Every year, I like to look back at some of the academic research papers that I thought were impactful over the past year. Previously, I tried to do something akin to “The Important Papers of 202X,” but the truth is I could not possibly read enough to say with any certainty that the papers I came across were better than some that I missed. Additionally, academic papers take years to write, and I sometimes come across research that hasn’t been published yet, or I read something that has been in the works for years and only recently published. So, I’ve decided that this year I’m going to be a little more loose with my rules and just write about two papers I read this year that I found interesting.
Intergenerational persistence of poverty in five high-income countries
This paper’s author Zach Parolin won the Association of Public Policy Analysis and Management’s David Kershaw award for his work studying how persistent poverty is in different countries. The idea behind this paper is fairly straightforward: If we assume that a country has perfect equality of opportunity, then whether or not you are in poverty as an adult should be independent of whether you experienced poverty as a child.
So, using data from the United States, Australia, Germany, Denmark, and the United Kingdom, Parolin measured how much childhood poverty contributed to the likelihood of adult poverty, and explored the mechanisms that drove those disparities. He found that in the United States, intergenerational poverty effects were much stronger. In other words, Americans who experienced child poverty are significantly more likely to also experience adult poverty compared to children who experience poverty in those other countries.
The main driver of this effect he identified was a relatively weak tax and transfer system compared to those other countries. One of the key takeaways from this paper was if the United States had a tax and transfer system similar to that of the other study nations, we could cut the intergenerational persistence of poverty by one-third.
Goods that people buy but wish did not exist
The name of this paper by Cass Sunstein says it all. There exist goods that people spend money on (sometimes quite a lot) that they do not gain wellbeing from consuming. The main idea is that non-consumption creates worse negative effects compared to consumption, and so people choose to consume these goods anyways.
Sunstein opens his paper by asking us to imagine that our friend is hosting a party we aren’t interested in going to. Because the party is happening, we feel pressured to go in order to avoid sending the signal to our friends that we don’t like parties, or perhaps we don’t care about them enough to show up. The best case scenario would be if the party was cancelled by the host, freeing us of the social need to attend. In this case, our preference ordering would be 1) nobody attends, 2) we attend along with everyone else, 3) we stay home while everyone else is at the party.
The key characteristic of the goods in question here are that many people would prefer they didn’t exist altogether, but because they do exist people feel compelled to consume them. This is different from something like a home security system that many people don’t get direct welfare from but often purchase anyway. Those goods are sometimes referred to as defensive expenditures, and they don’t quite fit this description because people don’t care about the existence of home security systems, they wish that crime didn’t exist.
One major example Sunstein discusses is social media. If you ask someone how much they would need to be paid in order to stay off social media for a month, they will tell you that it would take quite a bit of money, around $50. This seems to suggest that people benefit from social media.
However, you get a different answer if you flip the question on its head. People actually have a willingness to pay for eliminating social media altogether. Some people actually benefit from the existence of social media, but on average it appears that people wish it didn’t exist for everyone.
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These two papers exemplify what draws me to economics the most. The ability to take complicated topics like poverty or seemingly irrational decisionmaking and find a way to quantify it and model it. I’m looking forward to another year of learning in 2026, and I hope everyone has a pleasant end to their 2025.