Boston College University Libraries

Economics Portal: Getting Started with Economics Research

Starting Point for Economics Research

Key Resources


Selected Articles on Regulation and Cellular Phone Bill Shock 
By Michael D. Grubb

View Faculty Publications Highlight Interview:

Michael D. GrubbAssistant Professor, Economics Department

For many goods and services such as electricity, health care, cellular phone service, debit-card transactions, or those sold with loyalty discounts, the price of the next unit of service depends on past usage. As a result, consumers who are inattentive to their past usage but are aware of contract terms may remain uncertain about the price of the next unit. The theoretical paper develops a model of inattentive consumption, derives equilibrium pricing when consumers are inattentive, and evaluates bill-shock regulation requiring firms to disclose information that substitutes for attention. The analysis predicts that bill-shock regulation might be good for consumers or might be bad for consumers, depending on market conditions relating to consumer sophistication, consumer heterogeneity, and the level of competition. It remains an empirical question as to whether bill-shock regulation will be beneficial in any particular market. For that reason, the empirical paper focuses on the market for cellular phone service. Following FCC pressure to end bill shock, cellular carriers now alert customers when they exceed usage allowances. The paper estimates a model of plan choice, usage, and learning using a 2002-2004 panel of cellular bills. Accounting for firm price adjustment, simulations predict that implementing alerts in 2002-2004 would have lowered average annual consumer welfare by $33. We show that consumers are inattentive to past usage, meaning that bill-shock alerts are informative. Additionally, our estimates imply that consumers are overconfident, underestimating the variance of future calling. Overconfidence costs consumers $76 annually at 2002-2004 prices. Absent overconfidence, alerts would have little to no effect. Nevertheless, bill-shock regulation may be more beneficial in other markets. For instance, results in the theory paper are suggestive that requiring banks to issue low-balance alerts to checking account holders may not only reduce overdraft fees but also benefit consumers even after other fee changes are taken into account.

Rules for the Fed to live by

Clear rules, and having to explain deviations from them, would make for better monetary policy, according to an op-ed co-written by Murray and Monti Professor of Economics Peter Ireland. U.S. News & World Report

Oireachtas Banking Inquiry

Bankers who routinely abused the rules without suffering personal penalties were responsible for the banking crisis, Carroll School of Management Professor of Finance Ed Kane said in a presentation to the Joint Committee of Inquiry into the Banking Crisis in Ireland. RTEIrish Times,Irish IndependentNewstalk 106American Banker

New Resources

Amadeus (BC Community) Access extended one more year (6/2014-6/2015)
A database of comparable financial information for public and private companies across Europe. Note BC subscription includes very large companies, about 1 million. Access is also provided via WRDS.

Bankscope (BC Community) Access extended one more year (4/2014-4/2015).
Bankscope contains detailed financial information for the following public and private banks: ••Top 8,000 European banks ••Top 14,000 North American banks ••1,000 Japanese banks ••1,200 Russian banks ••Over 5,000 other major banks ••The leading 35 supranational banking and financial organizations.  Each bank report contains a detailed consolidated and/or unconsolidated balance sheet, an income statement and interim reports with up to 16 years of information. Bankscope also provides ratings, rating reports, country risk ratings and reports, news and detailed ownership information and bank structures. Access is also provided via WRDS.


Database Trials at Boston College
Check out databases on trial at BC. Includes many different subject areas.

Subject Guide

Barbara Mento
O'Neill 313