The Wall Street Journal speaks with IPA affiliate and board member Taveneet Suri about her work with us studying the effects of M-PESA mobile money on Kenyan women's livelihoods.
Making a New Year's resolution is easy. Keeping one isn't. When it comes to losing weight or quitting smoking, a commitment contract, wherein one publicly agrees to achieve a certain goal, can help. The commitment contract is based on two well-known principles of behavioral economics: 1) People don't always do what they claim they want to do; and 2) incentives get people to do things.
The "fiscal cliff" was a huge self-imposed commitment contract, timed for the end of the year. Politicians, to please shortsighted...
By applying the scientific method to economic development, organizations like IPA are contributing to a “culture of doing more of what works and less of what doesn’t work,” says Mr. Appen.
(Note, there is an ungated version of the article here)
The Wall Street Journal Weekend Review section had front page feature on Innovations for Poverty Action and randomized controlled trials called "The Anti-Poverty Experiment." It explains how IPA approaches evidence-baesd policy through rigorous evaluations, and how the approach has changed the field, featuring perspective from Dean Karlan, Esther Duflo, Richard Thaler and others. The story also explains how behavioral economics is being integrated into anti-poverty programs and looks at several of them. It was also featured in the Chronicle of Philanthropy and Real Clear Politics. An ungated version of the text is available here.
The younger you are, the more freaked out you are likely to be by the housing market crash.
A new paper by Federal Reserve Bank of Boston economists used consumer sentiment data collected in the Michigan Survey of Consumers over the summer to try to find out how the housing market's terrible state of affairs was affecting the willingness to buy a new home. Age mattered, which suggests a new generation may be coming along that will cast a wary eye at home ownership for a long time to come. The finding also suggests a new headwind to future growth levels, given that it's hard for the economy to achieve a better rate of growth when the housing sector remains moribund.
The Michigan data suggests younger survey respondents â€œare relatively less confident about home ownership after larger declines, while older respondents are relatively more confident,â€ the paper said.
Importantly, attitudes were affected by personal experience. For both age groups attitude changes were â€œobserved only for those with personal experience of loss (via themselves or someone close) during the crash.â€
The paper said that older survey respondents with stable attitudes on home ownership's value, even in the face of price declines, were over the age of 58. The paper's authors, Anat Bracha and Julian Jamison, both of the Boston Fed, speculated â€œin terms of the striking age differential, one possibility is that relatively younger respondents were indeed more malleable, and hence they internalized the sharp drop as a regime change.â€
Meanwhile, â€œolder respondents â€” whose models of the world are harder to alter â€” see the drop in house prices as a temporary dip in a stable long-term upward trend, making it a particularly good time to purchase.â€
The authors of a new book that looks at ways to reduce poverty around the world (and whether they work) have suggested one possible reason why the microcredit model may not be creating more entrepreneurs: It rewards cautiousness.
An experiment they ran in Tangiers showed that households were willing to pay a substantial amount of money to have a private tap in their home. Once they had a tap, there was no reduction in water borne illness. But there was a substantial increase in self-reported well-being as families had more time for leisure, and the tensions that arose between households as they jostled in line at the public tap disappeared.