Joshua R. Schwartzstein

Joshua Schwartzstein is an associate professor of business administration in the Negotiation, Organizations & Markets Unit. Before joining HBS, he was an assistant professor of economics at Dartmouth College.

Professor Schwartzstein’s primary research area is behavioral economics. He focuses on incorporating more psychologically realistic assumptions into economic models, and on applying these models to shed light on market outcomes and optimal public policy. In recent work, he has studied how the recognition that people make mistakes in medical-care decisions affects the analysis of health insurance policies, how relative thinking influences consumer choice, and how selective attention impacts the way people learn to use technologies. His research has appeared in the Quarterly Journal of Economics, the Journal of the European Economic Association, the Annual Review of Economics, and the Journal of Law and Economics. It has also been referenced in The New York Times, Science, and Health Affairs.

Professor Schwartzstein holds a PhD in economics from Harvard University and a BA in behavioral economics, economics, and mathematics from Cornell University.

Journal Articles

• Schwartzstein, Joshua, and Adi Sunderam. "Using Models to Persuade." American Economic Review 111, no. 1 (January 2021): 276–323. View Details
• Bushong, Benjamin, Matthew Rabin, and Joshua Schwartzstein. "A Model of Relative Thinking." Review of Economic Studies 88, no. 1 (January 2021): 162–191. View Details
• Handel, Benjamin, and Joshua Schwartzstein. "Frictions or Mental Gaps: What's Behind the Information We (Don't) Use and When Do We Care?" Journal of Economic Perspectives 32, no. 1 (Winter 2018): 155–178. View Details
• Beshears, John, Katherine L. Milkman, and Joshua Schwartzstein. "Beyond Beta-Delta: The Emerging Economics of Personal Plans." American Economic Review: Papers and Proceedings 106, no. 5 (May 2016): 430–434. View Details
• Baicker, Katherine, Sendhil Mullainathan, and Joshua Schwartzstein. "Behavioral Hazard in Health Insurance." Quarterly Journal of Economics 130, no. 4 (November 2015): 1623–1667. (Online Appendix.) View Details
• Schwartzstein, Joshua. "Selective Attention and Learning." Journal of the European Economic Association 12, no. 6 (December 2014): 1423–1452. (Online Appendix. Lead Article.) View Details
• Hanna, Rema, Sendhil Mullainathan, and Joshua Schwartzstein. "Learning Through Noticing: Theory and Evidence from a Field Experiment." Quarterly Journal of Economics 129, no. 3 (August 2014): 1311–1353. (Online Appendix.) View Details
• Schwartzstein, Joshua, and Andrei Shleifer. "An Activity-Generating Theory of Regulation." Journal of Law & Economics 56, no. 1 (February 2013): 1–38. (Lead Article.) View Details
• Mullainathan, Sendhil, Joshua Schwartzstein, and William Congdon. "A Reduced-Form Approach to Behavioral Public Finance." Annual Review of Economics 4 (2012): 511–540. View Details
• Mullainathan, Sendhil, Joshua Schwartzstein, and Andrei Shleifer. "Coarse Thinking and Persuasion." Quarterly Journal of Economics 123, no. 2 (May 2008): 577–619. View Details

Book Chapters

• Chandra, Amitabh, Benjamin Handel, and Joshua Schwartzstein. "Behavioral Economics and Health-Care Markets." Chap. 6 in Handbook of Behavioral Economics: Foundations and Applications 2, edited by B. Douglas Bernheim, Stefano DellaVigna, and David Laibson, 459–502. Amsterdam: Elsevier/North-Holland, 2019. View Details

Working Papers

• Gagnon-Bartsch, Tristan, Matthew Rabin, and Joshua Schwartzstein. "Channeled Attention and Stable Errors." Harvard Business School Working Paper, No. 18-108, June 2018. View Details

Cases and Teaching Materials

• Schwartzstein, Joshua, and Deepak Malhotra. "Rocket Science." Harvard Business School Case 921-043, January 2021. View Details
• Schwartzstein, Joshua, and Kathleen L. McGinn. "Juno (C): Leveraging Student Power." Harvard Business School Supplement 921-034, January 2021. View Details
• Schwartzstein, Joshua, and Kathleen L. McGinn. "Juno (B): Leveraging Student Power." Harvard Business School Supplement 921-033, January 2021. View Details
• Schwartzstein, Joshua, and Kathleen L. McGinn. "Juno (A): Leveraging Student Power." Harvard Business School Case 921-032, January 2021. View Details
• Schwartzstein, Joshua, Brian J. Hall, Tiffany Y. Chang, Karim Sameh, and Alpana Thapar. "Happy UAE." Harvard Business School Case 918-041, April 2018. View Details
• Beshears, John, Joshua Schwartzstein, Tiffany Y. Chang, and Brian J. Hall. "GiveDirectly." Harvard Business School Case 918-036, March 2018. View Details
• Exley, Christine L., Katherine B. Coffman, and Joshua Schwartzstein. "Legal Time Case – Video Short 2." Harvard Business School Multimedia/Video Supplement 920-704, September 2019. View Details
• Exley, Christine L., Katherine B. Coffman, and Joshua Schwartzstein. "Legal Time Case – Video Short 1." Harvard Business School Multimedia/Video Supplement 920-703, September 2019. View Details
• Exley, Christine L., Katherine B. Coffman, and Joshua Schwartzstein. "Legal Time - Confidential Information for the Prosecution (AUSA Prescott)." Harvard Business School Supplement 920-012, August 2019. View Details
• Exley, Christine L., Katherine B. Coffman, and Joshua Schwartzstein. "Legal Time - Confidential Information for the Defense Attorney (Drew Davis)." Harvard Business School Supplement 920-011, August 2019. View Details
• Exley, Christine L., Katherine B. Coffman, and Joshua Schwartzstein. "Legal Time Case." Harvard Business School Teaching Note 920-013, August 2019. (Revised September 2019.) View Details
• Exley, Christine L., Katherine B. Coffman, and Joshua Schwartzstein. "Legal Time Case." Harvard Business School Case 920-010, August 2019. View Details
• Schwartzstein, Joshua. "Happy UAE." Harvard Business School Teaching Note 918-042, April 2018. View Details
• Schwartzstein, Joshua, and John Beshears. "GiveDirectly." Harvard Business School Teaching Note 918-040, March 2018. View Details
• Luca, Michael, Joshua Schwartzstein, and Gauri Subramani. "Managing Diversity and Inclusion at Yelp." Harvard Business School Teaching Note 918-039, March 2018. View Details
• Luca, Michael, Joshua Schwartzstein, and Gauri Subramani. "Managing Diversity and Inclusion at Yelp (B)." Harvard Business School Supplement 918-012, September 2017. View Details
• Luca, Michael, Joshua Schwartzstein, and Gauri Subramani. "Managing Diversity and Inclusion at Yelp." Harvard Business School Case 918-009, August 2017. View Details

Research Summary

Overview

Professor Schwartzstein uses the lens of behavioral economics to build more psychologically accurate assumptions into economic models, and he applies these models to create a more realistic understanding of market outcomes and optimal public policy.

Behavioral Hazard and Public Policy

It is well recognized that people overuse low-value medical care due to moral hazard—because copays are lower than costs. Now Professor Schwartzstein has introduced the concept of “behavioral hazard” to explain the opposite: people underuse high-value care because they underweight the benefits of, for example, taking medications for chronic diseases like diabetes or hypertension. He has derived optimal copay formulas that incorporate both moral and behavioral hazard. When both are taken into account, health insurance can do more than provide financial protection: it can also improve health care efficiency. Professor Schwartzstein’s findings and methods can be applied to other forms of social insurance and public policy problems.

Relative Thinking and Consumer Choice

Fixed differences appear smaller when compared to large differences. Professor Schwartzstein has proposed a model of relative thinking, in which a person weighs a given change by less when he compares it to a larger range. Relative thinking implies that a person is less likely to exert effort in a money-earning activity if he had expected to earn higher returns or if there is greater income uncertainty. Relative thinking also induces a tendency to overspend, and for a person to spend more freely if she is infrequently allotted large amounts to consume rather than frequently allotted small amounts. The model clarifies issues ranging from why insurance can encourage investment to the optimal scheduling of entitlements distributions.

Selective Attention and Learning

What do we notice, and how does this affect what we learn? Standard economic models of learning ignore memory by assuming that we remember everything. But there is growing recognition that memory is imperfect. Further, memory imperfections do not stem from limited recall alone; rather, not all information will be encoded into memory. Professor Schwartzstein has developed a model of belief formation that recognizes that attention is selective, and that we narrow our attention to what we currently believe is worthwhile. This model makes predictions about when people will attend to the right variables, when they will not, and what biased ideas may result. The key insight is that such inattention may compound itself—a person may persistently fail to learn what is worth attending to. In experimental research, Professor Schwartzstein has shown that seaweed farmers in Indonesia consistently failed to recognize a key variable in optimizing production—and that they did respond based on seeing summaries of the researchers’ data.

Awards & Honors

Received Honorable Mention in 2016 for the Arrow Award for Best Paper in Health Economics from the International Health Economics Association for “Behavioral Hazard in Health Insurance” (Quarterly Journal of Economics, November 2015) with K. Baicker and S. Mullainathan.

Additional Information

• Curriculum Vitae