place of genetics in anthropological research. Archaeogenomics has challenged and scrutinized fundamental themes of anthropological research, including human origins, movement of ancient and modern populations, the role of social organization in shaping material culture, and the relationship between culture, language, and ancestry. Moreover, the discussion has inevitably invoked new debates on indigenous rights, ownership of ancient materials, inclusion in the scientific process, and even the meaning of what it is to be a human. We argue that the broad and seemingly daunting ethical, methodological, and theoretical challenges posed by archaeogenomics, in fact, represent the very cutting edge of social science research. Here, we provide a general review of the field by introducing the contemporary discussion points and summarizing methodological and ethical concerns, while highlighting the exciting possibilities of ancient genome studies in archaeology from an anthropological perspective.

Description: Recent anthropological works on the aftermath of mass violence can be studied as having generated a negative methodology. New work has addressed the gaps, voids, and hollows of knowledge production in and about sites of mass atrocity and is developing novel research practices within these schisms. While considering the (im)possibility of research as the condition of possibility (as well as the question) for anthropological (and historical) work on the long durée of mass violence, this review highlights some adverse ethnographic methods that have emerged (and have been conceptualized) in the interstices. A critical positionality vis-à-vis anthropology's positive outlook for evidentiary presences in the field has moved scholars of mass atrocity and its aftermath toward methods that would tarry in and through the negative.

Description: Deaf anthropology is a field that exists in conversation with but is not reducible to the interdisciplinary field of deaf studies. Deaf anthropology is predicated upon a commitment to understanding deafnesses across time and space while holding on to “deaf” as a category that does something socially, politically, morally, and methodologically. In doing so, deaf anthropology moves beyond compartmentalizing the body, the senses, and disciplinary boundaries. We analyze the close relationship between anthropology writ large and deaf studies: Deaf studies scholars have found analytics and categories from anthropology, such as the concept of culture, to be productive in analyzing deaf peoples’ experiences and the sociocultural meanings of deafness. As we note, however, scholarship on deaf peoples’ experiences is increasingly variegated. This review is arranged into four overlapping sections titled Socialities and Similitudes; Mobilities, Spaces, and Networks; Modalities and the Sensorium; and Technologies and Futures.

Description: This article summarizes my perspective on vital lessons that I have learned over my 45 years as a practicing anthropologist. To avoid repeating previously published biographical details of my life, I have only briefly described the facts and stages of my career here. Instead I have focused on a personal account of what I have learned from the events and experiences of my career and have attempted to distill them into underlying premises that have guided my academic vocation. I call them “nine truths I live by.”

Description: In this article, we review the nascent literature on the transmission of negative policy rates. We discuss the theory of how the transmission depends on bank balance sheets, and how this changes once policy rates become negative. We review the growing evidence that negative policy rates are special because the pass-through to banks’ retail deposit rates is hindered by a zero lower bound. We summarize existing research on the impact of negative rates on banks’ lending and securities portfolios as well as their consequences for the real economy. Finally, we discuss the role of different initial conditions when the policy rate becomes negative, and potential interactions between negative policy rates and other unconventional monetary policies. Expected final online publication date for the Annual Review of Financial Economics, Volume 13 is November 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: State-owned investors (SOIs), including sovereign wealth funds and public pension funds, have $27 trillion in assets under management in 2020, making these funds the third largest group of asset owners globally. SOIs have become the largest and are among the most important private equity investors, and they are key investors in other alternative asset investments such as real estate, infrastructure, and hedge funds. SOIs are also leaders in promoting environmental, social, and governance policies and corporate social responsibility policies in investee companies. We document the rise of SOIs, assess their current investment policies, and describe how their state ownership both constrains and enhances their investment opportunity sets. We survey the most impactful recent academic research on sovereign wealth funds, public pension funds, and their closest financial analogs, private pension funds. We also introduce a new Governance-Sustainability-Resilience Scoreboard for SOIs and survey research examining their role in promoting good corporate governance. Expected final online publication date for the Annual Review of Financial Economics, Volume 13 is November 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: This review addresses, from a unified perspective, the important role of conflicts of interest in various facets of asset management and advising, including managing individual portfolios, institutional asset management, and order routing. I use an agency framework to highlight the sources of the underlying incentive conflicts, the nature of efficient solutions, the role of the structure of compensation in mitigating (or creating) the agency problem, and the use of benchmarks as a solution. I also highlight several contemporary contexts in which conflicts of interest are important. Expected final online publication date for the Annual Review of Financial Economics, Volume 12 is November 2, 2020. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: Nearly a decade ago, we published the first Annual Review of Anthropology article on tobacco ( Kohrman & Benson 2011 ). Since then, much has happened, and much has persisted regarding human-tobacco relations. Here, we present a stocktaking of how scholars drawing on anthropological methods have responded.

Description: From the late 1990s, a wave of writing in anthropology took up the idiom of madness to orient a critical approach. However, anthropology's use of madness as critique reflects a longer conversation between psychiatry and anthropology. As madness is used to point to and connect other things—afflictions, therapeutics, medicine, politics, colonialism, religion, and, especially, trauma as a social condition—it is noteworthy not only for its breadth, but also because it is often applied to contexts in which it already has purchase as critique. Thus, madness in anthropology is a mirror onto the discipline's recursive engagements with psychiatry and the worlds to which both turn their attention.

Description: We review the literature on debt structure, which is a central element in a firm's capital structure. We first survey both theoretical and empirical research pertaining to debt characteristics—maturity and priority—and debt types—bank loans, corporate bonds, credit lines, commercial paper, and capital leases. We then present comprehensive empirical evidence on public US firms’ debt structure over the period 2002–2018, highlighting that more than three-quarters of US firms concentrate their borrowing in one debt type, and offer some suggestive explanations for the observed pattern. Finally, we discuss directions for future research, including a better understanding of debt structure choices by non-US firms and by private firms, the cross-sectional and temporal variations in debt structure, the corporate policy implications of firms’ debt structure choices, and the interaction between types of assets and debt structure. Expected final online publication date for the Annual Review of Financial Economics, Volume 12 is November 2, 2020. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: Global activities of banks are a core manifestation of broader patterns of globalization of production, trade, and finance. This article reviews the extensive recent empirical and theoretical literature on global banking, emphasizing the careful empirical analyses that incorporate key dimensions of heterogeneity among borrowers and lenders, and across activities. The actions of globally active banks are consequential, with cost and benefit trade-offs that differ during their lifetimes and at times of stress. Both research and policymaking around global banking benefit from improved infrastructures around collection of and access to granular data and repositories of evaluation studies. Although overall positive contributions from welfare perspectives arise from the activities of global banks, these organizations require appropriately targeted policy frameworks and oversight. Expected final online publication date for the Annual Review of Financial Economics, Volume 12 is November 2, 2020. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: The credit default swap (CDS) remains an important class of derivatives contract despite the declining activity in the single-name corporate market. I provide a quick introduction to the contracts, the pricing formula used to interpret the market premiums, the development in trading volumes, and some key insights that are important for understanding its role in markets. I then take a closer look at the CDS-bond basis and the role of trading and regulatory frictions. Finally, the European sovereign debt crisis brought back in focus the notion of a quanto spread, which I explain. Expected final online publication date for the Annual Review of Financial Economics, Volume 12 is November 2, 2020. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: We assess the complicated reality of monetary policy transmission through mortgage markets by synthesizing the existing literature on the role of refinancing in policy implementation. After briefly reviewing mortgage market institutions in the USA and documenting refinance activity over time, we summarize the links between refinancing and consumption and describe the frictions impeding the refinancing channel. The review draws heavily on research emerging from the experience of the financial crisis of 2008–2009, as it highlights a combination of market, institutional, and policy-making factors that dulled the transmission mechanism. We conclude with a discussion of potential mortgage market innovations and the applicability of lessons learned to the ongoing stresses induced by the COVID-19 pandemic. Expected final online publication date for the Annual Review of Financial Economics, Volume 12 is November 2, 2020. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: Real interest rates have been persistently below historical norms over the past decade, leading economists and policy makers to view the equilibrium real interest rate as likely to be low for some time. Various definitions and approaches to estimating the equilibrium real interest rate are examined, including approaches based on the term structure of interest rates and small macroeconomic models. The individual country approaches common in the literature are extended to allow for global trend and cyclical factors. The analysis finds that global factors dominate the downward trend in the equilibrium interest rate across 13 advanced economies. A corollary of this finding is that the U.S. equilibrium rate can be informed by global developments and is recently lower than estimated in U.S.-only studies. The analysis also highlights how the common global trend confounds empirical assessments of the determinants of movements in the equilibrium rate and the need to better integrate term-structure and macroeconomic approaches. Expected final online publication date for the Annual Review of Financial Economics, Volume 12 is Novembe 2, 2020. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: This is an edited version of a talk given at the Robert C. Merton 75th Birthday Celebration Conference held at MIT on August 5 and 6, 2019. A video of the talk is available at https://bit.ly/2nvITM6 . Expected final online publication date for the Annual Review of Financial Economics, Volume 12 is Novembe 2, 2020. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: We review recent research into how firms navigate four complex decisions in corporate takeovers: ( a) deal initiation, ( b) pre-offer toehold acquisition, ( c) the initial (public) offer price, and ( d) the payment method. We focus the evidence on public targets and the theory on first-price or English (ascending-price) auctions with two competing bidders and a single (pivotal) seller. The evidence shows that nearly half of bids are initiated by the target (not a bidder). Notwithstanding the large offer premiums, only a small fraction of bidders acquire a target toehold prior to bidding. The first bid rarely attracts rival bidders, suggesting effective competition deterrence. Bid jumps are high, as predicted when bidding costs are large. Pre-bid stock price run-ups reflect rational market deal anticipation and are understood as such by the deal negotiators. Bidders select stock payment when concerned with adverse selection on the target side of the deal.

Description: We provide a critical review of macroeconomic models used for monetary policy at central banks from a finance perspective. We review the history of monetary policy modeling, survey the core monetary models used by major central banks, and construct an illustrative model for those readers who are unfamiliar with the literature. Within this framework, we highlight several important limitations of current models and methods, including the fact that local-linearization approximations omit important nonlinear dynamics, yielding biased impulse-response analysis and parameter estimates. We also propose new features for the next generation of macrofinancial policy models, including a substantial role for the financial sector, the government balance sheet, and unconventional monetary policies; heterogeneity, reallocation, and redistribution effects;the macroeconomic impact of large nonlinear risk premium dynamics; time-varying uncertainty; financial sector and systemic risks; imperfect product market and markups; and further advances in solution, estimation, and evaluation methods for dynamic quantitative structural models.

Description: Starting with his 1970 doctoral dissertation and continuing to today, Robert C. Merton has revolutionized the theory and practice of finance. In 1997, Merton shared a Nobel Prize in Economics “for a new method to determine the value of derivatives.” His contributions to the science of finance, however, go far beyond that. In this article I describe Merton's main contributions. They include the following: 1.  The introduction of continuous-time stochastic models (the Ito calculus) to the theory of household consumption and investment decisions. Merton's technique of dynamic hedging in continuous time provided a bridge between the theoretical complete-markets equilibrium model of Kenneth Arrow and the real world of personal financial planning and management. 2.  The derivation of the multifactor Intertemporal Capital Asset Pricing Model (ICAPM). The ICAPM generalizes the single-factor CAPM and explains why that model might fail to properly account for observed market excess returns. It also provides a theory to identify potential forward-looking risk premia for use in factor-based investment strategies. It is therefore both a positive and normative theory. 3.  The invention of Contingent Claims Analysis (CCA) as a generalization of option pricing theory. CCA applies the technique of dynamic replication to the valuation and risk management of a wide range of corporate and government liabilities. Merton's CCA model for the valuation and analysis of risky debt is known among scholars and practitioners alike as the Merton Model. 4.  The development of financial engineering, which employs CCA to design and produce new financial products. Merton was the first to apply CCA to analyze government guaranty programs such as deposit insurance, and to suggest improvements in the way those programs are managed. He and his students have applied his insights at both the micro and macro policy levels. 5.  And finally, the development of a theory of financial intermediation that explains and predicts how financial systems differ across countries and change over time. Merton has applied that theory, called functional and structural finance, to guide the design and regulation of financial systems at the levels of the firm, the industry, and the nation. He has also used it to propose reforms in pensions, sovereign wealth funds, and macrostabilization policy. This article is one of a pair of articles published in this volume about Robert C. Merton's contributions to the science of financial economics. This article was originally published in Volume 11 of the Annual Review of Financial Economics. The other article in this pair is “ Robert C. Merton: The First Financial Engineer ” by Andrew W. Lo.

Description: Textual analysis, implemented at scale, has become an important addition to the methodological toolbox of finance. In this review, given the proliferation of papers now using this method, we first provide an updated survey of the literature while focusing on a few broad topics—social media, political bias, and detecting fraud. We do not attempt to survey the various statistical methods and instead initially focus on the construction and use of lexicons in finance. We then center the discussion on readability as an attribute frequently incorporated in contemporaneous research, arguing that its use begs the question of what we are measuring. Finally, we discuss how the literature might build on the intent of measuring readability to measure something more appropriate and more broadly relevant—complexity.

Description: Life-cycle portfolio choice models capture the role of human capital, housing, borrowing constraints, background risk, and several other crucial ingredients for determining the savings and investment decisions of households. Over the last two decades, this literature has provided us with multiple insights regarding the asset allocation decisions of individual investors. This article provides a critical survey of this research and suggests directions for future research, namely incorporating additional forms of household heterogeneity.

Description: There is sufficient evidence in the popular, legal, and financial literatures that informed options trading ahead of scheduled and unexpected corporate events is pervasive. In this review, we piece together the extant evidence on this topic into a cohesive picture, which includes abnormal activity ahead of announcements of earnings, mergers and acquisitions, as well as numerous other corporate events. We also discuss the more limited evidence on informed trading in other derivatives markets, such as credit default swaps. In addition, we characterize the impact and features of illegal insider trading and insider trading networks. We also provide a brief overview of the legal framework in the United States concerning legal and illegal insider trading to emphasize the challenges associated with identifying informed options trading. We end with our suggestions regarding future research opportunities in this broad topic.

Description: Short-term debt that can serve as a medium of exchange is designed to be information insensitive. No one should be tempted to acquire private information to gain an informational advantage in trading that could destabilize the value of the debt. Short-term debt minimizes the incentive to acquire information among all securities of equal value backed by the same underlying asset. Moreover, backing short-term debt with debt (i.e., using debt as collateral) minimizes information sensitivity across all types of collateral with equal value. These features are consistent with financial crises occurring periodically. In the information view adopted here, a financial crisis can occur when the collateral backing the short-term debt is thought to have lost enough value to raise doubts among the traders that some may acquire private information. In a crisis, there is a shift from information-insensitive to information-sensitive debt.

Description: Technological innovation is critical to a country's economic development and a firm's long-term success. This article reviews the recent literature that links institutions and innovation. Specifically, we focus on five aspects of the linkage. First, we discuss the literature that explores how the culture of a society or a corporation influences the process, features, and outcomes of innovation activities. Second, we review papers that focus on the role of demographic characteristics in innovation. Third, we describe studies examining the relation between market development and firms’ incentives as well as their ability to engage in innovative investments. Fourth, we discuss the literature on how innovation is shaped by a nation's laws and policies. Finally, we review the academic papers regarding the effects of government regulations and policies on innovation activities. Overall, this article aims to provide a synthetic and evaluative review of recent academic research that links various aspects of institutions and innovation. We also provide our views on potential directions for future research in this area.

Description: We provide an overview of the relationship between financial networks and systemic risk. We present a taxonomy of different types of systemic risk, differentiating between direct externalities between financial organizations (e.g., defaults, correlated portfolios, fire sales), and perceptions and feedback effects (e.g., bank runs, credit freezes). We also discuss optimal regulation and bailouts, measurements of systemic risk and financial centrality, choices by banks regarding their portfolios and partnerships, and the changing nature of financial networks. Expected final online publication date for the Annual Review of Economics, Volume 13 is August 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: There is compelling evidence that globalization shocks, often working through culture and identity, have played an important role in driving up support for populist movements, particularly of the right-wing kind. I start with an empirical analysis of the 2016 presidential election in the United States to show that globalization-related attitudinal variables were important correlates of the switch to Trump. I then provide a conceptual framework that identifies four distinct channels through which globalization can stimulate populism, two each on the demand and supply sides of politics. I evaluate the empirical literature with the help of this framework, discussing trade, financial globalization, and immigration separately. I conclude the review by discussing some apparently anomalous cases in which populists have been against, rather than in favor of, trade protection. Expected final online publication date for the Annual Review of Economics, Volume 13 is August 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: We review the current state of the estimation of dynamic stochastic general equilibrium (DSGE) models. After introducing a general framework for dealing with DSGE models, the state-space representation, we discuss how to evaluate moments or the likelihood function implied by such a structure. We discuss, in varying degrees of detail, recent advances in the field, such as the tempered particle filter, approximated Bayesian computation, Hamiltonian Monte Carlo, variational inference, and machine learning. These methods show much promise but have not been fully explored by the DSGE community yet. We conclude by outlining three future challenges for this line of research. Expected final online publication date for the Annual Review of Economics, Volume 13 is August 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: This review focuses on properties related to the robustness and stability of Nash equilibria in games with a large number of players. Somewhat surprisingly, these equilibria become substantially more robust and stable as the number of players increases. We illustrate the relevant phenomena through a binary-action game with strategic substitutes, framed as a game of social isolation in a pandemic environment. Expected final online publication date for the Annual Review of Economics, Volume 13 is August 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: In representative democracies, a variety of rules are employed to select and retain public officials to reflect public preferences over policies. We discuss the literature on selection and retention rules for government officials, focusing on low-information offices. First, we overview the historical origins and the scope of the variation in selection and retention rules. Second, we provide conceptual frameworks for assessing the advantages and disadvantages of direct elections and discuss various factors that influence the functioning of elections. Third, we present empirical regularities. We summarize the baseline effects of the institutional variation and their interaction with factors such as media and compensation. Finally, we discuss outstanding questions on theoretical and empirical fronts, and how the digitization of government information and advances in machine learning can open up new avenues for research. Expected final online publication date for the Annual Review of Economics, Volume 13 is August 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: This article reviews the literature on civil conflict and development with a focus on the socioeconomic consequences of violence and on promising policies for fostering peace. We make four main points. First, one of the reasons conflict is still often overlooked as key factor for development is that conflict costs are typically underestimated, in particular the shadow costs of deterrence. Second, there are several types of war traps that hold countries back, both economically and politically. Third, to break these traps, policies must be calibrated to address jointly both poverty and social tensions, as there is a strong macro complementarity between peace and development objectives. We document how single-minded policies that ignore this dual challenge can spectacularly fail, and we discuss in depth a series of particularly promising policies. Fourth, we highlight the increasing potential of novel data collection methodologies and the need for policy evaluation tools in violent contexts. Expected final online publication date for the Annual Review of Economics, Volume 13 is August 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: Stephen A. Ross was one of the most influential scholars in the field of financial economics in the late twentieth century. Ross's work was central to several novel domains of economic inquiry. His contributions included the arbitrage pricing theory (APT), the risk-neutral pricing of contingent claims, the binomial option pricing model, a theory of the term structure of interest rates, a seminal contribution to the economic theory of agency, and insights about conditioning biases in ex post performance measurement. In this article, we discuss his seminal papers and the broad scope of his curiosity within the arc of a remarkably productive and influential career that spanned five decades and yet ended sooner than most who knew him expected. Expected final online publication date for the Annual Review of Financial Economics, Volume 13 is March 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: Voters have strong incentives to increase their influence by trading votes, acquiring others’ votes when preferences are strong in exchange for giving votes away when preferences are weak. But is vote trading welfare improving or welfare decreasing? For a practice long believed to be central to collective decisions, the lack of a clear answer is surprising. We review the theoretical literature and, when available, its related experimental tests. We begin with the analysis of logrolling, the exchange of votes for votes. We then focus on vote markets, where votes can be traded against a numeraire. We conclude with procedures allowing voters to shift votes across decisions—that is, allowing one to trade votes with oneself only. We find that vote trading and vote markets are typically inefficient; more encouraging results are obtained by allowing voters to allocate votes across decisions. Expected final online publication date for the Annual Review of Economics, Volume 13 is August 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: Financial crises are a recurring feature of modern economies. This article summarizes the lessons learned from policy interventions and tools used to resolve banking crises from a practical, operational perspective and in light of the experiences and challenges faced during and since the 2008 global financial crisis. Managing a systemic banking crisis is a complex, multiyear process and requires a comprehensive framework for addressing systemic banking problems while minimizing taxpayers’ costs. Expected final online publication date for the Annual Review of Financial Economics, Volume 13 is March 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: Attention has become an issue of intense political, economic, and moral concern over recent years: from the commodification of attention by digital platforms to the alleged loss of the attentional capacities of screen-addicted children (and their parents). While attention has rarely been an explicit focus of anthropological inquiry, it has still played an important if mostly tacit part in many anthropological debates and subfields. Focusing on anthropological scholarship on digital worlds and ritual forms, we review resources for colleagues interested in this burgeoning topic of research and identify potential avenues for an incipient anthropology of attention, which studies how attentional technologies and techniques mold human minds and bodies in more or less intentional ways. Expected final online publication date for the Annual Review of Anthropology, Volume 50 is October 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: Markets for consumer financial services are growing rapidly in low- and middle-income countries and are being transformed by digital technologies and platforms. With growth and change come concerns about protecting consumers from firm exploitation due to imperfect information and contracting as well as from their own decision-making limitations. We seek to bridge regulator and academic perspectives on these underlying sources of harm and five potential problems that can result: high and hidden prices, overindebtedness, postcontract exploitation, fraud, and discrimination. These potential problems span product markets old and new and could impact micro- and macroeconomies alike. Yet there is little consensus on how to define, diagnose, or treat such problems. Evidence-based consumer financial protection will require substantial advances in theory and especially empirics, and we outline key areas for future research. Expected final online publication date for the Annual Review of Financial Economics, Volume 13 is November 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Description: This article provides a selective review of the recent literature on econometric models of network formation. I start with a brief exposition on basic concepts and tools for the statistical description of networks; then I offer a review of dyadic models, focusing on statistical models on pairs of nodes, and I describe several developments of interest to the econometrics literature. I also present a discussion of nondyadic models in which link formation might be influenced by the presence or absence of additional links, which themselves are subject to similar influences. This argument is related to the statistical literature on conditionally specified models and the econometrics of game theoretical models. I close with a (nonexhaustive) discussion of potential areas for further development.

Description: This review describes interactions between monetary and fiscal policies that affect equilibrium price levels and interest rates by critically surveying theories about ( a) optimal anticipated inflation, ( b) optimal unanticipated inflation, and ( c) conditions that secure a nominal anchor in the sense of a unique price level path. We contrast incomplete theories whose inputs are budget-feasible sequences of government-issued bonds and money with complete theories whose inputs are bond/money strategies described as sequences of functions that map time t histories into time t government actions. We cite historical episodes that confirm the theoretical insight that lines of authority between a Treasury and a central bank can be ambiguous, obscure, and fragile.

Description: This article reviews the literature on aspirations in economics, with a particular focus on socially determined aspirations. The core theory builds on two fundamental principles: ( a) Aspirations can serve to inspire, but still higher aspirations can lead to frustration and resentment; and ( b) aspirations are largely determined by an individual's social environment. Using the structure of this core theory, we discuss the implications of our framework for the study of interpersonal inequality, social conflict, fertility choices, risk taking, and goal setting.

Description: Data sets that are terabytes in size are increasingly common, but computer bottlenecks often frustrate a complete analysis of the data, and diminishing returns suggest that we may not need terabytes of data to estimate a parameter or test a hypothesis. But which rows of data should we analyze, and might an arbitrary subset preserve the features of the original data? We review a line of work grounded in theoretical computer science and numerical linear algebra that finds that an algorithmically desirable sketch, which is a randomly chosen subset of the data, must preserve the eigenstructure of the data, a property known as subspace embedding. Building on this work, we study how prediction and inference can be affected by data sketching within a linear regression setup. We use statistical arguments to provide “inference-conscious” guides to the sketch size and show that an estimator that pools over different sketches can be nearly as efficient as the infeasible one using the full sample.

Description: The fast and often chaotic urbanization of the developing world generates both economic opportunity and challenges, like contagious disease and congestion, because proximity increases both positive and negative externalities. In this article, we review the expanding body of economic research on developing-world cities. One strand of this literature emphasizes the economic benefits of urban connection, typically finding that agglomeration benefits are at least as high in poor countries as they are in rich countries. Yet there remains an ongoing debate about whether slums provide a path to prosperity or an economic dead end. A second strand of research analyzes the negative externalities associated with urban density, and the challenges of building and maintaining infrastructure to moderate those harms. Researchers are just beginning to understand the links between institutions (such as public–private partnerships), incentives (such as congestion pricing), and the effectiveness of infrastructure spending in addressing urban problems. A third line of research addresses the spatial structure of cities directly with formal, structural models. These structural models seem particularly valuable when analyzing land-use and transportation systems in the far more fluid cities of the developing world.

Description: Alternative work arrangements, defined both by working conditions and by workers’ relationship to their employers, are heterogeneous and common in the United States. This article reviews the literature on workers’ preferences over these arrangements, inputs to firms’ decisions to offer them, and the impact of regulation. It also highlights several descriptive facts: The typical worker is in a job where almost none of the tasks can be performed from home, work arrangements have been relatively stable over the past 20 years, work conditions vary substantially with education, and jobs with schedule or location flexibility are less family friendly on average. This last fact explains why women are not more likely to have schedule or location flexibility and seem to largely reduce their working hours to get more family-friendly arrangements.

Description: This article surveys the literature on capital flows and leverage. We summarize results from the existing papers and document new facts. The empirical literature takes both a macro and a micro approach. The macro approach focuses on aggregate data both over time and in the cross-section of countries, and it documents a positive correlation between total capital flows, build-ups in terms of external and domestic debt to GDP ratio, and financial crises. The micro approach uses granular data and focuses on leverage at the firm and bank level and associates this leverage with country-level capital flows and related exchange rate movements. We document new facts from a hybrid approach that focuses on the relationship between sector-level capital flows and sectoral leverage. We highlight the interconnections between different approaches and argue that harmonization of the macro and micro approaches can yield a more complete understanding of the effect of capital flows on country-, sector-, and firm- and bank-level leverage associated with credit booms and busts.

Description: This conversation between Nobel Laureates Amartya Sen and Angus Deaton, moderated by Annual Review of Economics Editorial Committee Member Tim Besley, focuses on bringing ethical issues into economics, and the implications that this has for the practice and teaching of economics. A video of this interview is available online at https://www.annualreviews.org/r/EconMoralCompass .

Description: We review the discontinuous games literature, with a sharp focus on conditions that ensure the existence of pure and mixed strategy Nash equilibria in strategic form games and of Bayes-Nash equilibria in Bayesian games.

Description: World Bank estimates put absolute poverty in Asia and Africa at 50–60% of the population in 1980 and at negligible levels in the developed world. This review investigates whether Asia was always so poor, as well as the history of poverty in today's rich countries. Poverty measurement methodologies are reviewed, and it is argued that a basic needs approach is the best way to tackle poverty measurement in the past. This approach is related to recent advances in the measurement of historical real wages. Estimates of poverty rates in England between 1290 and 1867 are presented, as are estimates for preindustrial India. About one-quarter of the English population was in extreme poverty in the late Middle Ages, and the proportion had fallen below 10% by 1688. About one-quarter of the people in northern India lived in extreme poverty in the early nineteenth century, and the proportion was likely lower in 1600. The very high poverty rates in India in 1980 were a development of the colonial era.

Description: Substantial research in development economics has highlighted the presence of weak institutions, market failures, and distortions in developing countries. Yet much of the knowledge generated in international trade comes from workhorse models that abstract from these frictions. This review summarizes the recent literature that assesses how these characteristics interact (or may interact) with trade reforms, resulting in different impacts in developing countries relative to what we would expect in developed countries. We discuss understudied areas that warrant further research.

Description: This article reviews the economic literature on informality, its causes, and its consequences for development. It covers a comprehensive body of research that ranges from well-identified experimental studies to equilibrium macro models, and which more recently includes structural models that integrate both micro and macro effects. The results available in the literature indicate that lowering the costs of formality is not an effective policy to reduce informality but may generate positive aggregate effects, such as higher output and total factor productivity (TFP). The most effective formalization policy is to increase enforcement on the extensive margin but not on the intensive margin of informality. The former generates substantial gains in aggregate TFP and output, without necessarily increasing unemployment. However, the overall welfare impacts are likely to depend on the transitional dynamics between steady states, which remains an open area for future research.

Description: The issue of one's identity has loomed large recently and has unfortunately been used more and more as a wedge to separate subgroups. It is important to understand the ramifications of identity, both to limit the negative consequences (such as so-called identity politics) and to be able to use one's sense of identity as a positive force in the world. What are effective approaches to allow positive identities and pride about one's social identity to be reinforced for the greater good? Recent work suggests that some forms of team competition can induce greater effort, which can be applied to areas such as microlending, charitable giving, and organization of the gig economy. And yet many fascinating questions remain; for example, what is the interaction of salience, social norms, and preferences on the effects of social identity in our society?

Description: This article reviews the broad changes in US trade policy over the course of the nation's history. Import tariffs have been the main instrument of trade policy and have had three main purposes: to raise revenue for the government, to restrict imports and protect domestic producers from foreign competition, and to reach reciprocity agreements that reduce trade barriers. Each of these three objectives—revenue, restriction, and reciprocity—was predominant in one of three consecutive periods in history. The political economy of these tariffs has been driven by the location of trade-related economic interests in different regions and the political power of those regions in Congress. The review also addresses the impact of trade policies on the US economy, such as the welfare costs of tariffs, the role of protectionism in fostering US industrialization, and the relationship between the Smoot–Hawley Tariff Act and the Great Depression of the 1930s.

Description: This article critically assesses prevailing measures of global poverty. A welfarist interpretation of global poverty lines is augmented by the idea of normative functionings, the cost of which varies across countries. In this light, current absolute measures are seen to ignore important social effects on welfare, while popular, strongly relative measures ignore absolute levels of living. It is argued that a new hybrid measure is called for, combining absolute and weakly relative measures consistent with how national lines vary across countries. Illustrative calculations indicate that we are seeing a falling incidence of poverty globally over the past 30 years. This is mainly due to lower absolute poverty counts in the developing world. While fewer people are poor by the global absolute standard, more are poor by the country-specific relative standard. The vast bulk of poverty, both absolute and relative, is now found in the developing world.

Description: Traditional decision theory assumes that people respond to the exact features of the options available to them, but observed behavior seems much less precise. This review considers ways of introducing imprecision into models of economic decision making and stresses the usefulness of analogies with the way that imprecise perceptual judgments are modeled in psychophysics—the branch of experimental psychology concerned with the quantitative relationship between objective features of an observer's environment and elicited reports about their subjective appearance. It reviews key ideas from psychophysics, provides examples of the kinds of data that motivate them, and proposes lessons for economic modeling. Applications include stochastic choice, choice under risk, decoy effects in marketing, global game models of strategic interaction, and delayed adjustment of prices in response to monetary disturbances.

Description: I review evidence that individuals associate themselves—or identify—with groups in two fundamental ways: ingroup bias and conformity to group norms. The evidence spans many spheres of economic activity, including consumption, production, hiring, promotion, education, cooperation, financial investments, and law enforcement. Group identities are not fixed, even when it comes to ethnic and religious identities. I argue that the choice of identity can be captured by a simple trade-off between gains from group status and costs to distance from the group. I outline a simple conceptual framework that captures the main empirical regularities and illustrate how it can be used to study the two-way interaction between economic policy and social identity. The analysis implies, e.g., that inequality and immigration of low-skilled workers can strengthen nationalism and reduce redistribution, and that changes in the economic environment can produce shifts in identification patterns that feed into trade policy. Finally, I discuss open theoretical questions and domains where the interaction between identity and economic activity is not well understood. This includes the provision of public services, the evolution of gender norms, and the use of identity to motivate workers.

Description: How do the Internet and social media affect political outcomes? We review empirical evidence from the recent political economy literature, focusing primarily on work that considers traits that distinguish the Internet and social media from traditional off-line media, such as low barriers to entry and reliance on user-generated content. We discuss the main results about the effects of the Internet in general, and social media in particular, on voting, street protests, attitudes toward government, political polarization, xenophobia, and politicians’ behavior. We also review evidence on the role of social media in the dissemination of fake news, and we summarize results about the strategies employed by autocratic regimes to censor the Internet and to use social media for surveillance and propaganda. We conclude by highlighting open questions about how the Internet and social media shape politics in democracies and autocracies.

Description: The frictions that restrict migration are among the largest sources of inefficiency in the global economy. The first step in designing policies to address these frictions is to understand the fundamental forces that drive migration. However, the Roy model—the workhorse model of migration in economics—does a poor job of explaining many important features of this phenomenon. This limitation can be rectified by adding migrant networks to the Roy model. A rich qualitative literature in the social sciences has documented the role played by social networks in supporting migrants in their new locations. Economists have advanced this literature by identifying and quantifying the contribution of these networks to migration. Although much progress has been made over the past two decades, important gaps in the literature remain: Migrant assimilation has received little theoretical or empirical attention, and a richer characterization of the social interactions that support these networks is needed to tie research on migration to the economic literature on networks.

Description: This review uses the empirical analysis of portfolio choice to illustrate econometric issues that arise in decision problems. Subjective expected utility (SEU) can provide normative guidance to an investor making a portfolio choice. The investor, however, may have doubts on the specification of the distribution and may seek a decision theory that is less sensitive to the specification. I consider three such theories: maxmin expected utility, variational preferences (including multiplier and divergence preferences and the associated constraint preferences), and smooth ambiguity preferences. I use a simple two-period model to illustrate their application. Normative empirical work on portfolio choice is mainly in the SEU framework, and bringing in ideas from robust decision theory may be fruitful.

Description: We survey the recent, fast-growing literature on peer effects in networks. An important recurring theme is that the causal identification of peer effects depends on the structure of the network itself. In the absence of correlated effects, the reflection problem is generally solved by network interactions even in nonlinear, heterogeneous models. By contrast, microfoundations are generally not identified. We discuss and assess the various approaches developed by economists to account for correlated effects and network endogeneity in particular. We classify these approaches in four broad categories: random peers, random shocks, structural endogeneity, and panel data. We review an emerging literature relaxing the assumption that the network is perfectly known. Throughout, we provide a critical reading of the existing literature and identify important gaps and directions for future research.

Description: Preferences for schools are important determinants of equitable access to high-quality education, effects of expanded choice on school improvement, and school choice mechanism design. Standard methods for estimating consumer preferences are not applicable in education markets because students do not always get their first-choice school. This review describes recently developed methods for using rich data from a school choice mechanism to estimate student preferences. Our objectives are to present a unifying framework for these methods and to help applied researchers decide which techniques to use. After laying out methodological issues, we provide an overview of empirical results obtained using these models and discuss some open questions.

Description: I review the recent literature that applies search-and-matching theory to the study of over-the-counter financial markets. I formulate and solve a simple model to illustrate the typical assumptions and economic forces at play in existing work. I then offer thematic tours of the literature and, in the process, discuss avenues for future research.

Description: The analysis of dynamic economic models routinely leads to the mathematical problem of determining an unknown function for which no closed-form solution exists. Economists must then resort to methods of numerical approximation when analyzing such models. Among the computational methods that have been successfully applied in economics and finance, one set of techniques stands out due to its flexibility and robustness: projection methods. In this article, we describe the basic steps of these methods for several different applications, surveying many successful applications of projection methods to dynamic economic models. Importantly, we emphasize that the ever-increasing complexity and dimensionality of dynamic models have made the previously used simpler methods obsolete and the applications of projection methods all but mandatory. We closely examine the most recent endeavors in the literature on solving economic models with projection methods.

Description: This article reviews recent developments in revealed preference theory. It discusses the testable implications of theories of choice that are germane to specific economic environments. The focus is on expected utility in risky environments, subjected expected utility and maxmin expected utility in the presence of uncertainty, and exponentially discounted utility for intertemporal choice. The testable implications of these theories for data on choice from classical linear budget sets are described and shown to follow a common thread. The theories all imply an inverse relation between prices and quantities, with different qualifications depending on the functional forms in the theory under consideration.

Description: This article offers a review of the recent empirical literature on lobbying within political economy. In surveying extant research, we emphasize quid pro quo and informational issues in special interest politics and highlight crucial open questions in both. The two main unresolved methodological issues remain ( a) how to account for the impact of lobbying on which equilibrium policies are chosen and advanced and ( b) how distorted those equilibrium policies are relative to the social optimum. Of the principal open questions within political economy, a comprehensive, quantitative assessment of the welfare effects of lobbying remains one of the most elusive.

Description: This article reviews recent advances in the study of dynamic taxation, considering three main approaches: the dynamic Mirrlees, the parametric Ramsey, and the sufficient statistics approaches. In the first approach, agents’ heterogeneous abilities to earn income are private information and evolve stochastically over time. Dynamic taxes are not restricted ex ante and are set for redistribution and insurance considerations. Capital is taxed only in order to improve incentives to work. Human capital is optimally subsidized if it reduces posttax inequality and risk on balance. The Ramsey approach specifies ex ante restricted tax instruments and adopts quantitative methods, which allow it to consider more complex and realistic economies. Capital taxes are optimal when age-dependent labor income taxes are not possible. The newer and tractable sufficient statistics approach derives robust tax formulas that depend on estimable elasticities and features of the income distributions. It simplifies the transitional dynamics thanks to a newly defined criterion, the utility-based steady-state approach, which prevents the government from exploiting sluggish responses in the short run. Capital taxes are here based on the standard equity-efficiency trade-off.

Description: This article reviews the econometrics of static games, with a focus on discrete-choice cases. These models have been used to study a rich variety of empirical problems, ranging from labor force participation to entry decisions. We outline the components of a general game and describe the problem of doing robust inference in the presence of multiple solutions, as well as the different econometric approaches that have been applied to tackle this problem. We then describe the specific challenges that arise in different variations of these models depending on whether players are assumed to have complete or incomplete information, as well as whether or not nonequilibrium play is allowed. We describe the results in 2 × 2 games (the most widely studied games in econometrics), and we present extensions and recent results in games with richer action spaces. Areas for future research are also discussed.

Description: This article reviews recent developments in the literature on marriage markets. A particular emphasis is put on frameworks based either on frictionless matching models with transfers or on search models.

Description: This review presents an approach to modeling decision making under misspecified subjective models. The approach is based on the idea that decision makers impose subjective causal interpretations on observed correlations, and it borrows basic concepts and tools from the statistics and artificial intelligence literatures on Bayesian networks. While these background literatures used Bayesian networks as a platform for normative and computational analysis of probabilistic and causal inference, in the framework proposed here graphical models represent causal misperceptions and help analyze their behavioral implications. I show how this approach sheds light on earlier equilibrium models with nonrational expectations and demonstrate its scope of economic applications.

Description: This article addresses the modern optimal tax progressivity literature, which clarifies the key role of the behavioral response to taxation and accounts for the incomes of the superrich being qualitatively different from others. Some of the superrich may be “superstars” for whom small differences in talent are magnified into much larger earnings differences, while others may work in winner-take-all markets, such that their effort to climb the ladder of success reduces the returns to others. We stress that pivotal tax-rate elasticities are not structural parameters and will be smaller the broader and less plastic is the tax base and the more effective is the enforcement of tax evasion. For this reason, normative analysis of tax rates should be accompanied by attention to the tax base, with a special focus on capital gains, which comprise a large fraction of the taxable income of the superrich.

Description: Global agriculture consumes substantial resources and produces significant pollution. By shifting its production to new locations, and inducing changes in technology and input use, trade has a substantial impact on environmental sustainability of the world's food systems, but due to suboptimal environmental policy, the exact nature of these impacts is in dispute. We review the literature on agricultural trade and environmental sustainability, highlighting the different approaches taken in ecology versus economics. While useful in identifying environmental costs, much of the ecological literature does not compare these costs to a trade-free counterfactual and can therefore be misleading. Further, by moving production to places with more resources and increasing production efficiency, trade can reduce the environmental impact of food production. On the other hand, trade can also limit the effectiveness of domestic environmental policy because production can be shifted to countries with less stringent regulations. However, recently, consumers are leveraging trade policy to induce exporters to improve environmental sustainability. While such policies are gaining traction in wealthy countries, evidence suggests that such measures will not reach their potential without buy-in from decision makers in the countries where the environmental damages are occurring.

Description: The labor supply response to agricultural wages is critical to the viability of crop production in high-income countries, which hire a largely foreign farm work force, as well as in low-income countries, where domestic workers move off the farm as the agricultural transformation unfolds. Modeling agricultural labor supply is more challenging than modeling the supply of other agricultural inputs or of labor to other sectors of the economy owing to unique features of agricultural production and farm labor markets. Data and econometric challenges abound, and estimates of agricultural labor supply elasticities are sparse. This review explains the importance and challenges of modeling farm labor supply and describes researchers’ efforts to address these challenges. It summarizes estimates of agricultural labor supply elasticities over the last 80 years, provides insights into variation in these estimates, identifies priority areas for future research, and reviews the most influential empirical work related to this important topic.

Description: As of 2020, carbon taxes were in effect in 30 jurisdictions around the world. This article provides a theoretical overview of carbon taxes along with some empirical evidence on the macroeconomic impacts of existing taxes, including emission reductions. It compares and contrasts carbon taxes with other policy instruments to reduce emissions. It also highlights issues that have recently attracted the attention of researchers on which additional research would be beneficial. Those include ( a) the role of border adjustments in a unilaterally imposed carbon tax, ( b) hybrid carbon tax systems that increase the likelihood of hitting desired emission reduction targets, ( c) the optimal price path for a carbon tax, and ( d) the growing empirical literature on the economic impact of carbon taxes.

Description: We survey the rapidly growing economic literature on environmental catastrophes and the various approaches developed to address the hovering threats. Various theoretical descriptions of catastrophic occurrences are classified with respect to the uncertain conditions that trigger the events, the postoccurrence dynamic regime, and the form of the inflicted damage. We show that variations in each of these characteristics strongly affect the ensuing optimal response to the threats. The basic setup is then extended in several dimensions, allowing the modeler to consider more realistic formulations of catastrophic scenarios. Recent efforts to incorporate catastrophic events within large-scale numerical schemes to study the global climate change problem are reviewed. The number of publications in this vein increases in tandem with the growing number of disasters reported globally and their scale of damage, reflecting the growing concern that this phenomenon portends environmental collapse.

Description: We review recent developments in the analysis of price transmission in agricultural markets. Markets may be separated in time, form, and space (as well as in combinations of such factors). Transactions and storage costs as well as production and marketing factors delineate these markets. We show that much of the research on spatial market linkages has reflected methodological advances that have led to increasingly nonlinear time-series models. Advances in the theoretical and empirical literature over the last few decades have demonstrated that price relationships in the food chain are highly context specific. Improvements in marketing, information, and transportation technology have strengthened the links between prices in the food system, but at the same time links in the food chain are increasingly subject to vertical coordination and, thus, less visible to outside observers, including researchers.

Description: Despite the significant risks and uncertainties that farmers in developing and emerging countries face in their production process, efforts at encouraging them to adopt agricultural insurance to mitigate their production risks have mainly yielded little success. This article reviews the recent literature on the demand for agricultural insurance in developing and emerging countries, by presenting the state of uptake, drivers of the demand for it, and the potential welfare gains from it. Our review reveals that while risk aversion is necessary for the demand for agricultural insurance, liquidity constraints, rates of time preference, basis risk, and trust are equally relevant in explaining the demand for insurance in poor countries. An interesting observation is the increasing number of studies that employ randomized control trials to analyze farmers’ uptake of agricultural insurance in developing and emerging countries. Our comprehensive review finds some information gaps in the literature, and we propose some avenues for further research.

Description: From the perspective of sending countries, international migrants are positively selected in terms of schooling, particularly in low-income countries. While emigration affects human capital accumulation, it also induces positive spin-offs in the form of remittances, incentives to acquire education, and diffusion of technology and democratic ideas. The net income implications for those left behind are uncertain. This article reviews the main transmission channels investigated in the existing literature and uses a standard development accounting framework to provide estimates of their relative strength and of their combined effect. Although skill biased, emigration increases the disposable income of those left behind in no fewer than three-quarters of the countries of the world. This result is robust to variations in the set of parameter values within a reasonable spectrum established in the empirical literature.

Description: In the wake of 25 United Nations Climate Change Conferences of the Parties (and counting), international cooperation on mitigating greenhouse gas emissions to avoid substantial and potentially irreversible climate change remains an important challenge. The limited impact of the Kyoto Protocol on curbing emissions, and the gap between the ambitions of its successor and the Paris Agreement's lack of sanctioning mechanisms for addressing noncompliance, demonstrates both the difficulties in negotiating ambitious environmental agreements and the reluctance of countries to comply with their agreed emission targets once they have joined the treaty. Therefore, a better understanding of the obstacles and opportunities that the interactions between domestic and international policy pose for the design of successful international climate cooperation is of utmost importance. To shed light on the roots of the stalemate (and suggest possible ways out), this article reviews and draws lessons from a growing theoretical, experimental, and empirical literature that accounts for the hierarchical interplay between domestic political pressure and international climate policy.

Description: In 2010, the White House announced the goal of eradicating food deserts—low-income neighborhoods without nearby supermarkets—in seven years. The efficacy of this initiative is premised on the presumption, mostly untested in 2010, that food deserts significantly contribute to health disparities in low-resourced communities. We synthesize the post-2010 line of research that seeks to establish causality in the relationship between food access and nutrition/health. All things considered, there is so far little evidence that food deserts have a causal effect of meaningful magnitude on health and nutrition disparities. The causes of diet quality disparity lie more on the side of food demand than on supply. Therefore, from the public health perspective, policies that lower the relative price of healthy food or change the “deep parameters” of preferences in favor of healthy food would be more appealing than eliminating food deserts.

Description: The past decades have seen the development of a multitude of sustainability-related food labels aimed at reducing the existing information asymmetry between food practitioners and consumers regarding the sustainability impact on the food supply chain. Sustainability-related food labels can correct market failures and contribute to a more sustainable world. This review discusses the effectiveness of sustainability-related food labels in promoting more sustainable food consumption around the world. We start by discussing the sustainable development goals in the food area and the challenge of defining these labels. We then investigate the demand- and supply-side issues related to the effectiveness of such labels in promoting the sustainable development goals that the labels serve. Finally, we discuss the questions raised by the state of research and their implications for food practitioners, consumers, and policy makers. We then identify future research avenues.

Description: We appraise the current status of relational contract theory, along with associated empirical studies, with the goal of providing an orientation to the field to economists who may not have expertise in contract theory. We begin with a theoretical discussion focusing mainly on intuition and the usefulness of the theory for conceptualizing applied agricultural contracting problems. We also discuss current theoretical challenges and the current state of empirical research on relational contracts. We conclude by discussing potentially fruitful areas for future research.

Description: In this review, we attempt to describe the evolution of integrated assessment modeling research since the pioneering work of William Nordhaus in 1994, highlighting a number of challenges and suggestions for moving the field forward. The field has evolved from global aggregate models focused on cost-benefit analysis to detailed process models used to generate emissions scenarios and to coupled model frameworks for impact analyses. The increased demand for higher sectoral, temporal, and spatial resolution to conduct impact analyses has led to a number of challenges both computationally and conceptually. Overcoming these challenges and moving the field forward will require not only greater efforts in model coupling software and translational tools, the incorporation of empirical findings into integrated assessment models, and intermethod comparisons but also the expansion and better coordination of multidisciplinary researchers in this field through better training of the next generation of integrated assessment scholars and expanding the community of practice.

Description: The aim of this article is to review a number of issues related to uncertain population forecasts, with a focus on world population. Why are these forecasts uncertain? Population forecasters traditionally follow two approaches when dealing with this uncertainty, namely scenarios (forecast variants) and probabilistic forecasts. Early probabilistic population forecast models were based upon a frequentist approach, whereas current ones are of the Bayesian type. I evaluate the scenario approach versus the probabilistic approach and conclude that the latter is preferred. Finally, forecasts of resources need not only population input, but also input on future numbers of households. While methods for computing probabilistic country-specific household forecasts have been known for some time, how to compute such forecasts for the whole world is yet an unexplored issue.

Description: The financial system could help achieve the global climate targets by aligning investments to sustainability. However, investors are largely exposed to carbon-intensive assets that could become stranded, thus delaying the low-carbon transition and bringing new sources of risk for financial stability, i.e., climate-related financial risks. Here, we discuss climate-related financial risks, the challenges they pose to traditional economic and financial risk assessment, and the implications for the implementation and feasibility of climate policies. We then present science-based approaches that introduce forward-looking climate risks and their deep uncertainty in financial risk management (e.g., via the climate value at risk, climate spread, climate stress-test). Finally, we present results of applications aimed at pricing climate risks in investors’ portfolios and calculating the largest losses that could lead to systemic risk, in collaboration with leading financial institutions.

Description: Spillovers among jurisdictions are ubiquitous and likely to increase with increasing population and consumption, so the centralization or decentralization of environmental governance is of pressing concern in a world of tightly linked socio-ecological systems. Spillovers play a key role in federalism analysis because they tend to reduce benefits from decentralization. Laboratory federalism, a common rationale for decentralization, has not proven successful as a model of local policy innovation. Given a national policy toward a public good, differences in preferences across jurisdictions may push national policy toward a quantity instrument rather than a tax instrument. Finally, the lack of interaction between environmental federalism analysis and studies of adaptive governance and linked complex adaptive systems leaves both literatures incomplete. The increasing urgency of global sustainability issues argues for linking insights from environmental federalism with the literature on linked socio-ecological complex adaptive systems.