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If smokers are well aware of the negative impacts of smoking, why don’t they quit? While nicotine substitutes and counseling have been dominant in smoking cessation programs in developed countries, these programs are costly and often not accessible for the rural poor in developing countries. Researchers Xavier Giné, Dean Karlan, and Jonathan Zinman designed an alternative approach: a commitment contract that provides financial incentives for smokers to quit. The CARES product (Committed Action to Reduce and End Smoking) was introduced and evaluated in the Philippines. The researchers find evidence supporting its effectiveness, offer suggestions on future research and recommendations on how to improve smoking cessation programs.   Full published paper is available here.
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December 01, 2008
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Information asymmetries complicate financial relationships. They give rise to problems that force lenders, for example, to rely on contracts that are secondbest solutions both from their own and from borrowers’ perspectives. But while these problems, namely adverse selection and moral hazard, are important in theory, they are difficult to identify and disentangle in practice. Researchers Dean Karlan and Jonathan Zinman take up the challenge with an innovative research methodology. Using an experimental design that randomizes along three dimensions and working with a South African lender, the study isolates the effects of adverse selection and moral hazard, finding strong evidence of moral hazard and weaker evidence of adverse selection on hidden information.
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December 01, 2008
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In the developing world, access to small, individual loans has been variously hailed as a povertyalleviation tool – in the context of “microcredit” – but has also been criticized as “usury” and harmful to vulnerable borrowers. Prior studies have assessed effects of access to credit on traditional economic outcomes for poor borrowers, but effects on mental health have been largely ignored.
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Published Paper
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December 01, 2008
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This paper evaluates an experiment in which individuals in rural Malawi were randomly assigned monetary incentives to learn their HIV results after being tested. Distance to the HIV results centers was also randomly assigned. Without any incentive, 34 percent of the participants learned their HIV results. However, even the smallest incentive doubled that share. Using the randomly assigned incentives and distance from results centers as instruments for the knowledge of HIV status, sexually active HIV-positive individuals who learned their results are three times more likely to purchase condoms two months later than sexually active HIV-positive individuals who did not learn their results; however, HIV-positive individuals who learned their results purchase only two additional condoms than those who did not. There is no significant effect of learning HIV-negative status on the purchase of condoms.
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December 01, 2008
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We use randomized grants to generate shocks to capital stock for a set of Sri Lankan microenterprises. We find the average real return to capital in these enterprises is 4.6%–5.3% per month (55%–63% per year), substantially higher than market interest rates. We then examine the heterogeneity of treatment effects. Returns are found to vary with entrepreneurial ability and with household wealth, but not to vary with measures of risk aversion or uncertainty. Treatment impacts are also significantly larger for enterprises owned by males; indeed, we find no positive return in enterprises owned by females.
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November 01, 2008
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We present new evidence on the randomization methods used in existing experiments, and new simulations comparing these methods. We find that many papers do not describe the randomization in detail, implying that better reporting is needed. Our simulations suggest that in samples of 300 or more, the different methods perform similarly. However, for very persistent outcome variables, and in smaller samples, pair-wise matching and stratification perform best and appear to dominate the rerandomization methods commonly used in practice. The simulations also point to specific recommendations for which variables to balance on, and for which controls to include in the ex post analysis.
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October 01, 2008
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This paper builds a theory of trust based on informal contract enforcement in social networks. In our model, network connections between individuals can be used as social collateral to secure informal borrowing. We define networkbased trust as the largest amount one agent can borrow from another agent and derive a reduced-form expression for this quantity, which we then use in three applications. (1) We predict that dense networks generate bonding social capital that allows transacting valuable assets, whereas loose networks create bridging social capital that improves access to cheap favors such as information. (2) For job recommendation networks, we show that strong ties between employers and trusted recommenders reduce asymmetric information about the quality of job candidates. (3) Using data from Peru, we show empirically that network-based trust predicts informal borrowing, and we structurally estimate and test our model.
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October 01, 2008
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Experimental economists believe (and enforce the idea) that researchers should not employ deception in the design of experiments. This rule exists in order to protect a public good: the ability of other researchers to conduct experiments and to have participants trust their instructions to be an accurate representation of the game being played. Yet other social sciences, particularly psychology, do not maintain such a rule. We examine whether such a public goods problem exists by purposefully deceiving some participants in one study, informing them of this fact, and then examining whether the deceived participants behave differently in a subsequent study. We find significant differences in the selection of individuals who return to play after being deceived as well as (to a lesser extent) the behavior in the subsequent games, thus providing qualified support for the proscription of deception. We discuss policy implications for the maintenance of separate participant pools.
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September 17, 2008
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Randomized experiments have become a popular tool in development economics research and have been the subject of a number of criticisms. This paper reviews the recent literature and discusses the strengths and limitations of this approach in theory and in practice. We argue that the main virtue of randomized experiments is that, owing to the close collaboration between researchers and implementers, they allow the estimation of parameters that would not otherwise be possible to evaluate. We discuss the concerns that have been raised regarding experiments and generally conclude that, although real, they are often not specific to experiments. We conclude by discussing the relationship between theory and experiments.
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September 01, 2008
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Does production risk suppress the demand for credit? We implemented a randomized field experiment to ask whether provision of insurance against a major source of production risk induces farmers to take out loans to adopt a new crop technology. The study sample was composed of roughly 800 maize and groundnut farmers in Malawi, where by far the dominant source of production risk is the level of rainfall. We randomly selected half of the farmers to be offered credit to purchase high-yielding hybrid maize and groundnut seeds for planting in the November 2006 crop season. The other half of farmers were offered a similar credit package, but were also required to purchase (at actuarially fair rates) a weather insurance policy that partially or fully forgave the loan in the event of poor rainfall. Surprisingly, take up was lower by 13 percentage points among farmers offered insurance with the loan. Take-up was 33.0% for farmers who were offered the uninsured loan. There is suggestive evidence...
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September 01, 2008
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This paper surveys evidence from recent randomized evaluations in developing countries on the impact of price on access to health and education. Debate on user fees has been contentious, but until recently much of the evidence was anecdotal. Randomized evaluations across a variety of settings suggest prices have a large impact on take-up of education and health products and services. While the sign of this effect is consistent with standard theories of human capital investment, a more detailed examination of the data suggests that it may be important to go beyond these models. There is some evidence for peer effects, which imply that for some goods the aggregate response to price will exceed the individual response. Time inconsistent preferences could potentially help explain the apparently disproportionate effect of small short-run costs and benefits on decisions with long-run consequences.
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August 01, 2008
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July 01, 2008
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Policymakers often prescribe that microfinance institutions increase interest rates to eliminate their reliance on subsidies. This strategy makes sense if the poor are rate insensitive: then microlenders increase profitability (or achieve sustainability) without reducing the poor's access to credit. We test the assumption of price inelastic demand using randomized trials conducted by a consumer lender in South Africa. The demand curves are downward sloping, and steeper for price increases relative to the lender's standard rates. We also find that loan size is far more responsive to changes in loan maturity than to changes in interest rates, which is consistent with binding liquidity constraints.
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June 01, 2008
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We exploit random assignment of gender quotas across Indian village councils to investigate whether having a female chief councillor affects public opinion towards female leaders. Villagers who have never been required to have a female leader prefer male leaders and perceive hypothetical female leaders as less effective than their male counterparts, when stated performance is identical. Exposure to a female leader does not alter villagers' taste preference for male leaders. However, it weakens stereotypes about gender roles in the public and domestic spheres and eliminates the negative bias in how female leaders' effectiveness is perceived among male villagers. Female villagers exhibit less prior bias, but are also less likely to know about or participate in local politics; as a result, their attitudes are largely unaffected. Consistent with our experimental findings, villagers rate their women leaders as less effective when exposed to them for the first, but not second, time. These ch...
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Working Paper
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June 01, 2008
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Using a pair of randomized evaluations, I evaluate a computer assisted learning program designed to reinforce students understanding of material presented in class. The program was implemented in both an in-school and out-of-school model allowing me to assess different strategies for integrating the technology into the existing schools. The effect of the program critically depends on the method of implementation. The program was a poor substitute for the teacher delivered curriculum and as a result, the in-school model caused students to learn significantly less than they otherwise would have learned (-0.57 standard deviations). When implemented as a complement to the normal program in the out-of-school model, however, the program generated average gains of 0.28 standard deviations reflecting small positive (but statistically insignificant) gains by most students and large positive gains by the weakest and older students in the class (from 0.4 to 0.69 standard deviations). The results...
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Working Paper
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June 01, 2008
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Research has shown that advertising exposure and intensity can impact whether or not a consumer buys a product, but outside the laboratory very little is known about what affect the so-called ‘creative content’ of ads has on consumer demand. Nor do we know much about how important the effect of ad content is relative to that of price. In order to better understand these impacts, researchers developed a field study that varies both advertising content and price in the same setting. This method allows us first toexamine whether ad content affects consumer decisions, then to estimate how much it impacts demand relative to the effect of price. Researchers explore these questions with a South African “cash loan” lender and find that ad content has significant effects on demand, as well as some evidence that the impact of ad content is large relative to that of price.
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May 30, 2008
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This special issue highlights an empirical approach that has increasingly grown in prominence in the last decade—field experiments. While field experiments can be used quite generally in economics—to test theories’ predictions, to measure key parameters, and to provide insights into the generalizability of empirical results—this special issue focuses on using field experiments to explore questions within the economics of charity. The issuecontains six distinct field experimental studies that investigate various aspects associated with the economics of charitable giving. The issue also includes a fitting tribute to one of the earliest experimenters to depart from traditional lab methods, Peter Bohm, who curiously has not received deep credit or broad acclaim. Hopefully this issue will begin to rectify this oversight.
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May 01, 2008
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Many policymakers advocate heavy subsidies to boost fertilizer use and raise agricultural productivity. In contrast, most economists assume that farmers already take advantage of potential profit opportunities, and argue that heavy subsidies are distortionary, environmentally unsound, regressive, and lead to politicization and inefficiency in fertilizer supply. In earlier work, we show that fertilizer is profitable for farmers in Western Kenya. Yet, usage is low, pointing to possible inefficiencies. In this paper, we build a model with a small fixed cost of purchasing fertilizer in which some farmers are present-biased and partially naïve. Farmers therefore procrastinate, postponing purchasing fertilizer until proceeds from the harvest are spent. Consistent with the model, small time-limited reductions in the cost of purchasing fertilizer at the time of harvest induce substantial increases in fertilizer use, as much as considerably larger price cuts later in the season. Such small time...
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May 01, 2008
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Indoor air pollution (IAP) caused by solid fuel use and/or traditional cooking stoves is a global health threat, particularly for women and young children. The WHO World Health Report 2002 estimates that IAP is responsible for 2.7% of the loss of disability adjusted life years (DALYs) worldwide and 3.7% in high-mortality developing countries. Despite the magnitude of this problem, social scientists have only recently begun to pay closer attention to this issue and to test strategies for reducing IAP. In this paper, we provide a survey of the current literature on the relationship between indoor air pollution, respiratory health and economic well-being. We then discuss the available evidence on the effectiveness of popular policy prescriptions to reduce IAP within the household.
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February 01, 2008
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In much of the developing world farmers grow crops for local consumption despite export options that appear to be more profitable. This paper reports on a randomized controlled trial conducted by DrumNet in Kenya that attempts to help farmers adopt and market export crops. After one year, DrumNet services led to an increase in production of export crops and lower marketing costs, which translated into household income gains for new adopters. One year after the study, however, the exporter stopped buying from the farmers because they had not become certified to comply with European export requirements. DrumNet collapsed as farmers defaulted on their loans. The risk of such events may explain, at least partly, why many seemingly more profitable export crops are not adopted.   Full published paper is available here.
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January 30, 2008

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