Justin Lahart reports:

Friday, the American Economic Association will present the John Bates Clark medal, awarded to the nation’s most promising economist under the age of 40.

The Clark is often a harbinger of things to come. Of the 30 economists who have won it, 12 have gone on to win the Nobel, including last year’s Nobel winner, Paul Krugman. Other past winners include White House National Economic Council director Lawrence Summers and Steve Levitt, of Freakonomics fame. Since it was first awarded in 1947, the Clark has been given out every two years, but beginning next year it will be given out annually.

With a deep pool of young talent to draw from, there’s no sure winner. But among economists, the clear favorite is Esther Duflo, 36, who leads the Massachusetts Institute of Technology‘s Jameel Poverty Action Lab with MIT colleague Abhijit Banerjee.

Ms. Duflo has been at the forefront of the use of randomized experiments to analyze the effectiveness of development programs. If teacher attendance is a problem in rural India, for example, what happens if teachers are given cameras with date and time stamps and told to take a picture of themselves and their students each morning and afternoon? Ms. Duflo and economist Rema Hanna tried it out and found that in the “camera schools,” teacher absences fell sharply and student test scores improved. Does giving poor mothers 60 cents worth of dried beans as an incentive to immunize their children work? It works astoundingly well. By answering these kinds of problems, Ms. Duflo, her colleagues, and the many economists around the world she has helped inspire, are uncovering ways to make sure that money spent on helping poor people in developing countries is used effectively.

Harvard University‘s Sendhil Mullainathan, who founded the Poverty Action Lab with Ms. Duflo and Mr. Banerjee, is also likely on the Clark short list. He’s a leading light in the fast-growing field of behavioral economics, studying ways that psychology influences economic decisions. For one paper, he and frequent co-author Marianne Bertrand sent out fictitious resumes in response to want ads, randomly assigning each resume with very African American sounding or very white sounding names. The resumes with the very white names got far more call backs. Mr. Mullainathan, 36, is also applying behavioral economics insights to development problems. One insight: The behavioral weaknesses of the very poor are no different than the weaknesses of people in all walks of life, but because the poor have less margin for error, their behavioral weaknesses can be much more costly.

Emanuel Saez at the University of Calif.-Berkeley, another Clark candidate, has been tenaciously researching the causes of wealth and income inequality around the world, with a focus on the what’s happening at the very tip of the wealth pyramid. But because there is very little data on the very rich, Mr. Saez, 36, and his frequent co-author Thomas Piketty have combed through income tax figures to come up with historic estimates. Among their findings: That before the onset of the financial crisis, the income share of the top 1% of families by income accounted for nearly a quarter of U.S. income – the largest share since the late 1920s.

I believe this point has not received sufficient attention:

In a twist that leaves some experts shaking their heads, the fund needs
money from cash-rich developing countries, like China and India, to
help more developed but strapped countries, like those in Eastern
Europe.

One possibility is that the recent IMF loan program is about making governments better off, not about making people better off.  Can you imagine that?

From the latest issue of the JPE, Bronnenberg, Dhar and Dube write:

We document evidence of a persistent “early entry” advantage for brands
in 34 consumer packaged goods industries across the 50 largest U.S.
cities. Current market shares are higher in markets closest to a
brand’s historic city of origin than in those farthest. For six
industries, we know the order of entry among the top brands in each of
the markets. We find an early entry effect on a brand’s current market
share and perceived quality across U.S. cities. The magnitude of this
effect typically drives the rank order of market shares and perceived
quality levels across cities.

You'll find ungated versions here.  The upshot is this:

Across 49 current leading national CPG brands, dating back to the late 1800s and early 1900s, we find that the current share in markets close to the city of origin, is, on average, 12 share (i.e., percentage) points higher than the national average of 22 percent.

What's amazing is how long these effects — however they are motivated — last.  Miller Beer was introduced to Chicago in 1856 (a very early launch though technically not its first city) and it still has an advantage there, relative to other cities.  Heinz Ketchup originated in Pittsburgh in 1876 and it still has an market share advantage there, again relative to other cities.

What is the mechanism?  Is it that durable relationships with retailers persist for a very long time?  Do area consumers develop the brand habit and pass it down across the generations?  Or is the brand from a particular area better suited for people of that area in the first place, perhaps for reasons which are demographic or ethnic in nature and somewhat persistent through time?