37th BREAD Conference on Development Economics
May 3-4, 2019
University of Maryland
College Park, Maryland
Conference Program
Friday, May 3
1:15-3:15 pm: Conference Session I. ANS Rm 0408
Andres Gonzalez-Lira, Ahmed Mushfiq Mobarak
Slippery Fish: Enforcing Regulation under Subversive Adaptation
Attempts to curb illegal activity by enforcing regulations gets complicated when agents can adapt to circumvent enforcement. Economic theory suggests that conducting audits on a predictable schedule and (counter-intuitively) at high frequency can both undermine their effectiveness. We conduct a large-scale randomized controlled trial to test these ideas by auditing Chilean vendors selling illegal fish. Vendors circumvent penalties through hidden sales and other means, which we track using mystery shoppers. Instituting monitoring visits on an unpredictable schedule is more effective at reducing illegal sales. High frequency monitoring to prevent displacement across weekdays to other markets backfires, because targeted agents learn faster and cheat more effectively. Sophisticated policy design is therefore crucial for determining the sustained, longer-term effects of enforcement. A simpler demand-side information campaign generates two-thirds of the gains compared to the most effective monitoring scheme, it is easier for the government to implement, and is almost as cost-effective. The government subsequently chose to scale up that simpler strategy.
Soeren Henn
Complements or Substitutes: State Presence and the Power of Traditional Leaders
When considering the importance of domestic institutions for economic development, the focus has typically been on national institutions (e.g., the nation state). However, within sub-Saharan Africa, traditional leaders (namely, village chiefs) also play an extremely important role. This paper studies how local leaders and the national state interact. Using geocoded data from 5,500 administrative units in 25 countries, I estimate the effect that the presence of the national state has on the power, legitimacy, and effectiveness of village chiefs. I use a regression-discontinuity design to compare villages close to district borders, where one set of villages is far from the district head- quarters of the national state and the other set is close. I find that the effect of the nation state on village chiefs hinges critically on whether or not a country’s constitution formally integrates village chiefs into the country’s institutional structure. In countries in which village chiefs are integrated into national institutions, stronger presence of the state causes village chiefs to be more influential and to provide more public goods. By contrast, in countries in which village chiefs are not institutionalized, more state presence actually causes chiefs to be less influential and to provide fewer public goods. That is, if village chiefs are not integrated nationally, then national institutions and local institutions actually works as substitutes rather than complements.
3:15-3:45 pm Coffee break, ANS courtyard
3:45-5:45 pm Conference Session 2. ANS Rm 0408
Michael Koelle
Microenterprises and the Lure of Wage Work: Theory and Evidence from Mexican Export Manufacturing
This paper proposes that job prospects for entrepreneurs limit the growth of owner-operated businesses. When job opportunities are uncertain and liquidation is costly, a forward-looking entrepreneur will reduce the size of their firm below its potential if they anticipate a chance of receiving an attractive job offer and switching occupations. I formalize this mechanism with a model where productive decisions and occupational choices are mutually dependent. With a detailed, representative and comprehensive dataset on almost one million microenterprises in Mexico and administrative records on export-dependent jobs, I test the mechanism empirically. I find evidence in support of the mechanism. Entrepreneurs take up new job opportunities, and their firms have reduced growth between four to one quarters before. With a separate dataset on unexpected news announcements of automotive plant expansions, I confirm that entrepreneurs only respond to future jobs when they are made public. The theoretical results and empirical findings lend support to policies that target individuals with a long-term comparative advantage in entrepreneurship.
Caitlin Brown, Rossella Calvi, and Jacob Penglase
Sharing the Pie: Undernutrition, Intra-household Allocation, and Poverty
Anti-poverty policies often aim to reach poor individuals by targeting poor households. However, intra-household inequality may mean many poor individuals reside in non-poor households. Using Bangladeshi data, we first show that undernourished individuals are spread across the household per-capita expenditure distribution. We then quantify the extent of food and total consumption inequality within families. Based on a collective model, we develop a new methodology to compute individual-level poverty rates that account for intra-household inequality. We show that women, children, and the elderly face significant probabilities of living in poverty even in households with per-capita expenditure above the poverty threshold.
6:15 – 7:15 Reception, College Park Marriott, Sheppard Gallery
7:15 pm Dinner, College Park Marriott
Saturday, May 4
9:00-10:00 am Conference Session 3. ANS Rm 0408
Shilpa Aggarwal, Rebecca Dizon-Ross, Ariel Zucker
Incentivizing Behavioral Change: The Role of Time Preferences
How should the design of incentives vary with the time preferences of agents? We formulate predictions for two incentive contract variations that should increase efficacy for impatient agents relative to patient ones: increasing the frequency of incentive payments, and making the contract “dynamically non-separable” by only rewarding compliance in a given period if the agent complies in a minimum number of other periods. We test the efficacy of these variations, and their interactions with time preferences, using a randomized evaluation of an incentives program for exercise among 3,200 diabetics in India. On average, providing incentives increases daily walking by 1,300 steps or roughly 13 minutes of brisk walking, and decreases the health risk factors for diabetes. Increasing the frequency of payment does not increase effectiveness, suggesting limited impatience over payments. However, making the payment function dynamically non-separable increases cost-effectiveness. Consistent with our theoretical predictions, agent impatience over walking appears to play a role in non-separability’s efficacy: both heterogeneity analysis based on measured impatience and a calibrated model suggest that the non-separable contract works better for the impatient.
10:00-10:30 am Coffee, ANS courtyard
10:30 am-12:30 pm Conference Session 4. ANS Rm 0408
Manuela Angelucci, Daniel Bennett
Adverse Selection in the Marriage Market: HIV Testing and Marriage in Rural Malawi
Asymmetric information in the marriage market may delay marriage and cause adverse selection if partner quality is revealed over time. Sexual safety is an important but hidden partner attribute, especially in areas where HIV is endemic. A model of positive assortative matching with both observable (attractiveness) and hidden (sexual safety) attributes predicts that removing the asymmetric information about sexual safety accelerates marriage and pregnancy for safe respondents, and more so if they are also attractive. Frequent HIV testing may enable safe people to signal and screen. Consistent with these predictions, we show that a high-frequency, \opt-out" HIV testing intervention that changes beliefs about partner's safety accelerates marriage and fertility, increasing the probabilities of marriage and pregnancy by 26 and 27 percent for baseline-unmarried women over 28 months. Estimates are larger for safe and attractive respondents. Conversely, a single-test intervention lacks these effects, consistent with other HIV testing evaluations in the literature. Our findings suggest that an endogenous response to HIV risk may explain why the HIV/AIDS epidemic has coincided with systematic marriage and fertility delays.
Vivi Alatas, Arun G. Chandrasekhar, Markus Mobius, Benjamin A. Olken, Cindy Paladines
When Celebrities Speak: A Nationwide Twitter Experiment Promoting Vaccination in Indonesia
Celebrity endorsements are often sought to influence public opinion. We ask whether celebrity endorsement per se has an effect beyond the fact that their statements are seen by many, and whether on net their statements actually lead people to change their beliefs. To do so, we conducted a nationwide Twitter experiment in Indonesia with 46 high-profile celebrities and organizations, with a total of 7.8 million followers, who agreed to let us randomly tweet or retweet content promoting immunization from their accounts. Our design exploits the structure of what information is passed on along a retweet chain on Twitter to parse reach versus endorsement effects. Endorsements matter: tweets that users can identify as being originated by a celebrity are far more likely to be liked or retweeted by users than similar tweets seen by the same users but without the celebrities’ imprimatur. By contrast, explicitly citing sources in the tweets actually reduces diffusion. By randomizing which celebrities tweeted when, we find suggestive evidence that overall exposure to the campaign may influence beliefs about vaccination and knowledge of immunization-seeking behavior by one’s network. Taken together, the findings suggest an important role for celebrity endorsement.
12:30 – 1:30 pm Lunch (boxed lunches provided), ANS courtyard
The Scientific Organizers of the Conference are: Sebastian Galiani (UMD), Kenneth Leonard (UMD), Susan Parker (UMD), and Garance Genicot (Georgetown).
ACKNOWLEDGMENTS:
The Departments of Economics and Agricultural and Resource Economics, the College of Behavioral and Social Sciences, the School of Public Policy, the Maryland Population Research Center, and the Division of Research have provided generous support.