Lab Seminar - Information and avoidance behavior: evidence from weather forecasts

Matt is explaining the importance of weather.

Matthew Gammans presented his research on information and behavior based on weather information. Weather affects both the choices and outcomes of individuals and firms. Econometric estimates of the effect of weather on outcomes of interest often treat weather as an exogenous shock. However, if individuals have access to weather forecasts, their behavior may reflect not just the direct effect of weather, but the cumulative effect of choices taken in response to predicted weather.  prior work has demonstrated the importance of predicted daily weather on the profitability of various industries, there exists limited work examining its influence on individual behavior. In the research, Matt combines one- to seven-day forecasts of precipitation from the National Weather Service and time use data from the American Time Use Survey to estimate the dynamic relationship between weather information and activity choice. The inclusion of weather forecast information not only addresses one potential source of bias in estimated weather effects, but because these forecasts are provided with various time leads, it also sheds light on the intertemporal substitutability of behavior.