Publications

his paper computes the welfare benefits of additional information about nutritional content in food by revealed preference and evaluates quantitatively whether the estimated behavioral response is consistent with information from experts on the relationship between diet and health. In doing so, it provides estimates of the im- pact of the law mandating nutrition labeling for all prepackaged foods in the US on nutrient consumption. Estimates derived from a structural model identified based on differential changes in information across foods are consistent with reduced form esti- mates comparing the change in calorie consumption among label users and non-label users. Taking the estimated willingness to pay for nutrient content as given implies that the labeling law led to an increase in consumer surplus of 25−40 annually for each label user and that additional labeling regulations could generate a comparable bene- fit. Comparing the implicit value of nutrient information with a benchmark computed from medical evidence and the value of a statistical life (VSL) suggests that consumers are insufficiently responsive to health differences across foods. Taking this benchmark as the normative standard, revealed preference estimates understate the benefits of labeling by a factor of four, and thousands of dollars in additional per capita welfare gains could be realized by policies which would lead consumers to eat healthier foods. 

We examine if the effectiveness of business tax subsidies varies based on whether subsidies are subject to state disclosure laws. State and local business incentives for investment and employment have tripled in size over the past thirty years (Bartik, 2019), now amounting to over 40 percent of total state corporate tax revenues (Slattery and Zidar, 2020). However, transparency problems inhibit clear assessments of whether subsidies achieve their intended outcomes. We study the role of subsidy disclosure laws. We examine both internal disclosure laws, which mandate subsidy reporting by the granting state agency to other state oversight agencies, and external disclosure laws, which mandate reporting to the public. We find positive effects of subsidies on local employment when subsidies are subject to internal disclosure laws; by implementing such regimes, governments could forego 1.2-1.7 subsequent subsidies per county, saving \$419.0-\$593.5 million in aggregate. In contrast, we observe little effect of external disclosure, which we show is due to governments either substituting to other incentive grants or posting stale information that impedes public monitoring. We contribute to the government disclosure literature by demonstrating the real employment effects of internal government disclosures, and we provide policy-relevant evidence about the conditions under which external disclosure regimes facilitate public monitoring. The evidence directly informs the increasing number of states implementing subsidy disclosure regimes.

We develop and estimate a two-sided matching model of clients with auditors. We find evidence that auditors and clients engage in matching based on their preferences for both observable and unobservable characteristics. This matching appears to partly explain the “Big 4” effect on several common audit outcomes. After controlling for the effects of matching, we find no evidence of auditor influence on the likelihood of a restatement, as well as mixed evidence on whether Big 4 auditor presence affects serious comment letter conversations with the SEC. Collectively, our results highlight the importance of accounting for two-sided matching between auditors and clients in understanding the influence of auditors on clients’ financial reporting practices.