“ Firms and the Evolution of Earnings Inequality in Argentina’s Volatile Economy”

Abstract: We document large fluctuations in earning inequality between 1995 and 2019 in Argentina. Leveraging Argentina's matched employer-employee dataset, we fit high-dimensional models of log earnings as a function of worker and firm fixed effects. Using our estimates we decompose the variance of log earnings into three components: worker characteristics, firm characteristics and assortative matching. We find a large contribution of firms to inequality: they account for one-third of the decline in inequality between the 1990s and 2000s, and fully explain the slight increase in the 2010s. On the other hand, we find a muted role for matching between high-wage workers and high-wage firms. We study the role of several drivers of firm-pay in driving these results, including firm productivity and collective bargaining institutions.

“Motivated Forecasts: Evidence from the Presidential Elections in Argentina”

Abstract: The increasing polarization in political issues could potentially affect one of the most important inputs that policymakers need to make decisions, i.e., agents’ expectations. I ask whether peoples’ forecasts about important economic indicators are affected by their political preferences. I conduct a pre-registered online experiment in a high-uncertainty political context given by the 2023 presidential elections in Argentina. The experiment exogenously manipulates the incentives to report accurate forecasts about economic indicators. I find that incentivizing responses reduces the gap between subjects’ forecasts regarding the performance of the different candidates and explore what drives the results.

“Risk, Complexity, and the Demand for Agricultural Insurance"”

“En-Trusting the "Other" in Contemporary India: An Experiment-based Study”

Abstract: The paper delves into the dynamics of trust between intra-group (Upper Castes and Lower Castes) and inter-group (Hindu and Muslim) identities in contemporary India. The experiment conducted is an extended version of the standard trust game, involving a single sender and three hypothetical responders in a single interaction game. The participants were representative of five distinct social groups: Hindu Upper Caste (Brahmins and Forward Caste), Hindu Lower Caste (Other Backward Classes (OBC) and Scheduled Caste the untouchables), and Muslims. The hypothetical responders were randomly assigned and counterbalanced as Brahmins, Scheduled Caste, or Muslim sounding names.

This study explores diverse trusting behaviours across three distinct identities, shedding light on how participants align with social norms and stereotypes based on their group membership and associated expected trustworthiness. Notably, we observe an accentuation effect within caste identities compared to interactions with a different socio-cultural outgroup, specifically Muslims. Participants belonging to Brahman, Forward Caste, and Other Backward Class (OBC) exhibit discriminatory trust behaviour towards Scheduled Caste and Muslims sounding names, with Muslims being the least trusted among all three categories. The study unveils strong in-group favouritism in trusting behaviour highest among Brahmins, followed by Scheduled Caste, and Muslim participants respectively.

Rooted in social identity theory and self categorization, our experiment reveals that lower-caste participants, including Other Backward Class (OBC) and Scheduled Caste, express greater trust towards individuals with Brahmin-sounding names than their forward-caste counterparts. This pro-trusting behaviour towards upper-caste sounding names suggests the influence of a positive identity, wherein individuals from lower castes develop a favourable perception tied to higher social caste groups. This positive identity effect fosters heightened trust among lower-caste participants towards higher social status caste groups but leads to decreased trust and pro-social behaviour towards groups with different cultural and religious backgrounds, such as Muslims. The study highlights the role of similarity in religious, cultural, and ethnic backgrounds in fostering trust, while differences diminish it.

The accentuation effect surfaces as individuals magnify distinctions between their socio-religious group and others, potentially fuelling intergroup conflicts and reinforcing stereotypes. The positive identity effect, particularly evident among lower-caste participants towards Brahmin-sounding names, operates within the broader socio-cultural and ethnic (Superordinate) Hindu identity, contributing to the accentuation effect. This dynamic elucidates trust behaviour between different castes and religions, emphasising the intricate interplay of social, cultural, and ethnic factors that shape interpersonal trust dynamics.

“Ends versus Means: Kantians, Utilitarians and moral Decisions.”

Abstract: Choosing the morally right action can be based on the ends resulting from the decision – the Consequentialist view – or on the conformity of the means involved with some overarching notion of duty – the Deontological view. Using a series of experiments, we investigate the overall prevalence and the consistency of consequentialist and deontological decision-making, when these two moral principles come into conflict. Our design includes a real-stakes version of the classical trolley dilemma, four novel games that induce ends-versus-means tradeoffs, and a rule-following task. These main games are supplemented with six classical self-versus-others choice tasks, allowing us to relate consequential/deontological behavior to standard measures of prosociality. Across the six main games, we find a sizeable prevalence (20 to 40%) of non-consequentialist choices by subjects, but no evidence of stable individual preference types across situations. In particular, trolley behavior predicts no other ends-versus-means choices. Instead, which moral principle prevails appears to be highly context-dependent. In contrast, we find a substantial level of consistency across self-versus-other decisions, but individuals’ degree of prosociality is unrelated to how they choose in ends-versus-means tradeoffs that only affect others.

You’ll be able to read the paper HERE

Gary Charness, Profesor, UC Santa Bárbara. Director of the Experimental and Behavioral Economics Laboratory, UC Santa Bárbara, is visiting JILAEE at Buenos Aires and will be giving a talk on “What have we learned about public policies using lab experiments”.

This talk is free, you only need to save your place so we can autorice your entrance to the talk.

After the talk we will share a glass of wine with all the participants and the speaker.

More meat for boys: Evidence and Perceptions of Discrimination in Restaurants (joint with Graeme Pearce)

Abstract: We present a natural field experiment designed to examine price discrimination in retail markets. This is done by examining portion sizes served in British Carvery Restaurants. Carvery restaurants serve traditional roast dinners, and are characterised by the manner in which customers are served: a single chef serves every customer individually and, under observation, cuts them a portion of meat from a roasted joint. We employed 147 testers to pose as diners, each of which paid the same price for the meal. We find systematic variations in served meat quantities that correlate with the testers' gender, with men receiving significantly more meat than women. The gender disparity in portion sizes is robust to controlling for a range of appearance and physical characteristics, and cannot be explained by women taking more vegetables or wasting more food than men. Evidence from a complementary framed-field experiments highlights how both women and men are negatively affected by this gender disparity.

Managing Remote Team Coordination: Experimental Evidence on Constrained and Flexible Scheduling

Abstract: A frequently cited benefit workers associate with remote work is flexible work schedules that allow them to balance work and non-work time demands. While flex schedules may allow employers to attract and retain workers who value them, they may also make coordination among work teams more challenging by introducing scheduling uncertainty and communication lags. We study these trade-offs by comparing the coordination and performance impacts of flexible schedules that do not specify when workers in teams should collaborate on their assignments relative to constrained work schedules that do specify time windows for collaboration on team performance among remote workers. Using a field experiment among teams of online language translators, we find that flex schedules lead to somewhat lower team performance than constrained schedules. We find heterogeneity in treatment effect that is consistent with flex schedules being challenging for teams more likely to have other communication barriers. In particular, we find mixed gender teams perform significantly worse under flex schedules, but same gender teams do not. We are currently investigating whether these effects are temporary or persist over time.

“Confrontation Costs in Negotiations: Bargaining Under the Veil of a Screen”

ABSTRACT:  In negotiations the objectives of parties are generally in conflict. Confronting this conflict can trigger negative emotions, such as nervousness, embarrassment or awkwardness, which I denote as confrontation costs. In this paper, I run a lab experiment to explore whether these costs shape the decision to engage in negotiations, and how this depends on the communication channel. I find that when participants can opt-out from negotiations, over 28% of times they avoid bargaining, even if opting-in delivers higher monetary payoffs. Moreover, when negotiations are face-to-face instead of electronic, the probability of avoiding them roughly doubles, due to higher confrontation costs. This makes electronic bargaining an effective way of fostering negotiations while improving participants' total welfare. When I analyze differences by gender, I find that women are more reluctant to bargain than men, and that they suffer higher confrontation costs.

Read the paper HERE

About Andrés: Andrés Gago is an Assistant Professor at the Business School of the Torcuato Di Tella University. He holds a PhD in Economics from CEMFI. His research falls within the field of applied economics, with interests in experimental and behavioral economics, as well as in political economy.

“Arriving in Argentina: a Field Experiment with Soccer Clubs”.

ABSTRACT: Societies are increasingly multicultural and diverse, thus urging to improve the integration of immigrants. Recreational sports are often seen as a potential means to foster social interactions. However, existing evidence from Europe suggests that immigrants face significant barriers when trying to join football clubs. Little is known about the extent and causes of such barriers in other contexts. In this paper, we test for the presence of prejudice against immigrants in amateur football clubs in Argentina using a correspondence study. We send emails to approximately 1400 clubs where fictitious applicants, either native or immigrant, ask to participate in a training session. We used the most frequent first and last names from foreign countries in Asia, Europe, and South America. The overall response rate is approximately 19%, and the preliminary results show that immigrants are three percentage points less likely to receive a positive response. Moreover, we find that Asian applicants face the most significant barrier, especially for women’s clubs. The findings highlight the need for increased awareness and inclusion efforts in recreational sports clubs.

“Arriving in Argentina: a Field Experiment with Soccer Clubs”

ABSTRACT: Societies are increasingly multicultural and diverse, thus urging to improve the integration of immigrants. Recreational sports are often seen as a potential means to foster social interactions. However, existing evidence from Europe suggests that immigrants face significant barriers when trying to join football clubs. Little is known about the extent and causes of such barriers in other contexts. In this paper, we test for the presence of prejudice against immigrants in amateur football clubs in Argentina using a correspondence study. We send emails to approximately 1400 clubs where fictitious applicants, either native or immigrant, ask to participate in a training session. We used the most frequent first and last names from foreign countries in Asia, Europe, and South America. The overall response rate is approximately 19%, and the preliminary results show that immigrants are three percentage points less likely to receive a positive response. Moreover, we find that Asian applicants face the most significant barrier, especially for women’s clubs. The findings highlight the need for increased awareness and inclusion efforts in recreational sports clubs.

“Performance Feddback and Gender differences in Persistence”.

ABSTRACT: The decision to persist in stratified career trajectories is often dynamic in nature: people receive performance feedback and decide whether to persist or to drop out. I show experimentally that men are on average 10 percentage points (15%) more likely to persist in an environment that rewards high performance than equally performing women who received the same feedback. About one-third of this gap is attributable to gender differences in beliefs about the future; In the laboratory as well as a classroom field study, men are more confident about their future performance even when compared to women who performed equally well and are similarly confident about their past performance. Findings suggest that another 30% of the gender gap in persistence is attributable to men seeking, and women avoiding exposure to additional feedback.

Read the paper HERE

“Missallocation of Talent in Brazil: the role of the Education System”

ABSTRACT: This paper investigates how disparities in private and public education across different levels of schooling contribute to misallocation of talent in higher education. To understand whether public resources in education alleviate the financial constraints that poor parents may face, I develop an overlapping generation model based on Restuccia and Urrutia (2004) in which heterogeneous parents invest in the education of their children. I calibrate the model to the Brazilian economy and find that equalizing public spending per student across the levels of schooling increases aggregate output, consumption and welfare and generates a better selection of talented students in public universities.

“College Summer School: Educational Benefits and Enrollment Preferences.”

ABSTRACT: We experimentally examine whether a policy targeting college summer school enrollment can accelerate degree progress and completion. We randomly assign summer scholarships to community college students and find a large impact on degree acceleration, increasing graduation within one year of the intervention by 32% and transfers to four-year colleges by 58%. We elicit preferences for the scholarships and find substantial treatment effects on enrollment, graduation, and transfer among students with a preference against summer school. These results suggest that many more students could benefit from summer school than the minority who currently enroll.

“Gender Diversity at Work: A field Experiment on Selection, Comunication and Productivity.”

ABSTRACT: We design a field experiment in an actual workplace to examine the effects of coworker gender, and work-team gender composition, on multiple dimensions of employee productivity and other behaviors (interaction style, production speed, accuracy, team strategies) and worker selection patterns. The experiment will have 400-500 workers in a real workplace and will be run in both in-office/in-person and remote/online settings. The job is a 3-week data-entry position, where worker subjects enter information about images – basic details as well as more open questions requiring judgment calls about the image. The work takes place through a sophisticated web-based work platform currently under construction – this platform is the sole interface through which workers perform their work in both the remote and in-person work settings. Randomization occurs at two stages – the work stage and the recruiting stage. Worker subjects in the experiment will engage in both solo-work and two-person team-work, and the experiment will include randomized gender composition of teams, randomized peer review and feedback, and flexible labor supply over the 3-week period. The platform will collect a wealth of data on worker productivity measures, as well as raw video-chat recordings which will be processed into a novel and uniquely rich data set for an intricate view of the inner workings of workplace team interactions. Outcome variables of interest include coworker interruptions, talking time, dominance, tone of voice, team strategy, production speed, accuracy, labor supply choices, and others. The recruiting stage involves cross-subject variation in wage offer (low vs high) and firm culture messaging (pro-diversity vs. neutral), to study how these affect the distribution of unobserved worker characteristics among workers who select into the firm’s labor pool by accepting its employment offer. This project aims to crack open a critical black box. We believe it will be the first to closely examine the impacts of “Diversity and Inclusion” messaging on job-seeker selection, and the effects of gender composition of work teams in a real workplace on a broad range of around coworker interaction and labor behaviors, across both remote-work and in-person work settings.

“Low-cost Contact Interventions can increase inter-ethnic Trust: Evidence from Senegal”

ABSTRACT: Existing experimental evidence on the contact hypothesis has mainly used long and unstructured interventions, with implications for the replicability and scalability of existing contact protocols. We here test the effect of a brief contact, using a structured protocol that can be implemented in a wide range of situations at a reasonable cost. We also evaluate the lasting effects one month after the intervention. Contact is only found to be effective at increasing trust toward the specific individuals met, and only in the short-run. Generic Machine Learning techniques enable us to identify characteristics of the most and least affected groups.

“Information Frictions in Mortgage Refinancing”

ABSTRACT: Households often fail to refinance mortgages, foregoing substantial savings in interest payments. We implement a large-scale experiment on all mortgage holders in a large Chilean bank to study whether light-touch informational interventions affect the incidence of refinancing and the extent of search. We randomly assign mortgage holders to receive one of five emails about their mortgage and track their search and refinancing behavior over time. These emails differ in the type and extent of the information provided and are each designed to target one possible behavioral friction leading to this inertia. We find that the most effective intervention---giving both information about savings and details of how to refinance---approximately doubles the incidence of refinancing requests, with significantly larger effects for those who would save the most from doing so. Using a simple framework, we discuss the implications of information and search frictions for mortgage rate markups and the passthrough of monetary policy.

“Road Maitenance and Local Economic Development: Evidence from Indonesia’s Highways”

ABSTRACT: This paper estimates how road maintenance affects local economic development and welfare. We propose a new instrument for road quality driven by features of Indonesia’s two-step budgeting process for allocating funding to different road authorities. We find that higher road quality allows manufacturers to create new jobs, allowing workers to transition outside of informal employment. Better roads increase household income, consumption, land values, and they reduce perishable goods prices. Using a simple model, we find that a 10 percent increase in road quality increases welfare by 2.5 percent, on average, with larger gains for poor households in non-urban districts.

“Do saving nudges cause borrowing? Evidence form a Mega Study (joint with Michaela Pagel)”

ABSTRACT: Using data from an experiment that encouraged 3.1 million bank customers to save, we investigate whether savings nudges have the unintended consequence of additional borrowing in high-interest credit. We first train a machine-learning algorithm to predict individual-level treatment effects and then focus on individuals who have a credit card and who are expected to save the most in response to the nudge. We find a 6.1% increase in savings (208 USD PPP per month) and that individuals increase their savings by spending less instead of borrowing more. In addition, individuals who were carrying credit card debt at baseline also respond to the treatment with an increase in savings of similar magnitude but do not use the new savings to pay off existing debt.Our results have implications for economic theory and policy design.

Read the paper HERE

ABSTRACT: Why are firms often slow to adopt new profitable opportunities, even in the absence of informational frictions, fixed costs, or misaligned incentives? We explore three potential mechanisms: present bias, memory, and trust in other firms. In partnership with a financial technology (FinTech) payments provider in Mexico, we randomly offer businesses that already use the payments technology the opportunity to be charged a lower merchant fee for each payment they receive from customers. The median value of the fee reduction is 3% of profits. We randomly vary the size of the fee reduction, whether the firms face a deadline to accept the offer, whether they receive a reminder, and whether we tell them in advance that they will receive a reminder. While deadlines do not affect take-up, reminders increase take-up of the lower fee by 18%, and anticipated reminders by an additional 7%. The results point to limited memory in firms, but not present bias. Additional survey data suggests trust as the mechanism behind the significant additional effect of the anticipated reminder. Upon receiving an anticipated reminder from the FinTech company, firms value the offer more and accept it even if they generally distrust advertised offers.

The University of Chicago | UCEMA Joint Initiative for Latin American Experimental Economics (JILAEE) is inviting submissions for the 2022 Special ESA Meeting on February 3-4, 2022.

The event will take place virtually.

The University of Chicago | UCEMA Joint Initiative for Latin American Experimental Economics (JILAEE) is inviting submissions for the 2022 Special ESA Meeting on February 3-4, 2022.

The event will take place virtually.

JILAEE is pleased to announce our Second eWorkshop on Field Experiments in Economics from 1 - 2 of February 2022.

The objective of the workshop is to provide an introduction to designing and implementing field experiments in economics. The first day is targeted at graduate students, postdocs, junior faculty, and other early career economists in Latin America. The second day (Feb. 2) is targeted at practitioners in firms, government, and NGOs.

Practitioners Workshop on Field Experiments (February 2nd):

Evidence-based policies and business practices are no longer an aspirational ‘gold-standard’ of public policy but are now considered the baseline standard for new and ongoing programs.The second day of the workshop will be devoted to practitioners in firms, government, and NGOs. We will show how field experiments can improve upon A/B testing to lend insights to best practices in public policy and businesses. Additionally, we will discuss how behavioral economics “nudges” that use knowledge of human psychology can be used to develop low-cost solutions for organizations. We will introduce JILAEE and talk about how organizations can benefit from working with our team in a research partnership. Participants will split up into break-out sessions to receive individual attention from our team, and brainstorm novel solutions to their organization’s problems. Finally, we will schedule one-on-one meetings with our researchers and interested practitioners. We aim to find organizations that are open to bold new ideas that will revolutionize the way they develop public policy or do business.

In the links below you can register for the workshop and learn more about our work through testimonies from existing partners and examples of successful partnerships between researchers and organizations.

Schedule

Day 2 - Feb. 2

11.00 - 12.00 ART / 08.00 - 09.00 CDT Nuts and bolts of field experiments for practitioners (John List)

12.00 - 12.45 ART / 09.00 - 09.45 CDT Practitioner workshops with firms/governments and NGOs (JILAEE Team)

12.45 - 13.15 ART / 09.45 - 10.15 CDT Q&A

JILAEE is pleased to announce an eWorkshop on Field Experiments in Economics on February 1, 2022.

The objective of the workshop is to provide an introduction to designing and implementing field experiments in economics. This day is targeted at graduate students, postdocs, junior faculty, and other early career economists in Latin America.

Early Career Scholars Workshop on Field Experiments (February 1, 2022):

Recent years have seen an enormous increase and interest in research using experimental methods in the field to address questions across a broad range of topics in economics. Yet for early career researchers, carrying out a field experiment may be daunting.

The workshop will offer a crash course on designing, implementing, and analyzing field experiments. It will show the potential gains from using field experiments to test economic theory, make causal inference, and inform optimal policies. Participants will leave the workshop with the tools to successfully conduct their own field experiments, and will have the opportunity to present their research ideas and receive feedback.

Registration

We especially encourage applications from graduate students and early career economists from (or interested in doing research in) Latin America. There is no registration fee for this workshop. Depending on interest we may need to cap numbers.

ABSTRACT: Inequality in access to high-quality teachers is an important driver of student socioeconomic achievement gaps. We experimentally evaluate a novel nation-wide low-cost government program aimed at reducing teacher sorting. Specifically, we tested two behavioral strategies designed to motivate teachers to apply to job vacancies in disadvantaged schools. These strategies consisted of an "Altruistic Identity" treatment arm, which primed teachers' altruistic identity by making it more salient, and an "Extrinsic Incentives" arm, which simplified the information and increased the salience of an existing government monetary-incentive scheme rewarding teachers who work in underprivileged institutions. We show that both strategies are successful in triggering teacher candidates to apply to such vacancies, as well as make them more likely to be assigned to a final in-person evaluation in a disadvantaged school. The effect among high-performing teachers is larger, especially in the "Altruistic" arm. Our results imply that low-cost behavioral strategies can enhance the supply and quality of professionals willing to teach in high-need areas.

Read the paper HERE

ABSTRACT: Mobile-based informational programs are common across the world, though there is no consensus on how effective they are at affecting behavior. We present causal evidence on the effects of six different mobile-based agricultural information programs implemented in Kenya and Rwanda. All programs shared similar objectives but were implemented by three different organizations and varied in terms of content, design, and target population. With administrative outcome data for over 156,000 people across all experiments, we are sufficiently powered to detect small effects in real input purchase choices. Combining results through a meta-analysis, we find that the odds ratio for following the recommendations is 1.26 (95% CI: 1.19, 1.32). We cannot reject similar magnitudes of effects across all experiments and recommended technologies. We do not find evidence of message fatigue nor of crowd-out of use of other inputs. Providing more granular information, supplementing the texts with an in-person call, and using different behavioral framings did not significantly increase impacts relative to a simple message, but message repetition had a modest positive effect. While the overall effect sizes are small, the low cost of text messages can make these programs cost-effective.

Read the paper HERE

ABSTRACT: Abstract We report from a study of how people’s distributive behavior is affected by them having limited information about the source of the inequality. A large literature has shown that people are more accepting of inequalities due to merit than to luck, but the existing literature has not considered that people in most distributive situations face limited information about the role of merit and luck in determining earnings. We provide a general theoretical framework for studying this question, where we show that limited information causes Bayesian spectators to implement less inequality as long as it introduces fairness-ranking uncertainty, while non-Bayesian spectators introduce opposing forces on implemented inequality depending on whether they are signal neglecters or base rate neglecters. We test the predictions of the theory in an experiment, where we establish that many people deviate from Bayesian updating when they receive a noisy earnings signal about performance. Estimating a structural model, we show that a large share of the participants can be characterized as base rate neglecters or as signal neglecters in their belief updating, which implies that many meritocrats implement the egalitarian or the libertarian outcome under limited information. Our findings show that limited information may create significant disagreement among individuals who share the same fairness view, because people update information differently. The results contribute to a better understanding of the foundations of redistribution policies in society.

ABSTRACT: Performance monitoring is a mainstay feature of most managers’ jobs and is hypothesized to be a key determinant of firm productivity. It is also the basis for many theoretical frameworks of manager-worker interactions, including knowledge- based hierarchy models. Despite this importance there is limited evidence on whether changing the manager’s ability to monitor the performance of their team actually affects managerial effort and ultimately impacts productivity. To shed light on these questions, we leverage the staggered introduction of a performance monitoring technology that enabled managers to track the progress of drive-thru orders in real-time in a large quick-service restaurant chain in Puerto Rico. We show that the technology substantially increased managerial investment in training employees in critical food production stations. Drive-thru sales went up by six percent (as well as counter sales to a lesser extent), driven by an increase in the number of customers served. Impacts were largest in the first two months after the technology was introduced and declined subsequently. We uncover a key role for refresher trainings in explaining this decline. Conditional on overall managerial quality by time interactions, stores in which managers devoted more effort to refresher trainings had more persistent gains in sales. These findings allow us peer inside the “black box” of IT adoption and firm productivity, and highlight the importance of managerial effort and on-the-job human capital investments in actualizing the value of IT.

Read the paper HERE

ABSTRACT: Abstract: Women's exposure to gender-based violence (GBV) may be especially acute amid COVID-19, which has led to a notable increase in reported violence, particularly in the Global South. Building on recent studies on the role of edutainment and community-level interventions in combating GBV, we partnered with an Egyptian women’s rights non-governmental organization to evaluate a randomized intervention delivered amid COVID-19 via social (Facebook and WhatsApp) and traditional (TV) media that are widely used in the Egyptian context. Our findings show that overall the intervention led to increased knowledge and use of resources available for women subjected to GBV, while it did not affect exposure to GBV and attitudes toward gender and marital equality, and sexual violence. WhatsApp was a more effective way for respondents to consume the treatment information than Facebook, but there are no statistical differences in knowledge and use of resources between WhatsApp and TV dissemination.