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Title: Moving Cost Magnitudes in Moving Cost Models

Citation Type: Miscellaneous

Publication Year: 2023

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Abstract: What is the correct interpretation of average moving costs? I show that in the steady-state of a standard moving cost model, average moving costs are proportional to the difference between the Shannon entropy of next period's location and the Shannon information of staying in the same location. Therefore, moving costs are correctly interpreted as a statistic about the modeler's lack of information regarding future moves, but not about the actual cost of moving in the real world. This alternative interpretation helps make sense of the wide range of moving costs in the literature.

Url: https://glhoward.github.io/greghoward.org/How_To_Interpret_Moving_Costs.pdf

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Authors: Howard, Greg

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Data Collections: IPUMS USA

Topics: Other

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