Behavioural Development Economics: Lessons from Field Labs in the Developing World

The now established field of experimental economics uses lab experiments to test behavioural assumptions and hypothesis of our standard models of decision-making (eg. if individuals have self-interested preferences). There is fair amount of evidence challenging our classical assumptions, and showing that these could matter at an aggregate level (eg. The World Development Report, 2015). This has led to incorporating behavioural and experimental insights into our models as well as policy initiatives. However, such evidence mostly comes from experiments in labs on students in developed countries. A newer strand of experimental and behavioural economics, Behavioural Development Economics, takes such experiments to the field usually in developing communities to better understand the underpinnings of development. Cardenas & Carpenter (2008) provide a review of the literature with a focus on experiments on individual preferences in developing contexts.

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Psychological frictions and non take-up

Many poor people do not benefit from the transfers and services they are eligible for. Researchers consider this problem, often referred to as the non take-up problem, as a major source of poverty persistence in rich societies. Yet, the reasons why potential beneficiaries do not take up those services are not fully understood. Recent works have made it clear that the traditional explanations in terms of stigma, lack of information or cost of application only capture a small part of the picture. Saurabh Bhargava and Dayanand Manoli recently conducted a field experiment that sheds new light on that phenomenon. The experiment is about the taking up of earned income tax credits (EITC).

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Angus Deaton’s great escape

Angus Deaton, from Princeton University, was awarded the 2015 Nobel Prize of economics “for his analysis of consumption, poverty and welfare.” It was good news for all economists, and researchers from other disciplines as well, devoting their research efforts to the understanding of poverty and the design and evaluation of policies dedicated to alleviate it.

Angus Deaton‘s works contribute to all aspects of the analysis of poverty and well-being, from the most fundamental questions about the definition of human well-being to the more applied questions of how to interpret and handle well-being data.

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Female Empowerment and Islamic Political Control in Turkey

It is commonly believed that Islamic political representation leads to lower women’s rights in societies. However, there is a lack of causal studies on the relationship between Islamic rule and outcomes such as education, female political participation, adolescent marriages, etc. The first attempt to capture the causal impact of local Islamic rule has recently been made by Erik Meyersson[1], who aims at analysing the effect of democratically elected Islamic political on education and related outcomes in Turkey. Contrary to the common belief, he shows that the arrival of the Islamic party in municipalities increased the female secular high school education, and this effect remains persistent up to 17 years after, and also shows that Islamic rule decreased the adolescent marriages and increased female political participation in municipal council in 2009.

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Coping with stress and poverty: some insights into Martha Wadworth’s work

During the first PoRESP summer school, which was organized from July 6th to July 9th 2015 in Brussels, we had the chance to have Martha Wadsworth as one of our keynote speakers. Martha Wadsworth is an Associate Professor of psychology at Penn State University and she is the director of the Coping and Regulation of Environmental Stress (CARES) Lab. She works on the biological and psychological impacts of poverty on children. In particular, her research shows that children that grew up in poverty have a biological response to stress that is different from children who have not experienced poverty.

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The indirect effect of the EITC program on infant health

Health is undoubtedly an important dimension of well-being. As soon as child well-being is concerned, health is even more important because early life health is a key determinant of future health as well as future economic outcomes.

The direct impact of health policy on the health of children is studied since long. Less is known about the indirect impact of cash transfers to parents on the health of their children. The most important cash transfer policy in the US is the earned income tax credit (EITC). This policy was introduced in 1975 and it has been expanded several times. Since the 1996 reform, no less than 25 millions of households benefit from EITC, for a total cost of above $50 billion. The targeted households, though, remain the low- to moderate-income families with children, especially single mother families.

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Spending in education does matter.

While economic intuition points at the relevance of economic resources to improve school performance, the evidence on the impact of school spending on outcomes is far from being set. Rather, some early studies that became seminal references on the subject, notably the well-known Coleman report (1996)[1], pointed that spending on education was not necessarily associated with better students outcomes.

However, a main concern with most early studies is the endogeneity of school spending. Increases on school resources tend to be directed towards schools with less resources, which are usually attended by low-income students. Low-income students in turn tend to perform worse in school and have lower income as adults. As a consequence, the relationship between school resources and outcomes in the previous studies tends to be biased downwards.

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