SoeTech Paper Picks

Our motivation: This paper explores how quasi-markets compare to and differ from traditional markets in the case of the Swedish school voucher system, for example with relation to competition, innovation and structural change. In doing so, it contributes to moving discussions about privatization beyond the market or state dichotomy and highlights the need to address the particular issues of quasi-market design.Abstract: Quasi-markets are increasingly used in public service provision, yet they remain highly contested. This paper develops a conceptual framework grounded in economic theory to examine how quasi-markets differ from traditional markets along five key dimensions: (1) revenues, costs, and profits, (2) the matching of supply and demand, (3) competition, (4) structural change, and (5) rent-seeking. Assuming profit-maximizing behavior, we stress test the quasi-market model to explore how these structural differences shape incentives and influence outcomes. Applying the framework to Sweden’s school voucher system, we show that specific design features have led to unintended consequences that undermine service quality and conflict with the reform’s stated policy goals.Reference:Bergh, Andreas, and Joakim Wernberg. 2025. ”Stress Testing a Quasi-Market: Unintended Consequences of the Swedish School Voucher System”. Scandinavian Journal of Public Administration.

Our motivation: Economic growth, globalization, technological shifts and structural change are often met with worries about economic inequality in the public debate. Starmans and her co-authors add valuable nuance and substance to these debates by contrasting inequality with unfairness and showing how the two are not necessarily the same.Abstract: There is immense concern about economic inequality, both among the scholarly community and in the general public, and many insist that equality is an important social goal. However, when people are asked about the ideal distribution of wealth in their country, they actually prefer unequal societies. We suggest that these two phenomena can be reconciled by noticing that, despite appearances to the contrary, there is no evidence that people are bothered by economic inequality itself. Rather, they are bothered by something that is often confounded with inequality: economic unfairness. Drawing upon laboratory studies, cross-cultural research, and experiments with babies and young children, we argue that humans naturally favour fair distributions, not equal ones, and that when fairness and equality clash, people prefer fair inequality over unfair equality. Both psychological research and decisions by policymakers would benefit from more clearly distinguishing inequality from unfairness.Reference:Christina Starmans, Mark Sheskin, och Paul Bloom. 2017. ”Why people prefer unequal societies”. Nature 1(April): 1–7

Our Motivation: Why doesn't the latest technology - be it computers in the 1980's or generative AI today - spark measurable productivity gains as soon as it is adopted? Brynjolfsson and Hitt introduce the notion of complementary organizational investments to explain why productivity gains don't automatically follow from technology investments and why there is oftentimes a lag in observable effects. Abstract: We explore the effect of computerization on productivity and output growth using data from 527 large U.S. firms over 1987–1994. We find that computerization makes a contribution to measured productivity and output growth in the short term (using 1-year differences) that is consistent with normal returns to computer investments. However, the productivity and output contributions associated with computerization are up to 5 times greater over long periods (using 5- to 7-year differences). The results suggest that the observed contribution of computerization is accompanied by relatively large and time-consuming investments in complementary inputs, such as organizational capital, that may be omitted in conventional calculations of productivity. The large long-run contribution of computers and their associated complements that we uncover may partially explain the subsequent investment surge in computers in the late 1990s.Reference: Brynjolfsson, E., & Hitt, L. M. (2003). Computing productivity: Firm-level evidence. Review of economics and statistics, 85(4), 793-808.

Our motivation: The Easterlin paradox, first coined in 1974, states that when countries reach a certain level of GDP, the relationship between income and happiness/well-being disappears. This is a persistent idea that takes on different forms in debates on economic growth, but when Stevenson and Wolfer revisit this paradox in their 2008 paper they find no evidence of such a satiation point. Instead, they show that economic growth is associated with rising happiness.Abstract: The "Easterlin paradox" suggests that there is no link between a society's economic development and its average level of happiness. We re-assess this paradox analyzing multiple rich datasets spanning many decades. Using recent data on a broader array of countries, we establish a clear positive link between average levels of subjective well-being and GDP per capita across countries, and find no evidence of a satiation point beyond which wealthier countries have no further increases in subjective well-being. We show that the estimated relationship is consistent across many datasets and is similar to the relationship between subject well-being and income observed within countries. Finally, examining the relationship between changes in subjective well-being and income over time within countries we find economic growth associated with rising happiness. Together these findings indicate a clear role for absolute income and a more limited role for relative income comparisons in determining happiness.Reference:Stevenson, Betsey, och Justin Wolfers. 2008. ”Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox”. NBER Working Paper No. w14282