Papers - Natural

Peter A Riach, Judith Rich

Cited by*: 21 Downloads*: 27

Pairs of carefully-matched, written applications were made to advertised job vacancies in England to test for sexual discrimination in hiring. Two standard resumes were constructed for each occupation to control for all relevant supply-side variables, such as qualifications, experience and age. Consequently any differential response recorded can be attributed to demand-side discrimination. Statistically significant discrimination against men was found in the `female occupation' - secretary, and against women in the `male occupation' - engineer. Statistically significant, and unprecedented, discrimination against men was found in two `mixed occupations' - trainee chartered accountant and computer analyst programmer.

Dean S Karlan, Martin Valdivia

Cited by*: 15 Downloads*: 27

Most academic and development policy discussions about microentrepreneurs focus on credit constraints and assume that subject to those constraints, the entrepreneurs manage their business optimally. Yet the self-employed poor rarely have any formal training in business skills. A growing number of microfinance organizations are attempting to build the human capital of microentrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs. Treatment groups received thirty- to sixty-minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find little or no evidence of changes in key outcomes such as business revenue, profits, or employment. We nevertheless observed business knowledge improvements and increased client retention rates for the microfinance institution.

Benjamin A Olken

Cited by*: 6 Downloads*: 26

This paper examines the accuracy of beliefs about corruption, using data from Indonesian villages. Specifically, I compare villagers' stated beliefs about the likelihood of corruption in a road-building project in their village with a more objective measure of 'missing expenditures' in the project, which I construct by comparing the project's official expenditure reports with an independent estimate of the prices and quantities of inputs used in construction. I find that villagers' beliefs do contain information about corruption in the road project, and that villagers are sophisticated enough to distinguish between corruption in the road project and other types of corruption in the village. The magnitude of their information, however, is small, in part because officials hide corruption where it is hardest for villagers to detect. This may limit the effectiveness of grass-roots monitoring of local officials. I also find evidence of systematic biases in corruption beliefs, particularly when examining the relationship between corruption and variables correlated with trust. For example, ethnically heterogeneous villages have higher perceived corruption levels but lower actual levels of missing expenditures. The findings illustrate the limitations of relying solely on corruption perceptions, whether in designing anti-corruption policies or in conducting empirical research on corruption.

Philip Oreopoulos, Uros Petronijevic

Cited by*: 3 Downloads*: 25

Recent studies show that programs offering structured, one-on-one coaching and tutoring tend to have large effects on the academic outcomes of both high school and college students. These programs are often costly to implement and difficult to scale, however, calling into question whether making them available to large student populations is feasible. In contrast, interventions that rely on technology to maintain low-touch contact with students can be implemented at large scale and minimal cost but with the risk of not being as effective as one-on-one, in-person assistance. In this paper, we test whether the effects of coaching programs can be replicated at scale by using technology to reach a larger population of students. We work with a sample of over four thousand undergraduate students from a large Canadian university, randomly assigning students into one of the following three interventions: (i) a one-time online exercise designed to affirm students' values and goals; (ii) a text messaging campaign that provides students with academic advice, information, and motivation; and (iii) a personal coaching service, in which students are matched with upper-year undergraduate coaches. We find large positive effects from the coaching program, as coached students realize a 0.3 standard deviation increase in average grades and a 0.35 standard deviation increase in GPA. In contrast, we find no effects from either the online exercise or the text messaging campaign on any academic outcome, both in the general student population and across several student subgroups. A comparison of the key features of the text messaging campaign and the coaching service suggests that proactively and regularly initiating conversations with students and working to establish trust are important design features to incorporate in future interventions that use technology to reach large populations of students.

Bruno Crepon, Julie Pernaudet

Cited by*: 0 Downloads*: 25

Disadvantaged youth are particularly at risk of under-investing in their health. Costs of healthcare and bias in health needs perceptions are likely to be key factors of underinvestment. Relying on a randomized experiment, we find that providing them with personalized information both on public health insurance and on their health status based on a medical diagnosis raises their curative and preventive investments. More specifically, they are more likely to consult a psychologist and to use contraception, while depression and risky sexual behaviors are key issues in this population. In order to distinguish between the two barriers, financial constraints and underestimation of health needs, we also test a program providing information on public health insurance only. This limited program improves their medical coverage in the same way as the combined program, but it does not translate into higher health investments. These findings highlight the importance of taking into account the role of subjective perceptions of health needs when considering health decisions among disadvantaged youth.

Paul Glewwe, Nauman Ilias, Michael Kremer

Cited by*: 21 Downloads*: 25

Advocates of teacher incentive programs argue that they can strengthen weak incentives, while opponents argue they lead to teaching to the test.' We find evidence that existing teacher incentives in Kenya are indeed weak, with teachers absent 20% of the time. We then report on a randomized evaluation of a program that provided primary school teachers in rural Kenya with incentives based on students' test scores. Students in program schools had higher test scores, significantly so on at least some exams, during the time the program was in place. An examination of the channels through which this effect took place, however, provides little evidence of more teacher effort aimed at increasing long-run learning. Teacher attendance did not improve, homework assignment did not increase, and pedagogy did not change. There is, however, evidence that teachers increased effort to raise short-run test scores by conducting more test preparation sessions. While students in treatment schools scored higher than their counterparts in comparison schools during the life of the program, they did not retain these gains after the end of the program, consistent with the hypothesis that teachers focused on manipulating short-run scores. In order to discourage dropouts, students who did not test were assigned low scores. Program schools had the same dropout rate as comparison schools, but a higher percentage of students in program schools took the test.

John A List, David Lucking-Reiley

Cited by*: 161 Downloads*: 25

We test two recent theories on the subject of charitable fundraising in capital campaigns. Andreoni (1998) predicts that publicly announced seed contributions can increase the total amount of charitable giving in a capital campaign. Bagnoli and Lipman (1989) predict that another technique for increasing contributions is a promise to refund donors' money in case the campaign threshold is not reached. Using a field experiment in a capital campaign for the Center for Environmental Policy Analysis at the University of Central Florida, we present evidence on both of these predictions. Data from direct mail solicitations sent to 3000 Central Floridian residents confirm the basic comparative-static predictions of both theories: total contributions increase with the amount of seed money, and with the use of a refund policy. A change in seed money from 10% to 67% of the campaign goal resulted in nearly a sixfold increase in contributions, while imposing a refund increased contributions by a more modest 20%. Seed money has a statistically significant effect on both the proportion of people choosing to donate and on the average gift size of those who donate, while refunds have a statistically significant effect only on the average gift size. These results have clear implications for practitioners in the design of fundraising campaigns.

Puppe Clemens, Sebastian Kube, Michel Marechal

Cited by*: 18 Downloads*: 25

We study the role of reciprocity in a labor market field experiment. In a recent paper, Gneezy and List (2006) investigate the impact of gift exchange in this context and find that it has only a transient effect on long run outcomes. Extending their work to examine both positive and negative reciprocity, we find consonant evidence in the positive reciprocity condition: the gift does not work well in the long run (if at all). Yet, in the negative reciprocity treatment we observe much stronger effects: a wage reduction has a significant and lasting negative impact on efforts. Together, these results highlight the asymmetry of positive and negative reciprocity that exists in the field, and provide an indication of the relative importance of each in the long run.

Santosh Anagol, Vimal Balasubramaniam, Tarun Ramadorai

Cited by*: 2 Downloads*: 24

Winners of randomly assigned initial public offering (IPO) lottery shares are significantly more likely to hold these shares than lottery losers 1, 6, and even 24 months after the random allocation. This effect persists in samples of wealthy and highly active investors, suggesting along with additional evidence that this type of "endowment effect" is not solely driven by portfolio inertia or wealth effects. The effect decreases as experience in the IPO market increases, but persists even for the most experienced investors. These results suggest that agents' preferences and/or beliefs about an asset are not independent of ownership, providing field evidence derived from the behavior of 1.5 million Indian stock investors which is in line with the large laboratory literature documenting endowment effects. We evaluate the extent to which prominent models of endowment effects and/or investor behavior can explain our results. A combination of inattention and non-standard preferences (realization utility) or non-standard beliefs (salience based probability distortions) appears most consistent with our findings.

Bruno S Frey, Stephan Meier

Cited by*: 57 Downloads*: 24

Most professional economists believe that economists in general are more selfish than other people and that this increased selfishness is due to economics education. This article offers empirical evidence against this widely held belief. Using a unique data set about giving behavior in connection with two social funds at the University of Zurich, it is shown that economics education does not make people act more selfishly. Rather, this natural experiment suggests that the particular behavior of economists can be explained by a selection effect.

Marianne Bertrand, Dean S Karlan, Sendhil Mullainathan, Eldar Shafir, Jonathan Zinman

Cited by*: 7 Downloads*: 23

Numerous laboratory studies find that minor nuances of presentation and description change behavior in ways that are inconsistent with standard economic models. How much do these context effect matter in natural settings, when consumers make large, real decisions and have the opportunity to learn from experience? We report on a field experiment designed to address this question. A South African lender sent letters offering incumbent clients large, short-term loans at randomly chosen interest rates. The letters also contained independently randomized psychological "features" that were motivated by specific types of frames and cues shown to be powerful in the lab, but which, from a normative perspective, ought to have no impact. Consistent with standard economics, the interest rate significantly affected loan take-up. Inconsistent with standard economics, some of the psychological features also significantly affected take-up. The average effect of a psychological manipulation was equivalent to a one half percentage point change in the monthly interest rate. Interestingly, the psychological features appear to have greater impact in the context of less advantageous offers and persist across different income and education levels. In short, even in a market setting with large stakes and experienced customers, subtle psychological features appear to be powerful drivers of behavior. The findings pose a challenge for the social sciences: they suggest that psychological nuance matters but may be inherently difficult to predict given the impact of context. Successful incorporation of psychological features into field studies is likely to prove a vital, but nontrivial, addition to the formation of more general theories on when, why, and how frames and cues influence important decisions.

John A List, Mark Strazicich

Cited by*: 39 Downloads*: 22

Time paths of carbon dioxide emissions in twenty-one industrial countries are examined from 1960-1997 to test for stochastic and conditional convergence. Both panel unit root tests and cross-section regressions are performed. Overall, we find significant evidence that CO2 emissions have converged.

Gustavo J Bobonis, Edward Miguel, Charu P Sharma

Cited by*: 6 Downloads*: 22

Iron-deficiency anemia is among the world's most widespread health problems, especially for children, but it is rarely studied by economists. This paper evaluates the impact of a health intervention delivering iron supplementation and deworming drugs to 2-6 year old children through an existing pre-school network in the slums of Delhi, India. At baseline 69 percent of sample children were anemic and 30 percent had intestinal worm infections. Sample pre-schools were randomly divided into groups and gradually phased into treatment. Weight increased significantly among assisted children, and pre-school participation rates rose sharply by 5.8 percentage points - a reduction of one-fifth in school absenteeism - in the first five months of the program. Gains are largest in low socio-economic status areas. Year two estimates are similar, but two methodological problems--sample attrition, and the non-random sorting of new child cohorts into treatment groups--complicate interpretation of the later results.

Craig E Landry, Andreas Lange, John A List, Michael K Price, Nicholas G Rupp

Cited by*: 160 Downloads*: 21

This study develops theory and uses a door-to-door fundraising field experiment to explore the economics of charity. We approached nearly 5000 households, randomly divided into four experimental treatments, to shed light on key issues on the demand side of charitable fundraising. Empirical results are in line with our theory: in gross terms, our lottery treatments raised considerably more money than our voluntary contributions treatments. Interestingly, we find that a one standard deviation increase in female solicitor physical attractiveness is similar to that of the lottery incentive--the magnitude of the estimated difference in gifts is roughly equivalent to the treatment effect of moving from our theoretically most attractive approach (lotteries) to our least attractive approach (voluntary contributions).

John A List, Jason F Shogren

Cited by*: 78 Downloads*: 21

We design and implement a field experiment to elicit and calibrate in-sample hypothetical and actual bids given the presence of other goods and intensity of market experience. Using market goods that possess characteristics beyond the norm but yet remain deliverable, bidding behavior was consistent with theory. But we also observe the average calibration factor for hypothetical bids in the auction with other goods to be more severe (0.3) than for the auction without the goods (0.4). The results support the view that the calibration of hypothetical and actual bidding is good- and context-specific.

David Court, Benjamin Gillen, Jordi McKenzie, Charles R Plott

Cited by*: 0 Downloads*: 21

Successful field tests were conducted on two new Information Aggregation Mechanisms (IAMs). The mechanisms collected information held as intuitions about opening weekend box office revenues for movies in Australia. Participants were film school students. One mechanism is similar to parimutuel betting that produces a probability distribution over box office amounts. Except for "art house films", the predicted distribution is indistinguishable from the actual revenues. The second mechanism is based on guesses of the guesses of others and applied when incentives for accuracy could not be used. It tested well against data and contains information not encompassed by the first mechanism.

Melissa R Michelson, Herbert Villa Jr.

Cited by*: 0 Downloads*: 21

Less than a third of Latinos vote in Presidential elections, while less than one fourth participate in Congressional elections. Turnout among young Latinos (age 18-25) is even lower. This paper describes the results of a field experiment aimed at increasing turnout among young Latinos in Fresno, California conducted in the fall of 2002. Canvassers went door-to-door during the final two weekends before Election Day to urge registered young people to go to the polls. Young people of all races/ethnicities were targeted. In addition to testing the effectiveness of personal contact and how this varies among registered voters of various races/ ethnicities, the project also included two imbedded experiments. First, the race/ethnicity of the canvassers was randomly assigned, to test whether Latinos and non-Latinos are equally effective at getting Latinos and non- Latinos to the polls. Second, the message delivered to contacted registered voters was randomly assigned, to test whether young Latinos are more receptive to a message which stresses group solidarity or one that emphasizes civic duty. The experiment demonstrates that Latino canvassers are better than non-Latinos at contacting young Latino voters, and that young Latinos are more receptive than are non-Latinos to door-todoor mobilization efforts.

Dean S Karlan, Jonathan Zinman

Cited by*: 2 Downloads*: 20

Information asymmetries are important in theory but difficult to identify in practice. We estimate the empirical importance of adverse selection and moral hazard in a consumer credit market using a new field experiment methodology. We randomized 58,000 direct mail offers issued by a major South African lender along three dimensions: 1) the initial "offer interest rate" appearing on direct mail solicitations; 2) a "contract interest rate" equal to or less than the offer interest rate and revealed to the over 4,000 borrowers who agreed to the initial offer rate; and 3) a dynamic repayment incentive that extends preferential pricing on future loans to borrowers who remain in good standing. These three randomizations, combined with complete knowledge of the Lender's information set, permit identification of specific types of private information problems. Specifically, our setup distinguishes adverse selection from moral hazard effects on repayment, and thereby generates unique evidence on the existence and magnitudes of specific credit market failures. We find evidence of both adverse selection (among women) and moral hazard (predominantly among men), and the findings suggest that about 20% of default is due to asymmetric information problems. This helps explain the prevalence of credit constraints even in a market that specializes in financing high-risk borrowers at very high rates.

Henk Folmer, Tim Jeppesen, John A List

Cited by*: 19 Downloads*: 20

Stricter environmental regulations are often opposed on the grounds that they will alter equilibrium capital flows. Empirical evidence in this area remains largely unresolved, mainly due to the quite disparate results found in the literature. This paper takes a positive look at the relationship between new manufacturing plant location decisions and environmental regulations by examining data from 11 studies that provide more than 365 observations. One major result from our meta-analysis is that methodological considerations play a critical role in shaping the body of received estimates. Our empirical estimates also lend insights into future research that is necessary before any robust conclusions can be made regarding the effects of environmental regulations on capital flows.

Lester Lusher

Cited by*: 0 Downloads*: 20

Procrastination, an issue linked to poor performance and decreased well-being, is a pervasive problem in education. This paper examines the role of commitment and motivation by evaluating a program called CollegeBetter.com which acts as a commitment device and monetary incentive to help college students battle problems of present bias. The zero-sum mechanism is based off a parimutuel betting market, where students join a pool by placing a monetary wager on themselves to achieve the pool's "commitment challenge." Students who successfully commit to the challenge 1) recover their wagers and 2) split losing wagers proportionally. Through a series of lab and field experiments, I find that students interested in the mechanism were low-achieving, overconfident, self-identified procrastinators, while traditional measures of time-preferences were weak predictors of selection. Across all pools, students randomly selected to participate were more likely to achieve the commitment challenge than students who applied for a spot but were randomly excluded. Consistent with loss aversion, having the student risk their own money is a principal contributor to the effectiveness of the mechanism.