nep-exp New Economics Papers
on Experimental Economics
Issue of 2023‒10‒30
thirty papers chosen by

  1. Ability Grouping and Student Performance: Experimental Evidence from Middle Schools in Mexico By Busso, Matías; Frisancho, Verónica
  2. Voting for income redistribution in a dynamic-income experiment By Tongzhe Li; Bradley J. Ruffle
  3. Do Consumers Acquire Information Optimally? Experimental Evidence from Energy Efficiency By Andrea La Nauze; Erica Myers
  4. Sexual Harassment in Public Spaces and Police Patrols: Experimental Evidence from Urban India By Sofia Amaral; Girija Borker; Nathan Fiala; Anjani Kumar; Nishith Prakash; Maria Micaela Sviatschi
  5. Can political gridlock undermine checks and balances? A lab experiment By Alvaro Forteza; Irene Mussio; Juan S Pereyra
  6. Mobile Effects on Two-Sided Financial Decisions: Evidence from Field Experiments on Peer-to-Peer Lending Platforms By Sihan Fang; Hyeokkoo Eric Kwon; Tian Lu; Yingjie Zhang
  7. Discrimination Against Gay and Transgender People in Latin America: A Correspondence Study in the Rental Housing Market By Abbate, Nicolás; Berniell, Inés; Coleff, Joaquín; Laguinge, Luis; Marchionni, Mariana; Pedrazzi, Julián; Machelett, Margarita; Pinto, María Florencia
  8. Policy Misperceptions, Information, and the Demand for Redistributive Tax Reform: Experimental Evidence from Latin American Countries By Ardanaz, Martín; Hübscher, Evelyne; Keefer, Philip; Sattler, Thomas
  9. Two Experiments on Trading Information Goods in a Network By Nobuyuki Hanaki; Yutaka Kayaba; Jun Maekawa; Hitoshi Matsushima
  10. The effect of the social environment during childhood on preferences in adulthood By Johannes Abeler; Toke Reinholt Fosgaard; Lars Garn Hansen
  11. What Job Would You Apply to?: Findings on the Impact of Language on Job Searches By Díaz Escobar, Ana María; Salas Bahamón, Luz Magdalena; Piras, Claudia; Suaya, Agustina
  12. Cognitive Limitations: Failures of Contingent Thinking By Niederle, Muriel; Vespa, Emanuel
  13. Voting Age, Information Experiments, and Political Engagement: Evidence from a General Election By Keefer, Philip; Vlaicu, Razvan
  14. Serving Consumers in an Uncertain World: A Credence Goods Experiment By Loukas Balafoutas; Helena Fornwagner; Rudolf Kerschbamer; Matthias Sutter; Maryna Tverdostup
  15. Watching the embezzler: an experiment on antisocial behaviour By Anabel Doñate-Buendía; Aurora García-Gallego
  16. Game of Prejurdice By Utteeyo Dasgupta; Subha Mani; Joe Vecci; Tomas Zelinsky
  17. Selection into Financial Education and Effects on Portfolio Choice By Irina Gemmo; Pierre-Carl Michaud; Olivia S. Mitchell
  18. Optimal Conditional Inference in Adaptive Experiments By Jiafeng Chen; Isaiah Andrews
  19. Quantifying Lottery Choice Complexity By Benjamin Enke; Cassidy Shubatt
  20. Willingness to pay for crime reduction: evidence from six countries in the Americas By Domínguez, Patricio; Scartascini, Carlos
  21. Investigator Racial Diversity and Clinical Trial Participation By Marcella Alsan; Romaine A. Campbell; Lukas Leister; Ayotomiwa Ojo
  22. Improving Early Literacy through Teacher Professional Development: Experimental Evidence from Colombia By Álvarez Marinelli, Horacio; Berlinski, Samuel; Busso, Matías; Martínez Correa, Julián
  23. Do Public Works Programs Have Sustained Impacts? A Review of Experimental Studies from LMICs By Aanchal Bagga; Marcus Holmlund; Nausheen Khan; Subha Mani; Eric Mvukiyehe; Patrick Premand
  24. Benefitting or suffering from a paradoxical leader? A self-regulation perspective By Fürstenberg, Nils; Booth, Jonathan E.; Alfes, Kerstin
  25. Aspiring to a Better Future: Can a Simple Psychological Intervention Reduce Poverty? By Kate Orkin; Rob Garlick; Mahreen Mahmud; Richard Sedlmayr; Johannes Haushofer; Stefan Dercon
  26. Spillover Effects of Financial Education: The Impact of School-Based Programs on Parents By Frisancho, Verónica
  27. Remote Tutoring with Low-tech Means to Accelerate Learning: Evidence for El Salvador By Zoido, Pablo; Flores, Iván; Hevia, Felipe; Székely, Miguel; Castro, Eleno
  28. The Causal Impact of Covid-19 Government-backed Loans on MSMEs Liquidity and Earnings By Cerda, Maikol; Gertler, Paul; Higgins, Sean; Montoya, Ana María; Parrado, Eric; Undurraga, Raimundo
  29. Why Do Voters Support Procyclical Fiscal Policies? Experimental Evidence from Latin America By Ardanaz, Martín; Hübscher, Evelyne; Keefer, Philip; Sattler, Thomas
  30. Choice-induced Sticky Learning By Gergely Hajdu; Balázs Krusper

  1. By: Busso, Matías; Frisancho, Verónica
    Abstract: This article relies on a large-scale field experiment in Mexico to measure the effects of two ability-grouping models (tracking and heterogeneous/bimodal groups) on student learning outcomes during middle school. Both strategies yielded an average learning gain of 0.08 of a standard deviation. We find larger and more persistent effects among initially high-achieving students and no significant effects among low achievers. Students in top tracking enjoyed multiple advantages, particularly a concentration of high-performing peers and a very homogeneous classroom, that facilitated the teacher's work and increased students' effort levels. Bimodal classes fostered greater effort levels among top students, while teachers induced less competition and allocated more time to practice and feedback activities, to the detriment of lecture time. Our results support the allocation of students to homogeneous classes to maximize performance gains among top students without hurting low achievers. Fostering inclusive learning among weaker students would require complementary investments under both models.
    Keywords: Peer effects;tracking;Bimodal classes;Middle school;Field experiment
    JEL: C93 I21 I28 O15
    Date: 2023–01
  2. By: Tongzhe Li; Bradley J. Ruffle
    Abstract: We design a laboratory experiment to investigate how income redistribution preferences respond to income mobility, income source, own income level and ideological beliefs. Own income is by far the strongest determinant of voting behavior for redistribution. High- (low-) income earners vote for low (high) rates of redistribution regardless of how their income was determined and of their previous-stage income. An intriguing element in our experimental design is that middle-income individuals have no such self-interest in the voting outcome, since their income remains unchanged regardless of the redistribution rate. We find these participants’ voting displays an affinity with low-income earners, which points to individuals’ predisposition to favoring high levels of redistribution. However, their relatively high support for redistribution is situational: it disappears when they have high incomes.
    Keywords: : income redistribution; taxes; voting; social mobility; experimental economics
    JEL: C91 D01
    Date: 2023–10
  3. By: Andrea La Nauze; Erica Myers
    Abstract: We use an experiment to test whether consumers optimally acquire information on energy costs in appliance markets where, like many contexts, consumers are poorly informed and make mistakes despite freely-available information. We find consumers acquire information suboptimally; there is little correlation between the revealed utility gain from improved decision making due to information and willingness to pay for information. We compare two behavioral interventions to address consumer mistakes: a conventional subsidy for energy-efficient products and a non-traditional subsidy paying consumers to view information on energy costs. We show that paying for attention can target welfare improvements more effectively.
    JEL: D12 D83 D91 Q41
    Date: 2023–09
  4. By: Sofia Amaral; Girija Borker; Nathan Fiala; Anjani Kumar; Nishith Prakash; Maria Micaela Sviatschi
    Abstract: We conducted a randomized controlled trial to evaluate the impact of an innovative police patrol program on sexual harassment in public spaces in Hyderabad, India. In collaboration with the Hyderabad City Police, we randomized both exposure to police patrols and the visibility of officers by deploying both uniformed and undercover personnel to hotspots. We implemented a novel, high-frequency observation exercise to measure sexual harassment at 350 hotspots, where enumerators took note of all observed instances of sexual harassment and women’s responses in real time. We find that although police patrols had no impact on overall street harassment, the visible policing patrols reduced severe forms of harassment (forceful touching, intimidation) by 27 percent and reduced the likelihood of women leaving the hotspot due to sexual harassment. We uncovered the underlying mechanisms and found that both police visibility and officers’attitudes oward sexual harassment are key to understanding its incidence. While the performance of undercover officers was similar to that of uniformed officers, harassment did not decrease when undercover officers were on patrol. This suggests that the visibility of police officers is critical in deterring perpetrators. Additionally, using lab experiments we find that, on average, police officers were more tolerant of mild street harassment and less inclined to punish offenders in such cases. Correspondingly, we observed in uniformed hotspots a decline in all types of harassment only when assigned officers held stronger personal views on harassment.
    JEL: J24
    Date: 2023–09
  5. By: Alvaro Forteza; Irene Mussio; Juan S Pereyra
    Abstract: If checks and balances are aimed at protecting citizens from the government's abuse of power, why do they sometimes weaken them? We address this question in a laboratory experiment in which subjects choose between two decision rules: with and without checks and balances. Voters may prefer an unchecked executive if that enables a reform that, otherwise, is blocked by the legislature. Consistent with our predictions, we find that subjects are more likely to weaken checks and balances when there is political gridlock. However, subjects weaken the controls not only when the reform is beneficial but also when it is harmful.
    Date: 2023–09
  6. By: Sihan Fang (Nanyang Technological University, 50 Nanyang Avenue, 639798 Singapore); Hyeokkoo Eric Kwon (Nanyang Technological University, 50 Nanyang Avenue, 639798 Singapore); Tian Lu (Arizona State University, 400 E Lemon St, Tempe, AZ, 85281 US); Yingjie Zhang (Peking University, No.5 Yiheyuan Road, Haidian, Beijing, 100871 China)
    Abstract: We have witnessed the convenience of mobile channels and how they boost user engagement in multiple industries. Such positive effects might or might not stay with users’ financial behavior since it requires a significant cognitive effort and risk preferences could also alter the effect direction. Moreover, regarding their effects on two-sided platforms, prior studies have focused on the decision-making of one single side. This might bias our understanding of mobile channels, especially in the finance sector, where lenders’ behavior would be influenced by borrowers’ application quality and quantity. To bridge these gaps, we investigate how mobile channels shape the behaviors of both borrowers and lenders in peer-to-peer (P2P) lending platforms, as well as the corresponding impacts on credit risk management and economic return. Drawing upon the cognitive load theory, we postulate that borrowers and lenders under heavy and mild cognitive load would exhibit distinct behaviors when submitting loan applications or approving loan requests, respectively. Empirically, we collaborate with a leading P2P lending platform to launch two-sided field experiments, in which we randomly assign mobile treatments to borrowers and lenders. The results illustrate that mobile borrowers are more likely to terminate loan submissions, especially during peak commuting hours. By contrast, mobile lenders have a higher tendency to approve loan applications within a shorter period. Surprisingly, we observe no change in the quality of submitted or approved loans. Considering the improved debt collection capability of the platform, we reveal that mobile adoption brings profit enhancement. We offer multiple theoretical and managerial implications.
    Keywords: Mobile adoption; Cognitive load theory; Peer-to-peer lending; Two-sided behavior; Field experiment
    JEL: G41 M31 O17 O33
    Date: 2023–09
  7. By: Abbate, Nicolás; Berniell, Inés; Coleff, Joaquín; Laguinge, Luis; Marchionni, Mariana; Pedrazzi, Julián; Machelett, Margarita; Pinto, María Florencia
    Abstract: We assess the extent of discrimination against gay and transgender individuals in the rental housing markets of four Latin American countries. We conducted a large-scale field experiment building on the correspondence study methodology to examine interactions between property managers and fictitious couples engaged in searches on a major online rental housing platform. We find evidence of discriminatory behavior against heterosexual couples where the female partner is a transgender woman (trans couples): they receive 19% fewer responses, 27% fewer positive responses, and 23% fewer invitations to showings than heterosexual couples. However, we find no evidence of discrimination against gay male couples. We also assess whether the evidence is consistent with taste-based discrimination or statistical discrimination models by comparing response rates when couples signal high socioeconomic status (high SES). While we find no significant effect of the signal on call-back rates or the type of response for high-SES heterosexual or gay male couples, trans couples benefit when they signal high SES. Their call-back, positive-response, and invitation rates increase by 25%, 36% and 29%, respectively. These results suggest the presence of discrimination against trans couples in the Latin American online rental housing market, which seems consistent with statistical discrimination. Moreover, we find no evidence of heterosexual couples being favored over gay male couples, nor evidence of statistical discrimination for gay male or heterosexual couples.
    Keywords: LGBTQ+;discrimination;Correspondence study;Rental housing market;Latin America
    Date: 2023–02
  8. By: Ardanaz, Martín; Hübscher, Evelyne; Keefer, Philip; Sattler, Thomas
    Abstract: Why do individuals preferences for redistribution often diverge widely from their material self-interest? Using an original online survey experiment spanning eight countries and 12, 000 respondents across Latin America, one of the most unequal regions in the world, we find significant evidence for an under-explored explanation: misconceptions regarding the distributional effects of current tax policy. Treated respondents who are informed that an increase in the value added tax (VAT) is regressive are significantly more likely to prefer policy reforms that make the tax more progressive. Treatment effects are driven by the large fraction of respondents who underestimate the regressivity of the VAT, even though their misperceptions are linked to fundamental views about the world. These respondents are disproportionately right-leaning and more likely to attribute success to individual effort than luck. Despite the deep-rooted nature of respondents misperceptions, treatment effects are largest among individuals who hold these views of the world. These findings contribute both to understanding the political economy of redistribution and the potential for information interventions to shift support for fiscal adjustment policies protecting the most vulnerable.
    Keywords: taxes;redistribution;Survey experiment
    JEL: D72 D90 H20 H30
    Date: 2022–12
  9. By: Nobuyuki Hanaki; Yutaka Kayaba; Jun Maekawa; Hitoshi Matsushima
    Abstract: We examine the impact of a cycle path on the trading of a copyable information good in a network experimentally. A cycle path in a network allows a buyer to become a reseller who can compete against existing sellers by replicating the good. A theoretical prediction considers that the price of the information good, even with the first transaction where there is not yet a reseller competing with the original seller, will be lower in networks with a cycle path than otherwise. However, our experiment reveals that the observed price for the first transaction is significantly higher in networks with a cycle path. An additional experiment that enhances competition also does not support the theoretical prediction.
    Date: 2021–12
  10. By: Johannes Abeler (Department of Economics, University of Oxford); Toke Reinholt Fosgaard (Department of Food and Resource Economics, University of Copenhagen; Department of Technology, Management and Economics, Technical University of Denmark); Lars Garn Hansen (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: Preferences are key for shaping decision-making, yet it remains an open question where preferences originate from. We investigate the causal effect of the childhood social environment on adults’ preferences. We utilize a natural experiment in Denmark, which randomized refugees to different neighbourhoods in the 1990s. We experimentally measure risk, time, and social preferences of adult refugees who were children at the time of arrival in Denmark. Using rich administrative register data on the entire Danish population we can measure a very broad range of aspects of the childhood social environment. We find that the randomly allocated childhood environment significantly affects adults’ preferences, in particular, patience.
    Keywords: Preference formation, natural experiment, register data
    JEL: C90 D15 D64 D81 D90 J62
    Date: 2023–10
  11. By: Díaz Escobar, Ana María; Salas Bahamón, Luz Magdalena; Piras, Claudia; Suaya, Agustina
    Abstract: This study tests four "light touch" interventions in the language used in job posts of male- dominated occupations to attract female workers using a discrete choice experiment. This experiment had more than 5000 participants from five Latin American countries. We test two possible mechanisms: the gender-stereotypes related to job skills and the use of inclusive language. We find that language matters, and men and women value information and inclusive language in job advertisements. However, women are more sensitive in this regard. We test the effect of simply aggregating irrelevant, but additional words to the job ad, and find that when the inclusive language in the ad is subtle, the effect of having more words is very important. But it decreases when the language signals a strong preference for an inclusive work environment. These findings highlight the importance of language and the type of information presented in job advertisements in attracting a gender-balanced workforce.
    Keywords: Language interventions;access to employment;labor discrimination;jobads;Occupational Segregation
    JEL: J16 J24 J63 C91 M54
    Date: 2023–04
  12. By: Niederle, Muriel; Vespa, Emanuel
    Abstract: In recent years, experiments have documented a new mechanism that leads to failures of profit maximization: the failure of contingent thinking (FCT). This article summarizes key experimental findings, clarifies what constitutes an FCT, and outlines how FCTs can be tested in other environments. Subsequently, we relate FCTs to recent theoretical work on cognitive limitations in behavioral economics. Finally, we connect FCTs to suboptimal behavior documented in applied environments.
    Keywords: Economics, Applied Economics, Economic Theory, Behavioral and Social Science, Clinical Research, Basic Behavioral and Social Science, Applied economics, Economic theory
    Date: 2023–09–13
  13. By: Keefer, Philip; Vlaicu, Razvan
    Abstract: We exploit new experimental and quasi-experimental data to investigate voters' intrinsic motivation to engage politically. Does having the right to vote increase engagement or, given significant incentives to free ride, do eligible voters remain rationally unengaged? Does knowledge that ones group is pivotal reduce free riding? And are the politically engaged influenced by election-relevant policy information in the run-up to a major election? To address these questions, we fielded an original survey of 5, 400 Mexican high school seniors just prior to the historic 2018 general election. Age-based regression discontinuity results show that the just-eligible score higher on measures of low-cost political engagement compared to the just-ineligible. A first survey experiment reveals that information that the youth vote will be pivotal increases the eligible respondents' interest in the presidential debate and in the election result. In the second experiment, information about current policy outcomes affects future policy priorities in ways consistent with the incentives of eligible respondents to collect relevant information on salient policy issues.
    Keywords: Political engagement;Free riding;Pivotal voters;Policy information
    JEL: D73 H83
    Date: 2022–12
  14. By: Loukas Balafoutas (University of Exeter, United Kingdom; University of Innsbruck, Austria); Helena Fornwagner (University of Exeter, United Kingdom; Austrian Institute of Economic Research (WIFO)); Rudolf Kerschbamer (University of Innsbruck, Austria); Matthias Sutter (University of Innsbruck, Austria; Max Planck Institute for Research on Collective Goods, IZA Bonn and CESifo Munich, Germany; University of Cologne, Germany); Maryna Tverdostup (Vienna Institute for International Economic Studies, Austria)
    Abstract: Credence goods markets are prone to fraudulent behavior and market inefficiencies due to informational asymmetries between sellers and customers. We examine experimentally the effects of diagnostic uncertainty and insurance coverage on the information acquisition and provision decisions by sellers and the trading decisions by consumers. Our results reveal that diagnostic uncertainty is a major source of inefficiency by decreasing efficient service provision. Insurance coverage has a positive net effect on market efficiency, despite making information acquisition and efficient service provision less likely. We also examine the role of -s and of sellers’ prosociality in shaping service provision and information acquisition.
    Keywords: Credence goods, diagnostic uncertainty, insurance coverage, experiment
    JEL: C91 D82 G22
    Date: 2023–10
  15. By: Anabel Doñate-Buendía (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Aurora García-Gallego
    Abstract: Embezzlement is a type of antisocial behaviour that occurs in our daily life. In this study, the importance of watching eyes for reducing this type of antisocial behaviour is examined. The embezzlement game is implemented, focusing on the decision of an intermediary, who gets an amount of money donated by some people to an NGO and decides on how much to give to the beneficiaries of that money. Here we propose that implementing watching eyes can effectively reduce embezzlement. The variable sex is also considered, analysing the sex of the subject and the interaction between the sex of the decision maker and the sex of the eyes. A laboratory experiment with four treatments and a baseline is run, controlling for who is watching you (woman vs. man), and how realistic it feels (static image vs. GIF). Gender differences on embezzlement decisions are significant. Furthermore, significant differences are found regarding the realism of the tool of watching eyes and the sex of it. Therefore, it is relevant the type of tool used in order to reduce antisocial behaviour, as well as the sex of that tool (eyes in this case). Also the sex and other individual characteristics of the sample population matter. All these variables should be considered when defining an intervention in order to accurately reduce antisocial behaviour.
    Keywords: embezzlement game; experiment; gender; visual cues; antisocial behaviour
    JEL: C91 D63 D64 D91 J16
    Date: 2023
  16. By: Utteeyo Dasgupta (Fordham University, Department of Economics); Subha Mani (Fordham University, Department of Economics); Joe Vecci (Gothenburg University); Tomas Zelinsky (Technical University of Kosice)
    Abstract: Children and adolescents are often revered as powerful symbols of hope, representing the future and embodying the potential for positive change. However, early stages of life can also give rise to the development of immoral tendencies and anti-social behaviors. This paper examines the prevalence and possible underlying causes of discrimination among adolescents. Specifically, we examine how discriminatory preferences may vary depending on two common type of decisions -selecting group members versus sharing a pie. We find that even in low-stakes settings, there is sizable ingroup bias when individuals have the opportunity to include someone from the minority ethnicity as part of their ingroup. However, when asked to share a pie, the prevalence of discrimination decreases. Notably, discrimination largely stems from taste-based animosity with no evidence of statistical discrimination or inaccurate beliefs. Furthermore, adolescents curb discriminatory choices when the price of prejudice becomes prohibitively high. Our results have important implications for the design and timing of anti-discriminatory policies and programs.
    Keywords: Discrimination, Adolescents, Low-stakes, Lab-in-the-field experiment, Slovakia
    JEL: C9 D3 J7
    Date: 2023
  17. By: Irina Gemmo; Pierre-Carl Michaud; Olivia S. Mitchell
    Abstract: To examine how financial education affects financial outcomes, one must evaluate whether and how sample selection may bias inferences regarding program impacts. Our incentivized experiment reveals how such selection influences estimated financial education effects. The more financially literate and those expecting higher gains pay more to purchase education, while those who consider themselves very financially literate pay less. Using portfolio allocation tasks, we show that the financial education increases portfolio efficiency and welfare by almost 20 and 3 percentage points, respectively. In our setting, selection does not greatly influence estimated program effects, comparing those participating and those who do not.
    JEL: G11 G41 G53
    Date: 2023–09
  18. By: Jiafeng Chen; Isaiah Andrews
    Abstract: We study batched bandit experiments and consider the problem of inference conditional on the realized stopping time, assignment probabilities, and target parameter, where all of these may be chosen adaptively using information up to the last batch of the experiment. Absent further restrictions on the experiment, we show that inference using only the results of the last batch is optimal. When the adaptive aspects of the experiment are known to be location-invariant, in the sense that they are unchanged when we shift all batch-arm means by a constant, we show that there is additional information in the data, captured by one additional linear function of the batch-arm means. In the more restrictive case where the stopping time, assignment probabilities, and target parameter are known to depend on the data only through a collection of polyhedral events, we derive computationally tractable and optimal conditional inference procedures.
    Date: 2023–09
  19. By: Benjamin Enke; Cassidy Shubatt
    Abstract: We develop interpretable, quantitative indices of the objective and subjective complexity of lottery choice problems that can be computed for any standard dataset. These indices capture the predicted error rate in identifying the lottery with the highest expected value, where the predictions are computed as convex combinations of choice set features. The most important complexity feature in the indices is a measure of the excess dissimilarity of the cumulative distribution functions of the lotteries in the set. Using our complexity indices, we study behavioral responses to complexity out-of-sample across one million decisions in 11, 000 unique experimental choice problems. Complexity makes choices substantially noisier, which can generate systematic biases in revealed preference measures such as spurious risk aversion. These effects are very large, to the degree that complexity explains a larger fraction of estimated choice errors than proximity to indifference. Accounting for complexity in structural estimations improves model fit substantially.
    Keywords: complexity, choice under risk, cognitive uncertainty, experiments
    Date: 2023
  20. By: Domínguez, Patricio; Scartascini, Carlos
    Abstract: Crime levels are a perennial development problem in Latin America and a renewed concern in the United States. At the same time, trust in the police has been falling, and questions abound about citizens' willingness to support government efforts to fight crime. We conduct a survey experiment to elicit willingness to contribute toward reducing crime across five Latin American countries and the United States. We compare homicide, robbery, and theft estimates and find a higher willingness to contribute for more severe crimes and for higher crime reductions. In addition, we examine the role of information on the willingness to contribute by conducting two experiments. First, we show that exposing respondents to crime-related news increases their willingness to pay by 5 percent. Furthermore, while we document a 7 percent gap in willingness to pay for crime reduction between people who under- and over-estimate the murder rate, we find that this gap can be wholly eliminated by informing them about the actual level of crime. On average, our estimates suggest that households are willing to contribute around $140 per year for a 20 percent reduction in homicide. This individual-level predisposition would translate into additional investment in public security efforts of up to 0.5 percent of GDP.
    Keywords: willingness to pay;Cost of crime;Latin America;United States
    JEL: K42 H53 H27
    Date: 2022–10
  21. By: Marcella Alsan; Romaine A. Campbell; Lukas Leister; Ayotomiwa Ojo
    Abstract: We investigate whether increased racial diversity of clinical trial principal investigators could increase the enrollment of Black patients, which currently lags population and disease-burden shares. We conducted a survey experiment in which respondents were shown a photo of a current NIH investigator in which race (Black/White) was randomized. Sex was also randomized as a relevant benchmark. Black respondents reported 0.35 standard deviation units higher interest in participating in a clinical study led by a race concordant investigator (a 12.6% increase). Sex concordance had no effect. Further analyses indicate that perceived trustworthiness and attractiveness are the most important factors explaining these results.
    JEL: I14 I18
    Date: 2023–09
  22. By: Álvarez Marinelli, Horacio; Berlinski, Samuel; Busso, Matías; Martínez Correa, Julián
    Abstract: Teachers are the most fundamental input of students' learning. For this reason, developing teaching skills is a policy priority for most governments around the world. We experimentally evaluate the effectiveness of "Let's All Learn to Read, " a one-year professional development program that trained and coached teachers throughout the school year and provided them and their students with structured materials. Following a year of instruction by the trained teachers, students' literacy scores in treated schools grew by 0.386 of a standard deviation compared to students in the control group. These gains persisted through the second and third grades. We also show that an early intervention in rst grade is more cost-effective at improving literacy skills than implementing remediation strategies in third grade.
    Date: 2022–10
  23. By: Aanchal Bagga (Tufts University); Marcus Holmlund (DIME and World Bank); Nausheen Khan (DIME and World Bank); Subha Mani (Fordham University, Department of Economics); Eric Mvukiyehe (Duke University); Patrick Premand (DIME and World Bank)
    Abstract: Many low- and middle-income countries (LMICs) have introduced public works programs that offer temporary cash-for-work opportunities to poor individuals. This paper reviews experimental evidence on the impacts of public works programs on participants over the short and medium run, providing new insights on whether they have sustained impacts. The findings show that public works mainly increase employment and earnings during the program. Short-term positive effects tend to fade in the medium run, except in a few cases in which large impacts on savings or investments in self-employment activities are also observed. Importantly, the estimated impacts on earnings are much lower than planned transfer amounts due to forgone earnings, raising questions about cost- effectiveness. There is also little evidence of public works programs improving food consumption expenditure. The review finds evidence of improvements in psychological well-being and women's empowerment in some cases, but not systematically, and with limitations in measurement. The paper concludes by outlining directions for future research.
    Keywords: Public works programs, Experimental evidence, Low- and middle-income countries, Sustainability, Social protection, Safety nets, Employment
    JEL: H41 C93 O12 J22 I38
    Date: 2023
  24. By: Fürstenberg, Nils; Booth, Jonathan E.; Alfes, Kerstin
    Abstract: Why do followers’ reactions to perceived paradoxical leader behavior (PLB) differ? To answer this question, we draw from self-regulation theory and argue that making sense of a paradoxical leader’s seemingly contradictory behavior can pose a challenge for followers and requires specific cognitive traits and abilities that enable them to navigate such complex and dynamic environments. We propose that followers who lack these cognitive traits and related abilities find it more difficult to make sense of and navigate their paradoxical leader’s behavior, thereby perceiving them as behaviorally unpredictable. This, in turn, impairs followers’ self-regulation when working with such leaders, and leads to lower well-being. Conversely, followers endowed with appropriate cognitive traits can make sense of PLB and thrive in these environments. To test our propositions, we conducted two multi-wave field studies. In Study 1, we examine the role of followers’ trait cognitive flexibility in interpreting PLB; whereas Study 2 explores the role of followers’ trait self-regulation. The findings from these studies support our hypotheses, with an important implication: the efficacy of PLB may not only solely depend on a leader’s ability to enact these behaviors but also on their followers’ ability to interpret and make sense of them.
    Keywords: leader unpredictability; paradoxical leader behavior; self-regulation; sensemaking; well-being
    JEL: J50
    Date: 2023–10–05
  25. By: Kate Orkin; Rob Garlick; Mahreen Mahmud; Richard Sedlmayr; Johannes Haushofer; Stefan Dercon
    Abstract: How do aspirations influence investment decisions for people living in poverty? Does this change as peoples economic conditions improve? To answer these questions, we design a workshop teaching techniques to raise aspirations and plan to achieve them. We cross-randomise this with large unconditional cash transfers in a 415-village, 8, 300-person, 1.5-year experiment in Kenya. The workshop substantially raises aspirations, investment, and living standards. But the workshop+cash produces similar effects to cash alone, potentially because cash raises aspirations. Thus, helping people living in poverty set higher aspirations can raise investment and living standards, but improving economic conditions can activate the same process.
    JEL: D14 D91 I38 O12
    Date: 2023–09
  26. By: Frisancho, Verónica
    Abstract: This paper studies whether school-based financial education has spillover effects from children to parents. Leveraging data from a large-scale experiment with public high schools in Peru and credit bureau records on the parents of the youth targeted, this study measures the impact of providing personal finance lessons during secondary school on parental financial behavior. Financial education lessons in the school yield limited average spillover effects, but lead to sizable effects on parental financial behavior within disadvantaged households. Among parents from poorer households, the treatment reduces default probability by 26%, increases credit scores by 5%, and increases current debt levels by 40%. The treatment has stronger effects among the parents of daughters, who experience a significant 6.7% increase in their credit score and a 28% reduction in their loan portfolio in arrears. Among the parents of boys, most of the spillover effects are muted.
    Keywords: : Financial Education;youth;spillovers;Financial literacy;Credit records;Treatment effects;Long-lasting impacts
    JEL: C93 D14 G53 O16
    Date: 2023–02
  27. By: Zoido, Pablo; Flores, Iván; Hevia, Felipe; Székely, Miguel; Castro, Eleno
    Abstract: This paper presents the results of an impact evaluation, with an experimental design, which estimates the effect on learning math of a remote tutoring program offered to girls and boys aged 9-14 years in three departments of El Salvador. The program used low-tech interventions such as text messages and 20-minute phone calls over an eight-week period. Remote tutoring is estimated to have had a positive and significant effect of 0.23 standard deviations, which is equivalent to a 33.2 percent acceleration in learning math, compared to the changes observed in the control group. Evidence shows that the rate of learning increases considerably as the number of tutoring sessions taken increases. When compared with other related studies, we conclude that the intervention is cost-effective. The main innovative elements are: (i) the generation of evidence through instruments applied in person, which ensures high quality and accuracy in learning level measurements; (ii) to our knowledge, this is the first experimental evaluation program of its kind in Latin America implemented during the pandemic, with schools partially open, which allows us to verify whether the intervention is as effective as similar such interventions in other contexts and regions of the world; (iii) the use of two types of learning level tests to validate the robustness of the results.
    Keywords: education research;Inequality;Economic Development;government policy
    JEL: I20 I24 I25 I28
    Date: 2022–12
  28. By: Cerda, Maikol; Gertler, Paul; Higgins, Sean; Montoya, Ana María; Parrado, Eric; Undurraga, Raimundo
    Abstract: We conducted two randomized controlled trials (RCTs) to evaluate the impact of government-guaranteed loans offered by the Chilean and Colombian governments. The public funds of these programs greatly expanded following the start of the Covid-19 pandemic and offered loans to Micro, Small and Medium Enterprises to mitigate the negative impact of the shock. Through a collaboration with private banks, we launched two experiments which offered loans to a sub-set of the 10, 072 Chilean and 3, 079 Colombian small businesses that took part in our experiments. Most of these firms had previously applied for a loan during the pandemic--but prior to the RCTs--but were rejected by banks due to their risk analysis of the firms. With take-up rates of 27% and 29%, respectively, we find that Covid-19 loans had a significant positive impact on the total liquidity that treated MSMEs could access: total liquidity with the formal banking system increased by 15.7% (statistically significant at the 1% level). The results of our RCTs will inform Latin American governments concerning their strategies to support MSMEs via government-backed loan programs and will shape similar public policies in the future.
    Keywords: RCT;Government-guaranteed loans;COVID-19 pandemic;Eventstudy;Impact Evaluation
    JEL: J16 L26 P52
    Date: 2023–02
  29. By: Ardanaz, Martín; Hübscher, Evelyne; Keefer, Philip; Sattler, Thomas
    Abstract: Governments often pursue procyclical fiscal policies, even though they reduce voter welfare. Is this because voters actually prefer procyclical policies? The analysis in this paper exploits the first individual-level evidence from an original survey of 12, 000 respondents in 8 countries across Latin America. Prior research links support for procyclical policy to imperfect voter information but does not explore voter knowledge of the composition of public spending increases and cuts in response to positive and negative shocks. We present experimental evidence that less informed individuals are more supportive of procyclical policy. Previous work also explores how trust in politicians influences fiscal policy preferences. We find that those who distrust politicians support acyclical fiscal policies: they are skeptical that they will benefit from higher government spending after positive shocks and be spared the costs of spending cuts after negative shocks. Finally, the evidence supports untested assumptions about voter patience and risk aversion. Patient respondents care more about the future costs of procyclical policy and risk-averse respondents about its higher volatility; support for acyclical policy is correspondingly higher among both groups.
    Keywords: asymmetric information;Trust;patience;risk aversion;procyclical fiscal policy
    JEL: D72 D82 E02 E62
    Date: 2023–04
  30. By: Gergely Hajdu (Department of Economics, Vienna University of Economics and Business); Balázs Krusper (Lidl Stiftung & Co. KG)
    Abstract: Consumers are constantly exposed to new information that compels them to update their beliefs about products, thereby influencing future buying and selling decisions. This process does not simply stop with a product choice. We study how choosing a product affects learning about products in the choice set after the choice has been made. We design an experiment, where we have control over the objective ranking of the options in the choice set. Specifically, participants learn about the fundamental quality of financial investments by observing price changes in multiple rounds. Participants either choose some of the investments themselves (Choice condition) or have some of the investments assigned to them (Allocation condition). We find that learning is stickier after making a choice: participants respond less to price changes in the Choice condition than in the Allocation condition. This result holds for both own and non-owned investments and for both good news and bad news. The effect is unlikely to be driven by attention: we find no difference between the conditions in the amount of attention paid to the investments. We estimate a structural model and show that learning aligns closely with the Bayesian benchmark after exogenous product allocation, while it is too sticky after making a choice. Our model characterizes sticky learning in a tractable way that is easily portable, making it simple to analyze its consequences in other contexts.
    Keywords: biased beliefs, attention, sticky learning, choice effect
    JEL: D9 D12 G4
    Date: 2023–09

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.