nep-sea New Economics Papers
on South East Asia
Issue of 2021‒03‒22
nineteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Comparative Analysis of Financial Sustainability Using the Altman Z-Score, Springate, Zmijewski and Grover Models for Companies Listed at Indonesia Stock Exchange Sub-Sector Telecommunication Period 2014 – 2019 By Fauzi, Samrony Eka; , Sudjono; Saluy, Ahmad Badawi; Institute of Research, Asian
  2. How Different Electricity Pricing Systems Affect the Energy Trilemma: Assessing Indonesia’s Electricity Market Transition By Heffron, Raphael J.; Marc-Fabian Körner, Marc-Fabian; Sumarno, Theresia; Wagner, Jonathan; Weibelzahl, Martin; Fridgen, Gilbert
  3. Consumer immobility predicts both macroeconomic contractions and household poverty during COVID-19 By Headey, Derek D.; Cho, Ame; Lambrecht, Isabel; Maffioli, Elisa Maria; Toth, Russell
  4. Bracing for the Typhoon: Climate Change and Sovereign Risk in Southeast Asia By Beirne, John; Renzhi, Nuobu; Volz, Ulrich
  5. Fast and Sustainable Development Space in Vietnam By Ly Dai Hung
  6. Monitoring the impact of COVID-19 in Myanmar: Mechanization service providers - December 2020 survey round By Takeshima, Hiroyuki; Zone, Phoo Pye; Win, Myat Thida; Masias, Ian
  7. Monitoring the impact of COVID-19 in Myanmar: Rice millers – November 2020 survey round By Goeb, Joseph; Synt, Nang Lun Kham; Zone, Phoo Pye; Tang, Yulu
  8. Monitoring the impact of COVID-19 in Myanmar: Rice millers – October 2020 survey round [in Burmese] By Goeb, Joseph; Synt, Nang Lun Kham; Zone, Phoo Pye; Tang, Yulu
  9. Citizens' Opinions of and Experiences with Government Responses to COVID-19 Pandemic in Vietnam By Do, Huyen Thanh; Nguyen, Cuong Viet; Nguyen, Long Thanh; Nguyen, Phuong Minh; Ngo, Quyen Ha; Phung, Quyen Ha
  11. Opening the Black Box: Disbursement Delays Impacts on Growth in Asian Development Bank Loan Projects in Indonesia By Muhammad A Ingratubun; Akhmad Fauzi
  12. Why Are Latin American Crises Deeper Than Those in Emerging Asia, Including That of COVID-19? By Herrero, Alicia Garcia
  13. COVID-19 Impact on Micro, Small, and Medium-Sized Enterprises under the Lockdown: Evidence from a Rapid Survey in the Philippines By Shinozaki, Shigehiro; Rao, Lakshman N.
  14. Demographic Transition and its Impacts on Fiscal Sustainability in East and Southeast Asia By Korwatanasakul, Upalat; Sirivunnabood, Pitchaya; Majoe, Adam
  15. Vietnam Economy Within 3-Dimension Space of US-China Trade War By Ly Dai Hung
  16. An Energy Policy for ASEAN? Lessons from the EU Experience on Energy Integration, Security, and Decarbonization By Diaz-Rainey, Ivan; Tulloch, Daniel J.; Ahmed, Iftekhar; McCarten, Matthew; Taghizadeh-Hesary, Farhad
  17. How effective is community quarantine in the Philippines? A quasi-experimental analysis By Pajaron, Marjorie C.; Vasquez, Glacer Niño A.
  18. Teacher Characteristics and Student Performance: Evidence from Random Teacher-Student Assignments in China By Huang, Wei; Li, Teng; Pan, Yinghao; Ren, Jinyang
  19. Lying and social norms: a lab-in-the-field experiment with children By Despoina Alempaki; Genyue Fu; Jingcheng Fu

  1. By: Fauzi, Samrony Eka; , Sudjono; Saluy, Ahmad Badawi; Institute of Research, Asian
    Abstract: This study aims to compare the best bankruptcy prediction models between Altman, Springate, Zmijewski and Grover models against companies listed on the Indonesian stock exchange in the telecommunications sub-sector for the 2014-2019 period. The purposive sampling method is used to obtain a sample of companies with the following criteria: Companies listed on the Indonesian stock exchange, the telecommunications sub-sector, the company has conducted an IPO in 2010, the company is obedient in reporting annual reports from 2014 - 2019 and the company is free from delisting issues. There are 4 companies that meet the purposive sampling criteria, namely PT. Telkom TBK, PT. Indosat TBK. PT. XL Axiata TBK and PT. Smartfren TBK. The data used in this research is secondary panel data. The results showed that only PT. Telkom which is in a healthy financial condition. Meanwhile, PT. Indosat, PT. XL Axiata and PT. Smartfren is consistently in an unhealthy condition based on the analysis of the Altman and Springate models. The calculation of Zmijewski's model and Grover's model gave inconsistent results. Comparative testing of the four bankruptcy analysis models resulted in the Altman, Springate and Grover models recording accurate results but Altman modelling is the best because it is an accurate, consistent, and tested model both descriptively and statistically.
    Date: 2021–02–02
  2. By: Heffron, Raphael J. (Asian Development Bank Institute); Marc-Fabian Körner, Marc-Fabian (Asian Development Bank Institute); Sumarno, Theresia (Asian Development Bank Institute); Wagner, Jonathan (Asian Development Bank Institute); Weibelzahl, Martin (Asian Development Bank Institute); Fridgen, Gilbert (Asian Development Bank Institute)
    Abstract: Many countries have a clear policy objective of increasing their share of renewable energy sources (RESs). However, a major impediment to higher RES penetration often lies in the historically grown structures of a country’s electricity sector. In Indonesia, policy makers have relied on cheap fossil fuels and state control to provide the population with access to both reliable and affordable electricity. However, this focus on only two of the three horns of the energy trilemma, namely energy security and energy equity (and not sustainability), may put Indonesia at risk of missing its ambitious RES targets. In this context, a number of small-scale reform attempts to promote RES integration in recent years have proved to be relatively unsuccessful. Like many other countries, Indonesia needs clear policy directions to avoid an unsustainable lock-in into a fossil fuel future. In the last decades, several other countries have successfully restructured their electricity sectors, for example by introducing a wholesale market for electricity under different electricity pricing systems, including nodal, zonal, or uniform pricing. These countries may hold valuable experiences of overcoming the historically grown barriers to successful RES integration through a greater role for market mechanisms. We develop three generic models that allow policy makers to analyze the impact of introducing either a nodal, a zonal, or a uniform pricing system on the three horns of the energy trilemma in their country. We evaluate our model using a simplified network representation of the Indonesian electricity sector. Our results indicate that each of the pricing systems is able to foster specific horns of the energy trilemma. Considering that any major reform intended to improve energy sustainability in Indonesia will only be a success if it also addresses energy security and energy equity, we also discuss our results from the perspective of energy justice and the need to balance the country’s energy trilemma. Ultimately, we illustrate a transformation pathway for a more sustainable and just transition to a low-carbon economy in Indonesia.
    Keywords: electricity pricing system; electricity market liberalization; energy trilemma; energy justice; Indonesia; renewable energy sources
    JEL: L11 L51 Q40 Q41 Q42 Q48
    Date: 2021–01–18
  3. By: Headey, Derek D.; Cho, Ame; Lambrecht, Isabel; Maffioli, Elisa Maria; Toth, Russell
    Abstract: Amid extreme uncertainty during the COVID-19 pandemic, economic policymakers have struggled to respond to rapidly changing circumstances with appropriate speed and scale. One policy obstacle is the dearth of real-time indicators of the pandemic’s economic impacts, especially in low and middle income countries (LMICs). Here we show that an ‘immobility’ indicator from GoogleTM – measuring the extent to which consumers are staying at home more – is a powerful predictor of changes in household poverty in Myanmar, as well as aggregate national consumption and gross domestic product (GDP) in cross-country data. Combined, this evidence suggests that real-time mobility indicators have the potential to inform a wide range of policy deliberations, including forecasting models, fine-tuning the timing of both economic stimulus and social protection interventions, and tracking economic recovery from this unprecedented crisis.
    Keywords: MYANMAR; BURMA; SOUTHEAST ASIA; ASIA; Coronavirus; coronavirus disease; Coronavirinae; COVID-19; gross national product; poverty; economic growth; consumption; indicators; households; urban areas; rural areas; consumers; mobility indicators; immobility
    Date: 2021
  4. By: Beirne, John (Asian Development Bank Institute); Renzhi, Nuobu (Asian Development Bank Institute); Volz, Ulrich (Asian Development Bank Institute)
    Abstract: Southeast Asian countries are among those most heavily affected by climate change. The number and intensity of extreme weather events in the region have been increasing markedly, causing severe social and economic damage. Southeast Asian economies are also exposed to gradual effects of global warming as well as transition risks stemming from policies aimed at mitigating climate change. To empirically examine the effect of climate change on the sovereign risk of Southeast Asian countries, we employ indices for vulnerability and resilience to climate change and estimate country-specific OLS models for six countries and a fixed-effects panel using monthly data for the period 2002–2018. Both the country-specific and the panel results show that greater climate vulnerability appears to have a sizable positive effect on sovereign bond yields, while greater resilience to climate change has an offsetting effect, albeit to a lesser extent. A higher cost of debt holds back much-needed investment in public infrastructure and climate adaptation, increases the risk of debt sustainability problems, and diminishes the development prospects of Southeast Asian countries.
    Keywords: climate change; sovereign risk; climate vulnerability; climate resilience; Southeast Asia
    JEL: D53 H63 Q54
    Date: 2021–03–08
  5. By: Ly Dai Hung (Vietnam Insitute of Economics, Hanoi, Vietnam)
    Abstract: The paper examines the available space for fast and sustainable development in Vietnam. We define the fast and sustainable development as the combination of cross-section-dimensional fast development with high sustainable development. Then, the fast and sustainable development is the optimal combination point of economic growth rate and some critical social indicators. The optimal point, in turn, is on the regression line which illustrates the correlation between the economic growth and social indicators on a crosssection sample of 182 economies. With the achieved growth rate, Vietnam still has available fiscal space to both raise the economic growth and improve the social indicators. On comparision with middle-income economies, this economy gains relatively good performance on inequality, poverty and unemployment reduction, but still needs more effort to upgrade the technology innovation level.
    Keywords: Economic Growth,Fast and Sustainable Development,Innovation
    Date: 2020–12
  6. By: Takeshima, Hiroyuki; Zone, Phoo Pye; Win, Myat Thida; Masias, Ian
    Abstract: Mechanization service providers (MSP) in Myanmar were originally interviewed by telephone in May, June, July, and November 2020, covering mostly combine-harvester SPs (CHSP) and tractor SPs (TSP), to determine how their businesses were being affected by COVID-19 related restrictions. The results of those surveys were published in Myanmar Strategy Support Program Policy Notes 07, 12, 17, and 39, respectively. To trace the continuing impact of the COVID-19 pandemic on their economic activities, a fifth phone survey of MSPs was done in mid-December 2020, administered mostly to SPs in harvesting activities. This Note reports on the results of the fifth survey, as well as on some trends from the earlier surveys.
    Keywords: MYANMAR, BURMA, SOUTHEAST ASIA, ASIA, Coronavirus, coronavirus disease, Coronavirinae, mechanization, monitoring, non-pharmaceutical interventions, COVID-19
    Date: 2021
  7. By: Goeb, Joseph; Synt, Nang Lun Kham; Zone, Phoo Pye; Tang, Yulu
    Abstract: To understand how Myanmar’s rice value chain has been affected by the COVID-19 crisis, a series of phone interviews is being conducted with rice millers from Ayeyarwady, Bago, and Yangon. This report presents data from interviews conducted in November 2020.
    Keywords: MYANMAR, BURMA, SOUTHEAST ASIA, ASIA, Coronavirus, coronavirus disease, Coronavirinae, COVID-19, rice, value chains, interviews, paddy, state intervention
    Date: 2021
  8. By: Goeb, Joseph; Synt, Nang Lun Kham; Zone, Phoo Pye; Tang, Yulu
    Keywords: MYANMAR, BURMA, SOUTHEAST ASIA, ASIA, Coronavirus, coronavirus disease, Coronavirinae, COVID-19, rice, value chains, interviews, paddy, state intervention
    Date: 2021
  9. By: Do, Huyen Thanh; Nguyen, Cuong Viet; Nguyen, Long Thanh; Nguyen, Phuong Minh; Ngo, Quyen Ha; Phung, Quyen Ha
    Abstract: The study aims to understand the impact of COVID-19 on citizens' livelihoods, the accessibility and effectiveness of the Government's relief packages, and public confidence and trust in the government responses to the pandemic. The study reveals several important findings as follows. First, the government responses to contain the COVID-19 outbreak have proved to be swift and effective, according to citizens surveyed. This is evident in the respondents' high consensus of strong support for government policy and actions to contain the pandemic. Importantly, people who have positive experiences with their provincial performance in governance and public administration were more supportive of the government's responses during the pandemic. Second, despite such government and citizen responses, the COVID-19 pandemic has generated negative impacts on the Vietnamese citizens and the national economy as a whole. The survey findings reveal that 24 percent of the respondents reported job losses because of the pandemic. These are also 65 percent of the respondents reporting income loss. Third, the findings of the survey reaffirm an overall positive feedback from citizens of and experience with the government's support package. People who received supports from the package were more likely to support the government's responses to the COVID-19 pandemic.
    Keywords: COVID-19,government’s responses,aid package,economic impact
    Date: 2021
  10. By: Syafitri, Linda Hernika
    Abstract: Pandemi wabah Covid 19 yang melanda dunia, termasuk negara Indonesia, mengharuskan semua warga dunia berjuang melawan Covid 19 dengan menerapkan berbagai kebijakan upaya untuk memutus rantai penyebaran Covid 19, dari kebijakan lockdown (Karantina Wilayah) menjadi pembatasan sosial berskala besar (PSBB) sesuai dengan tingkat keparahan wilayah masing-masing. Perekonomian negara didunia termasuk negara Indonesia mengalami pelambatan di saat pandemi ini terjadi. Untuk itu, Pemerintah berupaya mengagendakan kebijakan yang baru agar dampak Covid 19 pada sektor ekonomi tidak sampai menimbulkan krisis yang berkepanjangan. Artikel ini bertujuan untuk mendeskripsikan aktivitas ekonomi masyarakat dari dampak yang ditimbulkan wabah Covid 19. Aktivitas atau kegiatan Ekonomi merupakan suatu bentuk upaya dari manusia untuk bisa mengatasi permasalahan dari kebutuhan hidupnya demi mempertahankan dan menjaga kelangsungan hidup. Covid 19 secara tidak lansgsung mengajarkan kita bahwa bukan dampak negatifnya saja yang telah ditimbulkan namun ada berbagai sisi positif yang bisa kita ambil hikmahnya.
    Date: 2021–03–09
  11. By: Muhammad A Ingratubun (Agricultural University, Indonesia); Akhmad Fauzi (Agricultural University, Indonesia)
    Abstract: Compared with commercial banks that take one day, Asian Development Bank (ADB) loans take over 5-year before they are fully disbursed after the borrower signed the loan agreements, because of conditionalities. During which, the funds stay in the banks and gain compounded interest disfavoring Indonesia and affect its economic growth. Development aid studies have mostly overlooked these gains, and their impacts. We reviewed the financial costs of delays during project implementation in Indonesia and their impacts on GDP growth involving 325 ADB's loan projects with over 1,100 sub-loans, from 1969 to 2017 totaled over $33 billion. We applied a non-econometric, and quantitative attribution methodology, adopting project and portfolio management principles. The results show that 'if disbursed 100% in year-1', the ADB loans help Indonesia stabilizing growth at 6% per annum until they are at 1%-GDP. Because of disbursement delays, this is shortened by half with 60% volatility and declining at 0.42%-GDP (average ADB loans) due to ADB's standard implementation of 5-year and with 2-year delays (7-year). Growth sharply decays at 0.5%-GDP and reaches zero as ADB loans increase to 0.81%-GDP. Indonesia suffers a capital loss of $0.5 - $12 per $1 loan because of disbursement delays under today's prevalent banking practices. Accounting for these losses, ADB loans have severe negative impacts as growth suffers over 200% volatility because of disbursement delays. Fixing this is simple but requires a fundamental change.
    Keywords: Disbursement delays, growth, money creation, negative impact, volatility, bank
    Date: 2021–01
  12. By: Herrero, Alicia Garcia (Asian Development Bank Institute)
    Abstract: The COVID-19 pandemic has challenged global economies with unparalleled negative shock. Asia and Latin America have gone through a number of financial crises in the last few decades but they have addressed those crises rather differently, leading to different growth trajectories after the shocks. We take a closer look at the past crises in Latin America and Asia, such as the Latin American balance-of-payment crisis in the 1980s and a number of Latin American banking crises in the 1990s and compare them with the Asian financial crisis in 1997 and draw lessons on their differences and the policy responses to shed some light on the situation today with the pandemic. All in all, Latin American countries are challenged with worse debt dynamics and more limited access to dollar liquidity. Asia, instead, seems to have developed a much more resilient macroeconomic framework as well as larger self- and regional insurance.
    Keywords: Latin America; emerging Asia; external funding; international crisis
    JEL: F32 F33 F34
    Date: 2021–03–04
  13. By: Shinozaki, Shigehiro (Asian Development Bank Institute); Rao, Lakshman N. (Asian Development Bank Institute)
    Abstract: The novel coronavirus disease, COVID-19, has brought significant change to people’s lives and business activities nationally, regionally, and globally. The Philippines took swift action—including enhanced community quarantine (ECQ)—to contain the pandemic and launched an emergency subsidy program with massive public spending to support disrupted households and businesses. The strict lockdown ran from mid-March to the end of May 2020 in the national capital region and high-risk provinces, causing huge economic losses. Six months after the March lockdown, the Philippine economy has moved to the recovery stage, but micro, small, and medium-sized enterprises (MSMEs) are continuing to confront a sharp drop in demand and revenue. We examine the initial impact on MSMEs of the ECQ and lockdown measures using evidence obtained from a rapid nationwide survey conducted from the end of March to mid-April 2020 and derive policy implications.
    Keywords: COVID-19; economic crisis; economic impact; MSMEs; SME development; access to finance; SME policy; Philippines
    JEL: D22 G20 L20 L50
    Date: 2021–02–08
  14. By: Korwatanasakul, Upalat (Asian Development Bank Institute); Sirivunnabood, Pitchaya (Asian Development Bank Institute); Majoe, Adam (Asian Development Bank Institute)
    Abstract: Many economies in East and Southeast Asia are progressing toward becoming aging or aged societies. The impacts of this demographic transition are multifaceted and far-reaching and include declining tax revenues, leading to fiscal imbalances, and possible increases in government expenditures for coping with care expenses and pension schemes. We provide insights into ways to balance fiscal revenue against costly pension and social security systems and increasing healthcare expenditures. Using panel data for 178 countries across 18 years to capture the state of fiscal balance and data on demographic transition, we estimate three models to analyze the relationships between (i) demographic transition and government balance, (ii) demographic transition and government health expenditure, and (iii) demographic transition and government debt. The results first establish that health expenditure is negatively associated with the government balance. Then, for the relationship between demographic transition and health expenditure, old-age dependency and the share of the population aged over 64 shows a significant positive relationship with health expenditure. We find that demographic transition does not have a direct effect on the government balance, but instead has an indirect effect through higher government expenditure. This can be explained by the high costs of treating health conditions related to old age, including chronic illnesses. Our findings provide important implications for fiscal sustainability and necessitate comprehensive reviews of public health spending; healthcare reforms that prioritize accessibility for all and efficiency in healthcare services; and cost-sharing measures to mitigate the age-related fiscal burden. These measures will be particularly important in dealing with the impacts of the coronavirus disease (COVID-19) pandemic, to which the elderly are particularly vulnerable.
    Keywords: demographic transition; population aging; fiscal balance; fiscal sustainability
    JEL: H30 H51 H55 J11 J14 J18
    Date: 2021–03–03
  15. By: Ly Dai Hung (Vietnam Institute of Economics, Hanoi, Vietnam)
    Abstract: The paper accesses the impact of US-China trade war on Vietnam economy, as a small open economy with international financial integration. The methodology combines qualitative analysis with quantitative model, which employs a vector autoregression with time varying coefficients (TVC-VAR), based on a quarterly sample covering from Q1/2001 to Q1/2019. The empirical evidence proves that the trade war can reduce the expected economic growth by lowering the prospect of world economy, induce the high fluctuation of VND by the deviation of USD and RMB. Within the 3-dimension space including trade, finance and geo-polistic, the war represents the fundamental issues, including the relative performance of US with China econmy (the trade dimension), the difference between the savings of US compared with the rest of world (the fiance dimension), and the competition of polistical power between US and China (the geo-polistic dimension).
    Date: 2020–11
  16. By: Diaz-Rainey, Ivan (Asian Development Bank Institute); Tulloch, Daniel J. (Asian Development Bank Institute); Ahmed, Iftekhar (Asian Development Bank Institute); McCarten, Matthew (Asian Development Bank Institute); Taghizadeh-Hesary, Farhad (Asian Development Bank Institute)
    Abstract: The European Union (EU) has redefined the energy sphere in Europe over the last 3 decades. Transnational policies targeting liberalization and integration, energy efficiency, renewables, carbon pricing, and energy security have led to major steps forward in terms of a more secure, integrated, and environmentally friendly energy supply. We explore, through the lenses of a paradigm shift and transition pathways, how the Association of Southeast Asian Nations (ASEAN) grouping might advance its own energy trilemma through greater energy cooperation. We provide evidence that ASEAN has lagged behind in energy transition, representing considerable risks in multiple forms ‒ most notably, political and physical climate risks from failing to meet the Paris Agreement targets and the risk of stranded assets if accelerated transition is achieved. However, accelerated transition could come in many forms. By drawing on the EU experience, we argue that an energy policy for ASEAN should explicitly pursue a dual transition pathway strategy to yield the best outcome in terms of the energy trilemma. First, an "ASEAN supergrid" supported by a single energy market and by common carbon pricing would "green" urban and industrial demand. Second, "distributed smart grids" would help reap the social and economic benefits of providing electricity to the rural/remotely located population that have hitherto not had access to electricity. This is a dual transnational and local approach that contrasts with energy transition defined at national level. This interconnected approach should yield security, environmental, and economic dividends.
    Keywords: energy transition; EU; ASEAN; energy policy; carbon pricing; renewable energy; climate risk; smart grids
    JEL: O44 O52 O53 Q40 Q54
    Date: 2021–02–19
  17. By: Pajaron, Marjorie C.; Vasquez, Glacer Niño A.
    Abstract: As the world races to develop a COVID-19 vaccine, non-pharmaceutical interventions such as voluntary social distancing and community quarantine (CQ) have been the first line of defense in breaking the chains of transmission in most countries. The efficacy of a public health measure, however, depends on a myriad of factors including its timing and optimal implementation, the proclivity of individuals in following protocols and information dissemination. We examine whether the different types of CQ imposed at different periods and areas in the Philippines are effective in mitigating the pernicious effects of COVID-19 while controlling for other confounding factors. Our natural experiment (difference-in-differences fixed effects) using panel data that we constructed results in the following. First, a lockdown is effective only in reducing COVID-19 incidence and mortality when combined with health capacity and sociodemographic characteristics that could potentially capture preferences to comply. Second, the efficacy of a CQ persists over time but it is somewhat reduced. Third, heterogeneity in the effectiveness of a quarantine exists across the different types of CQ, with a stricter CQ apparently more effective. Fourth, the number of nurses and other health care workers, urbanity and population matter in improving the health outcomes of areas under quarantine.
    Keywords: COVID-19,community quarantine,health policy intervention,quasi-experimental analysis,Philippines
    JEL: I12 I15 I18
    Date: 2021
  18. By: Huang, Wei (National University of Singapore); Li, Teng (National University of Singapore); Pan, Yinghao (National University of Singapore); Ren, Jinyang (Jiangxi University of Finance and Economics)
    Abstract: This paper investigates the impacts of teacher characteristics on student performance using a nationally representative and randomly assigned teacher-student sample in China. We find that having a more experienced or female homeroom teacher (HRT) with additional classroom management duties significantly improves students' test scores and cognitive and noncognitive abilities. In contrast, these effects are not observed for subject teachers who are responsible only for teaching. More experienced or female HRTs are also associated with a better classroom environment, more self-motivated students, more parental involvement, and higher parental expectations. These mechanisms explain 10-25 percent of HRT effects on test scores and cognitive ability and 50-60 percent of HRT effects on noncognitive ability. Our findings highlight the importance of teacher management skills in education production.
    Keywords: teacher value-added, education production function, student performance
    JEL: I21 J24
    Date: 2021–03
  19. By: Despoina Alempaki (University of Warwick); Genyue Fu (Hangzhou Normal University, China); Jingcheng Fu (National University of Singapore)
    Abstract: We conduct a lab-in-the-field experiment with 567 children, aged four to eleven, in which we investigate the effect of social norms on lying and test whether norm sensitivity changes with age. Children think about a number between 1 and 6 in private, then roll a die, and report whether the number that came up is the same as the one they thought of. Just before making their report, we expose children to different empirical and normative information prescribing lying or honesty. We show that a normative intervention suggesting other children approve of honesty effectively reduces lying. We find limited evidence of the influence of our empirical interventions: information suggesting other children report honestly is effective only for younger children, while information suggesting other children report dishonestly does not influence lying patterns. We further observe that, although lying is omnipresent across all age groups, honesty significantly increases with age.
    Keywords: truth-telling, lying, social norms, children, lab-in-the-field experiment
    Date: 2021–01

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