Embedded Files
About: BREAD Fellows and Affiliates often submit Working Papers to be listed on the BREAD website. You can view BREAD Working Papers below.
Repository: BREAD Working Papers are hosted in a Github repository (linked here) to ensure files are accessible freely and publicly.
About: BREAD Fellows and Affiliates often submit Working Papers to be listed on the BREAD website. You can view BREAD Working Papers below.
Repository: BREAD Working Papers are hosted in a Github repository (linked here) to ensure files are accessible freely and publicly.
Instructions for submitters: If you are a BREAD Fellow or Affiliate looking to submit a working paper, please submit it to ibread@princeton.edu and include the following: (1) Title, (2) Abstract, (3) Authors, and (4) Live link / Pdf that you want included on the website. Submissions must include all four to be accepted.
Instructions for submitters: If you are a BREAD Fellow or Affiliate looking to submit a working paper, please submit it to ibread@princeton.edu and include the following: (1) Title, (2) Abstract, (3) Authors, and (4) Live link / Pdf that you want included on the website. Submissions must include all four to be accepted.
Date: Summer 2019
Date: Summer 2019
WP#: 559
WP#: 559
Abstract: Mobile money has spread rapidly across Africa since it was first introduced in Kenya in 2007, and has been extensively studied in recent years. However, identification is challenging because mobile money is typically rapidly adopted, making it difficult to preserve a control group. In this paper, we add to previous literature with an RCT conducted among microentrepreneurs in urban Malawi in 2017-18, where usage of mobile money was still modest, even though a nascent mobile money agent network existed. Treatment was three-pronged: assistance in opening a mobile money account, training on how to perform basic transactions, and a withdrawal fee waiver. We find that the majority of people opened accounts and used them extensively. We find strong evidence that treated respondents reallocated labor from business to agriculture, and we find more mixed evidence of an increase in expenditures. In contrast to the existing literature, effects appear to be driven by using the accounts to save rather than to make transfers.
Abstract: Mobile money has spread rapidly across Africa since it was first introduced in Kenya in 2007, and has been extensively studied in recent years. However, identification is challenging because mobile money is typically rapidly adopted, making it difficult to preserve a control group. In this paper, we add to previous literature with an RCT conducted among microentrepreneurs in urban Malawi in 2017-18, where usage of mobile money was still modest, even though a nascent mobile money agent network existed. Treatment was three-pronged: assistance in opening a mobile money account, training on how to perform basic transactions, and a withdrawal fee waiver. We find that the majority of people opened accounts and used them extensively. We find strong evidence that treated respondents reallocated labor from business to agriculture, and we find more mixed evidence of an increase in expenditures. In contrast to the existing literature, effects appear to be driven by using the accounts to save rather than to make transfers.
Date: Spring 2019
Date: Spring 2019
WP#: 558
WP#: 558
Abstract: Zika virus epidemics have potential large-scale population effects. Controlled studies of mice and non-human primates indicate Zika effects on fertility, raising concerns about miscarriage in human populations. In regions of Brazil, Zika risk peaked months before residents learned about the epidemic. This spatio-temporal variation supports differentiation between Zika biological effects on fertility and learning about its risks over reproductive behavior. Causal inference techniques used with vital statistics indicate that the epidemic caused 20% reductions in birth cohort size 18 months after Zika infection peaked, but 10 months after public health messages advocated childbearing delay in the most affected areas. The evidence is not consistent with biological reductions in fertility being the main force; it indicates strategic changes in reproductive behavior to temporally align childbearing with reduced risk to infant health within locations where Zika risk was more salient to the population. The effects are larger for the more educated, older and wealthier mothers, which may reflect their facilitated access both to information and family planning services within the high-risk/mosquito-infested urban locations.
Abstract: Zika virus epidemics have potential large-scale population effects. Controlled studies of mice and non-human primates indicate Zika effects on fertility, raising concerns about miscarriage in human populations. In regions of Brazil, Zika risk peaked months before residents learned about the epidemic. This spatio-temporal variation supports differentiation between Zika biological effects on fertility and learning about its risks over reproductive behavior. Causal inference techniques used with vital statistics indicate that the epidemic caused 20% reductions in birth cohort size 18 months after Zika infection peaked, but 10 months after public health messages advocated childbearing delay in the most affected areas. The evidence is not consistent with biological reductions in fertility being the main force; it indicates strategic changes in reproductive behavior to temporally align childbearing with reduced risk to infant health within locations where Zika risk was more salient to the population. The effects are larger for the more educated, older and wealthier mothers, which may reflect their facilitated access both to information and family planning services within the high-risk/mosquito-infested urban locations.
Date: Winter 2019
Date: Winter 2019
WP#: 557
WP#: 557
Abstract: Using exogenous variation in social proximity generated by an allocation rule, we find that bureaucrats assigned to their home states are perceived to be more corrupt and less able to withstand illegitimate political pressure. Despite this, we observe that home officers are more likely to be promoted in the later stages of their careers. To understand this dissonance between performance and promotion we show that incoming Chief Ministers preferentially promote home officers that come from the same home district. Taken together, our results suggest that social proximity hampers bureaucrat performance by facilitating political capture and corruption.
Abstract: Using exogenous variation in social proximity generated by an allocation rule, we find that bureaucrats assigned to their home states are perceived to be more corrupt and less able to withstand illegitimate political pressure. Despite this, we observe that home officers are more likely to be promoted in the later stages of their careers. To understand this dissonance between performance and promotion we show that incoming Chief Ministers preferentially promote home officers that come from the same home district. Taken together, our results suggest that social proximity hampers bureaucrat performance by facilitating political capture and corruption.
Date: Spring 2019
Date: Spring 2019
WP#: 556
WP#: 556
Abstract: How does competition affect market outcomes when formal contracts are not enforceable, and parties resort to relational contracts? Difficulties with measuring relational contracts and dealing with the endogeneity of competition have frustrated attempts to answer this question. We make progress by studying relational contracts between upstream farmers and downstream mills in Rwanda’s coffee industry. First, we identify salient dimensions of their relational contracts (unenforceable provision of services in both directions before, during and after harvest) and measure them through an original survey of mills and farmers. Second, we take advantage of an engineering model for the optimal placement of mills to construct an instrument that isolates geographically determined variation in competition. Conditional on the suitability for mills within the catchment area, we find that mills surrounded by more suitable areas: (i) face more competition from other mills; (ii) use fewer relational contracts with farmers; and (iii) exhibit worse performance. In contrast to conventional wisdom, an additional competing mill also (iv) makes farmers worse off; (v) reduces the aggregate quantity of coffee supplied to mills by farmers; and (vi) conditional on the farmer’s distance from the mill, lowers relational contracts more for farmers close to the competing mill, suggesting that competition directly alters farmers temptation to renege on the relational contract. The finding that increased competition downstream leaves all producers – including upstream producers – no better-off suggests a potential role for policy in a second-best environment in which contracts are hard to enforce.
Abstract: How does competition affect market outcomes when formal contracts are not enforceable, and parties resort to relational contracts? Difficulties with measuring relational contracts and dealing with the endogeneity of competition have frustrated attempts to answer this question. We make progress by studying relational contracts between upstream farmers and downstream mills in Rwanda’s coffee industry. First, we identify salient dimensions of their relational contracts (unenforceable provision of services in both directions before, during and after harvest) and measure them through an original survey of mills and farmers. Second, we take advantage of an engineering model for the optimal placement of mills to construct an instrument that isolates geographically determined variation in competition. Conditional on the suitability for mills within the catchment area, we find that mills surrounded by more suitable areas: (i) face more competition from other mills; (ii) use fewer relational contracts with farmers; and (iii) exhibit worse performance. In contrast to conventional wisdom, an additional competing mill also (iv) makes farmers worse off; (v) reduces the aggregate quantity of coffee supplied to mills by farmers; and (vi) conditional on the farmer’s distance from the mill, lowers relational contracts more for farmers close to the competing mill, suggesting that competition directly alters farmers temptation to renege on the relational contract. The finding that increased competition downstream leaves all producers – including upstream producers – no better-off suggests a potential role for policy in a second-best environment in which contracts are hard to enforce.
Date: Summer 2018
Date: Summer 2018
WP#: 555
WP#: 555
Abstract: Do the stringent formal sector borrowing requirements common in many developing countries restrict credit access, technology adoption, and welfare? When a Kenyan dairy’s savings and credit cooperative randomly offered some farmers the opportunity to replace loans with high down payments and stringent guarantor requirements with loans collateralized by the asset itself – a large water tank – loan take-up increased from 2.4% to 41.9%. (In contrast, substituting joint liability requirements for deposit requirements did not affect loan take up.) There were no repossessions among farmers allowed to collateralize 75% of their loans, and there was only a 0.7% repossession rate among those offered 96% asset collateralization. A Karlan-Zinman test based on waiving borrowing requirements ex post finds evidence of adverse selection with lowered deposit requirements, but not of moral hazard. A simple model and rough calibration suggests that adverse selection may deter lenders from making welfare-improving loans with lower deposit requirements, even after introducing asset collateralization. We estimate that 2/3 of marginal loans led to increased water storage investment. Real effects of loosening borrowing requirements include increased household water access, reductions in child time spent on water-related tasks, and greater school enrollment for girls.
Abstract: Do the stringent formal sector borrowing requirements common in many developing countries restrict credit access, technology adoption, and welfare? When a Kenyan dairy’s savings and credit cooperative randomly offered some farmers the opportunity to replace loans with high down payments and stringent guarantor requirements with loans collateralized by the asset itself – a large water tank – loan take-up increased from 2.4% to 41.9%. (In contrast, substituting joint liability requirements for deposit requirements did not affect loan take up.) There were no repossessions among farmers allowed to collateralize 75% of their loans, and there was only a 0.7% repossession rate among those offered 96% asset collateralization. A Karlan-Zinman test based on waiving borrowing requirements ex post finds evidence of adverse selection with lowered deposit requirements, but not of moral hazard. A simple model and rough calibration suggests that adverse selection may deter lenders from making welfare-improving loans with lower deposit requirements, even after introducing asset collateralization. We estimate that 2/3 of marginal loans led to increased water storage investment. Real effects of loosening borrowing requirements include increased household water access, reductions in child time spent on water-related tasks, and greater school enrollment for girls.
Date: Winter 2019
Date: Winter 2019
WP#: 554
WP#: 554
Abstract: Natural resources can lead to the deterioration of public policies through corruption, as well as to civil conflict. Our paper tests this political resource curse through a large-scale field experiment following the dissemination of information about a substantial resource discovery in Mozambique. A variety of outcomes is measured through surveys, behavioral activities, lab-in-the-field experiments, and georeferenced conflict data. Information given only to local leaders increases elite capture and rent-seeking, while information and deliberation targeted at citizens increases mobilization and accountability, and decreases violence. Although the political resource curse is likely to be real, information campaigns can have a countervailing effect.
Abstract: Natural resources can lead to the deterioration of public policies through corruption, as well as to civil conflict. Our paper tests this political resource curse through a large-scale field experiment following the dissemination of information about a substantial resource discovery in Mozambique. A variety of outcomes is measured through surveys, behavioral activities, lab-in-the-field experiments, and georeferenced conflict data. Information given only to local leaders increases elite capture and rent-seeking, while information and deliberation targeted at citizens increases mobilization and accountability, and decreases violence. Although the political resource curse is likely to be real, information campaigns can have a countervailing effect.
Date: Winter 2019
Date: Winter 2019
WP#: 553
WP#: 553
Abstract: For many products, the utility of adoption depends on the share of other households that adopt. We estimate a structural model of demand that allows for these interdependencies. We apply our model to the adoption of household latrines – a technology that has large consequences for public health. We estimate the model using data from a large-scale experiment covering over 18,000 households in 380 communities in rural Bangladesh, where we randomly assigned incentives to purchase latrines. Subsidies were randomly assigned at the household level to identify the direct effect of price, and subsidy saturation was randomly varied at the community level to identify strategic complementarities in demand. We conduct counter-factual simulations to analyze the policymaker’s tradeoffs along price, saturation and scope margins: To raise aggregate latrine adoption, is it better to intensely subsidize a few, or widely disperse subsidies across households or communities? We also analyze the effects of targeting subsidies on the basis of household poverty, social position, or neighborhood population density. Finally, we use additional experiments to explore mechanisms underlying the complementarity in demand, and find that shame and changing social norms are driving factors.
Abstract: For many products, the utility of adoption depends on the share of other households that adopt. We estimate a structural model of demand that allows for these interdependencies. We apply our model to the adoption of household latrines – a technology that has large consequences for public health. We estimate the model using data from a large-scale experiment covering over 18,000 households in 380 communities in rural Bangladesh, where we randomly assigned incentives to purchase latrines. Subsidies were randomly assigned at the household level to identify the direct effect of price, and subsidy saturation was randomly varied at the community level to identify strategic complementarities in demand. We conduct counter-factual simulations to analyze the policymaker’s tradeoffs along price, saturation and scope margins: To raise aggregate latrine adoption, is it better to intensely subsidize a few, or widely disperse subsidies across households or communities? We also analyze the effects of targeting subsidies on the basis of household poverty, social position, or neighborhood population density. Finally, we use additional experiments to explore mechanisms underlying the complementarity in demand, and find that shame and changing social norms are driving factors.
Date: Spring 2020
Date: Spring 2020
WP#: 552
WP#: 552
Abstract: We test whether the provision of multiple labeled savings accounts affects savings and downstream outcomes in an experiment with 761 microentrepreneurs in urban Malawi. Treatment respondents received one or multiple savings accounts, in the form of lockboxes or mobile money. We find that while providing additional boxes increased savings by 40%, technical issues marred the efficacy of a second mobile money account. Both types of accounts had impacts on down- stream outcomes, including farming decisions and credit extended to customers. We do not detect differential downstream effects by the number of accounts.
Abstract: We test whether the provision of multiple labeled savings accounts affects savings and downstream outcomes in an experiment with 761 microentrepreneurs in urban Malawi. Treatment respondents received one or multiple savings accounts, in the form of lockboxes or mobile money. We find that while providing additional boxes increased savings by 40%, technical issues marred the efficacy of a second mobile money account. Both types of accounts had impacts on down- stream outcomes, including farming decisions and credit extended to customers. We do not detect differential downstream effects by the number of accounts.
Date: Winter 2019
Date: Winter 2019
WP#: 551
WP#: 551
Abstract: We assess evidence from randomized control trials (RCTs) on long-run economic productivity and living standards in poor countries. We first document that several studies estimate large positive long-run impacts, but that relatively few existing RCTs have been evaluated over the long-run. We next present evidence from a systematic survey of existing RCTs, with a focus on cash transfer and child health programs, and show that a meaningful subset can realistically be evaluated for long-run effects. We discuss ways to bridge the gap between the burgeoning number of development RCTs and the limited number that have been followed up to date, including through new panel (longitudinal) data, improved participant tracking methods, alternative research designs, and access to administrative, remote sensing, and cell phone data. We conclude that the rise of development economics RCTs since roughly 2000 provides a novel opportunity to generate high-quality evidence on the long-run drivers of living standards.
Abstract: We assess evidence from randomized control trials (RCTs) on long-run economic productivity and living standards in poor countries. We first document that several studies estimate large positive long-run impacts, but that relatively few existing RCTs have been evaluated over the long-run. We next present evidence from a systematic survey of existing RCTs, with a focus on cash transfer and child health programs, and show that a meaningful subset can realistically be evaluated for long-run effects. We discuss ways to bridge the gap between the burgeoning number of development RCTs and the limited number that have been followed up to date, including through new panel (longitudinal) data, improved participant tracking methods, alternative research designs, and access to administrative, remote sensing, and cell phone data. We conclude that the rise of development economics RCTs since roughly 2000 provides a novel opportunity to generate high-quality evidence on the long-run drivers of living standards.
Date: Fall 2018
Date: Fall 2018
WP#: 550
WP#: 550
Abstract: Societal norms about gender roles contribute to the economic disadvantages facing women in many developing countries. This paper evaluates an intervention aimed at eroding support for restrictive gender norms, specifically a multi-year school-based intervention in Haryana, India, that engaged adolescents in classroom discussions about gender equality. Using a randomized controlled trial, we find that the intervention increased adolescents’ support for gender equality by 0.25 standard deviations, a sizable effect compared to other correlates of their gender attitudes such as their parents’ views. Program participants also report more gender-equitable behavior; for example, boys report helping out more with household chores.
Abstract: Societal norms about gender roles contribute to the economic disadvantages facing women in many developing countries. This paper evaluates an intervention aimed at eroding support for restrictive gender norms, specifically a multi-year school-based intervention in Haryana, India, that engaged adolescents in classroom discussions about gender equality. Using a randomized controlled trial, we find that the intervention increased adolescents’ support for gender equality by 0.25 standard deviations, a sizable effect compared to other correlates of their gender attitudes such as their parents’ views. Program participants also report more gender-equitable behavior; for example, boys report helping out more with household chores.
Date: Fall 2018
Date: Fall 2018
WP#: 549
WP#: 549
Abstract: We exploit a policy designed to randomly allocate roommates in a large South African university to investigate whether inter-racial interaction affects stereotypes, attitudes and performance. Using Implicit Association Tests, we find that living with a roommate of a different race reduces white students’ negative stereotypes towards blacks and increases inter-racial friendships. Interaction also affects academic outcomes: blacks in mixed rooms improve their GPA, pass more exams and have lower dropout rates. This positive effect is not driven by the ability of the roommate and is stronger the lower the roommate’s prejudice, suggesting a complementarity between stereotype reduction and performance gains.
Abstract: We exploit a policy designed to randomly allocate roommates in a large South African university to investigate whether inter-racial interaction affects stereotypes, attitudes and performance. Using Implicit Association Tests, we find that living with a roommate of a different race reduces white students’ negative stereotypes towards blacks and increases inter-racial friendships. Interaction also affects academic outcomes: blacks in mixed rooms improve their GPA, pass more exams and have lower dropout rates. This positive effect is not driven by the ability of the roommate and is stronger the lower the roommate’s prejudice, suggesting a complementarity between stereotype reduction and performance gains.
Date: Winter 2020
Date: Winter 2020
WP#: 548
WP#: 548
Abstract: We collect data on prices, travel costs and farmer decisions to quantify market access and its impact on agricultural productivity in 1,183 villages in two regions of Tanzania. Villages at the bottom of the travel cost-adjusted price distribution face 40-55% less favorable prices than those at the top. A one standard deviation increase of village-level remoteness is associated with 20-25% lower input adoption and output sales. A spatial model of input adoption conservatively estimates that farmers behave as if travel costs are 4% ad-valorem per kilometer. Counterfactuals suggest that halving travel costs would double adoption and reduce the adoption-remoteness gradient by 39%.
Abstract: We collect data on prices, travel costs and farmer decisions to quantify market access and its impact on agricultural productivity in 1,183 villages in two regions of Tanzania. Villages at the bottom of the travel cost-adjusted price distribution face 40-55% less favorable prices than those at the top. A one standard deviation increase of village-level remoteness is associated with 20-25% lower input adoption and output sales. A spatial model of input adoption conservatively estimates that farmers behave as if travel costs are 4% ad-valorem per kilometer. Counterfactuals suggest that halving travel costs would double adoption and reduce the adoption-remoteness gradient by 39%.
Date: Fall 2018
Date: Fall 2018
WP#: 547
WP#: 547
Abstract: We develop a methodology to estimate robust city-level vehicular mobility indices, and apply it to 154 Indian cities using 22 million counterfactual trips measured by a web mapping service. There is wide variation in mobility across cities. An exact decomposition shows this variation is driven more by differences in uncongested mobility than congestion. Under plausible assumptions, a one-standard-deviation improvement in uncongested speed creates much more mobility than optimal congestion pricing. Denser and more populated cities are slower, only in part because of congestion. Urban economic development is correlated with better (uncongested and overall) mobility despite worse congestion.
Abstract: We develop a methodology to estimate robust city-level vehicular mobility indices, and apply it to 154 Indian cities using 22 million counterfactual trips measured by a web mapping service. There is wide variation in mobility across cities. An exact decomposition shows this variation is driven more by differences in uncongested mobility than congestion. Under plausible assumptions, a one-standard-deviation improvement in uncongested speed creates much more mobility than optimal congestion pricing. Denser and more populated cities are slower, only in part because of congestion. Urban economic development is correlated with better (uncongested and overall) mobility despite worse congestion.
Date: Spring 2018
Date: Spring 2018
WP#: 546
WP#: 546
Abstract: In the 1970s and 1980s the government of Bangladesh, with the support and financing of the United Nations Children’s Fund, promoted the digging of tube wells to provide clean drinking water and reduce the incidence of diarrheal disease. Prior to this, drinking water came from surface water sources, which were identified as a principal source of diarrheal disease. In the late 1990s, however, evidence indicated that groundwater, unlike surface water and by then the main source of water for drinking, irrigation and cooking in Bangladesh, was contaminated by naturally-occurring arsenic in 59 of the country’s 64 districts. While there is now a large body of evidence that the consumption of arsenic-contaminated water is manifested in higher levels of morbidity and new symptoms (e.g., skin lesions), there is little evidence on the economic consequences of arsenic ingestion and retention in the body in Bangladesh. In this paper, we provide new estimates of the effects of the ingestion and retention of inorganic arsenic on direct measures of cognitive and physical capabilities as well as on the schooling attainment, occupational structure, entrepreneurship and incomes of the rural Bangladesh population. We also provide new estimates of the effects of the consumption of foods grown and cooked in arsenic-contaminated water on individual arsenic concentrations.
Abstract: In the 1970s and 1980s the government of Bangladesh, with the support and financing of the United Nations Children’s Fund, promoted the digging of tube wells to provide clean drinking water and reduce the incidence of diarrheal disease. Prior to this, drinking water came from surface water sources, which were identified as a principal source of diarrheal disease. In the late 1990s, however, evidence indicated that groundwater, unlike surface water and by then the main source of water for drinking, irrigation and cooking in Bangladesh, was contaminated by naturally-occurring arsenic in 59 of the country’s 64 districts. While there is now a large body of evidence that the consumption of arsenic-contaminated water is manifested in higher levels of morbidity and new symptoms (e.g., skin lesions), there is little evidence on the economic consequences of arsenic ingestion and retention in the body in Bangladesh. In this paper, we provide new estimates of the effects of the ingestion and retention of inorganic arsenic on direct measures of cognitive and physical capabilities as well as on the schooling attainment, occupational structure, entrepreneurship and incomes of the rural Bangladesh population. We also provide new estimates of the effects of the consumption of foods grown and cooked in arsenic-contaminated water on individual arsenic concentrations.
Date: Fall 2018
Date: Fall 2018
WP#: 545
WP#: 545
Abstract: Quantitative research on human trafficking is scant due to lack of data. This study makes use of a unique survey we collected on former victims of trafficking and vulnerable women and girls in the Philippines. We start by exploring the correlates of trafficking and show that household composition (in particular the presence of older sisters) and plausibly exogenous measures of health and economic shocks predict the likelihood of being trafficked. We then study the effects of trafficking on victims’ intertemporal and risk preferences using entropy balancing. We find that trafficking victims are not differentially patient, but they are more risk-loving. Our novel data and findings are pertinent to the design of policies intending to prevent trafficking and reintegrate victims.
Abstract: Quantitative research on human trafficking is scant due to lack of data. This study makes use of a unique survey we collected on former victims of trafficking and vulnerable women and girls in the Philippines. We start by exploring the correlates of trafficking and show that household composition (in particular the presence of older sisters) and plausibly exogenous measures of health and economic shocks predict the likelihood of being trafficked. We then study the effects of trafficking on victims’ intertemporal and risk preferences using entropy balancing. We find that trafficking victims are not differentially patient, but they are more risk-loving. Our novel data and findings are pertinent to the design of policies intending to prevent trafficking and reintegrate victims.
Date: Fall 2018
Date: Fall 2018
WP#: 544
WP#: 544
Abstract: We prove that, for general demand and cost conditions and market structures, the fraction of first-best surplus that a monopolist is unable to extract in a market provides a tight upper bound on the relative distortions arising from firms’ equilibrium decisions at all margins (entry and pricing). Continuing with this worst-case perspective, we show that a symmetrically truncated Zipf (STRZ) distribution of consumer values generates the lowest producer surplus among those with a given mean and maximum value. This allows us to relate potential deadweight loss from all margins in a market to the Zipf-similarity of its demand curve. The STRZ distribution also bounds deadweight loss at just the pricing margin. We leverage existing results from industrial organization (e.g., on demand curvature) and statistics (e.g., on the relation between means and medians) to bound producer surplus in an array of important special cases. Calibrations based on the world distribution of income generate extremely Zipf-similar demand curves, with disturbing consequences for potential deadweight loss in global markets. We gauge the extent to which various policies—such as progressive taxation or price discrimination—can ameliorate potential deadweight loss.
Abstract: We prove that, for general demand and cost conditions and market structures, the fraction of first-best surplus that a monopolist is unable to extract in a market provides a tight upper bound on the relative distortions arising from firms’ equilibrium decisions at all margins (entry and pricing). Continuing with this worst-case perspective, we show that a symmetrically truncated Zipf (STRZ) distribution of consumer values generates the lowest producer surplus among those with a given mean and maximum value. This allows us to relate potential deadweight loss from all margins in a market to the Zipf-similarity of its demand curve. The STRZ distribution also bounds deadweight loss at just the pricing margin. We leverage existing results from industrial organization (e.g., on demand curvature) and statistics (e.g., on the relation between means and medians) to bound producer surplus in an array of important special cases. Calibrations based on the world distribution of income generate extremely Zipf-similar demand curves, with disturbing consequences for potential deadweight loss in global markets. We gauge the extent to which various policies—such as progressive taxation or price discrimination—can ameliorate potential deadweight loss.
Date: Summer 2018
Date: Summer 2018
WP#: 543
WP#: 543
Abstract: By downplaying externalities, magnifying the cost of moral behavior, or suggesting not being pivotal, exculpatory narratives can allow individuals to maintain a positive image when in fact acting in a morally questionable way. Conversely, responsibilizing narratives can help sustain better social norms. We investigate when narratives emerge from a principal or the actor himself, how they are interpreted and transmitted by others, and when they spread virally. We then turn to how narratives compete with imperatives (general moral rules or precepts) as alternative modes of communication to persuade agents to behave in desirable ways.
Abstract: By downplaying externalities, magnifying the cost of moral behavior, or suggesting not being pivotal, exculpatory narratives can allow individuals to maintain a positive image when in fact acting in a morally questionable way. Conversely, responsibilizing narratives can help sustain better social norms. We investigate when narratives emerge from a principal or the actor himself, how they are interpreted and transmitted by others, and when they spread virally. We then turn to how narratives compete with imperatives (general moral rules or precepts) as alternative modes of communication to persuade agents to behave in desirable ways.
Date: Summer 2018
Date: Summer 2018
WP#: 542
WP#: 542
Abstract: Firms in developing countries often avoid paying taxes by making informal payments to tax officials. These bribes may raise the cost of operating a business, and the price charged to consumers. To decrease these costs, we designed a feedback incentive scheme for business tax inspectors that rewards them according to the anonymous evaluation submitted by inspected firms. We show theoretically that feedback incentives decrease the equilibrium bribe amount, but make firms with more inelastic demand more attractive for inspectors. A tilted scheme that attaches higher weights to the evaluation of smaller firms limits the scope for targeting and decreases the bribe amount to a lesser extent. We evaluate both schemes in a field experiment in the Kyrgyz Republic and find evidence that is consistent with the model predictions. By decreasing bribes, our intervention reduces the average cost for firms and the price they charge to consumers. Since fewer firms substitute bribes for taxes, tax revenues increase. Our study highlights the role of firm heterogeneity and market structure in shaping the relationship between firms and tax inspectors, and provides clear evidence of pass-through of bribes to consumers.
Abstract: Firms in developing countries often avoid paying taxes by making informal payments to tax officials. These bribes may raise the cost of operating a business, and the price charged to consumers. To decrease these costs, we designed a feedback incentive scheme for business tax inspectors that rewards them according to the anonymous evaluation submitted by inspected firms. We show theoretically that feedback incentives decrease the equilibrium bribe amount, but make firms with more inelastic demand more attractive for inspectors. A tilted scheme that attaches higher weights to the evaluation of smaller firms limits the scope for targeting and decreases the bribe amount to a lesser extent. We evaluate both schemes in a field experiment in the Kyrgyz Republic and find evidence that is consistent with the model predictions. By decreasing bribes, our intervention reduces the average cost for firms and the price they charge to consumers. Since fewer firms substitute bribes for taxes, tax revenues increase. Our study highlights the role of firm heterogeneity and market structure in shaping the relationship between firms and tax inspectors, and provides clear evidence of pass-through of bribes to consumers.
Date: Winter 2018
Date: Winter 2018
WP#: 541
WP#: 541
Abstract: In South Asia, parents prize sons for both economic and cultural reasons, and having a son is often thought to improve his mother’s status within the household. However, using data from Bangladesh and India, we show that such high regard does not necessarily translate into improved autonomy for her. In fact, a daughter raises her mother’s participation in household decisions and her freedom of mobility relative to a son. A daughter also prompts her mother to work more, but not necessarily to consume more. These effects are strongest among mothers of older girls. These results are consistent with a theoretical model in which mothers have greater relative preferences for spending on their daughters than fathers do, and so seek more autonomy to direct resources to their daughters.
Abstract: In South Asia, parents prize sons for both economic and cultural reasons, and having a son is often thought to improve his mother’s status within the household. However, using data from Bangladesh and India, we show that such high regard does not necessarily translate into improved autonomy for her. In fact, a daughter raises her mother’s participation in household decisions and her freedom of mobility relative to a son. A daughter also prompts her mother to work more, but not necessarily to consume more. These effects are strongest among mothers of older girls. These results are consistent with a theoretical model in which mothers have greater relative preferences for spending on their daughters than fathers do, and so seek more autonomy to direct resources to their daughters.
Date: Winter 2018
Date: Winter 2018
WP#: 540
WP#: 540
Abstract: Although it is well known that traditional cultural practices can play an important role in development, we still have little understanding of what this means for development policy. To improve our understanding of this issue, we examine how the effects of school construction on girls’ education vary with a widely-practiced marriage custom called bride price, which is a payment made by the husband and/or his family to the wife’s parents at marriage. We begin by developing a model of educational choice with and without bride price. The model generates a number of predictions that we test in two countries that have had large-scale school construction projects, Indonesia and Zambia. Consistent with the model, we find that for groups that practice the custom of bride price, the value of bride price payments that the parents receive tend to increase with their daughter’s education. As a consequence, the probability of a girl being educated is higher among bride price groups. The model also predicts that families from bride price groups will be the most responsive to policies, like school construction, that are aimed at increasing female education. Studying the INPRES school construction program in Indonesia, as well as a similar program in Zambia, we find evidence consistent with this prediction. Although the program had no discernible effect on the education of girls from groups without bride price, it had large positive effects for girls from groups with a bride price. The findings emphasize the importance of the marriage market as a driver of educational investment and provide an example of how the cultural context of a society can be crucial for the effectiveness of development policy.
Abstract: Although it is well known that traditional cultural practices can play an important role in development, we still have little understanding of what this means for development policy. To improve our understanding of this issue, we examine how the effects of school construction on girls’ education vary with a widely-practiced marriage custom called bride price, which is a payment made by the husband and/or his family to the wife’s parents at marriage. We begin by developing a model of educational choice with and without bride price. The model generates a number of predictions that we test in two countries that have had large-scale school construction projects, Indonesia and Zambia. Consistent with the model, we find that for groups that practice the custom of bride price, the value of bride price payments that the parents receive tend to increase with their daughter’s education. As a consequence, the probability of a girl being educated is higher among bride price groups. The model also predicts that families from bride price groups will be the most responsive to policies, like school construction, that are aimed at increasing female education. Studying the INPRES school construction program in Indonesia, as well as a similar program in Zambia, we find evidence consistent with this prediction. Although the program had no discernible effect on the education of girls from groups without bride price, it had large positive effects for girls from groups with a bride price. The findings emphasize the importance of the marriage market as a driver of educational investment and provide an example of how the cultural context of a society can be crucial for the effectiveness of development policy.
Newer Papers Older Papers
Page updated
Google Sites
Report abuse