Working papers by JILAEE’s researchers

Understanding Peer Effects in Educational Decisions: Theory and Evidence from a Field Experiment.

Ye, Karen J.

(2023)

  • Researchers know little about the mechanisms underlying peer effects in teenagers’ educational decisions. I focus on the decision to participate in an educational program. Seeing a peer’s decision influences a student in three ways: she may want to participate together with her peer (joint consumption), or she may learn from her peer’s decision about the program value (social learning) or the social norms of participation (social norms). I develop a theoretical model with these three channels, and conduct a field experiment in three Chicago high schools to disentangle them. I find large negative peer effects that are driven by changing students’ beliefs about the social norms of participation.

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Toward an Understanding of the Economics of Misinformation: Evidence from a Demand Side Field Experiment on Critical Thinking.

Castillo, Gustavo, List, John A., Ramírez, Lina, Seither, Julia, Unda, Jaime and Vallejo, Beatriz.

(2024)

  • o   Misinformation represents a vital threat to the societal fabric of modern economies. While the supply side of the misinformation market has begun to receive increased scrutiny, the demand side has received scant attention. We explore the demand for misinformation through the lens of augmenting critical thinking skills in a field experiment during the 2022 Presidential election in Colombia. Data from roughly 2.000 individuals suggest that our treatments enhance critical thinking, causing subjects to more carefully consider the truthfulness of potential misinformation. We furthermore provide evidence that reducing the demand of fake news can deliver on the dual goal of reducing the spread of fake news by encouraging reporting of misinformation.

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Entrepreneurship Training and Economic Resilience: Evidence on Building Skills for Women.

Seither, Julia, and Lang, Megan

(2024)

  • Raising incomes while lowering income volatility are two core objectives for rural development. Despite substantial, existing literature, it is unclear whether entrepreneurship trainings can achieve both objectives by easing entry into entrepreneurship and improving enterprise performance. We randomize access to an entrepreneurship training among women in Uganda. Treated women are 19% more likely to run profitable businesses 18 months post-program. High-frequency data shows that they fare significantly better during the COVID-19 lockdown than women in the control group. Exploiting social network data, we detect significant network-based spillovers to the control group and provide novel tools to adjust estimates accordingly.

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A Meta-Analysis Experiment on the Contact Hypothesis.

Gwen-Jiro Clochard

(2024)

  • For decades, intergroup contact has been considered one of the most important tools for reducing prejudice and improving intergroup relations. This paper reviews the experimental literature on the contact hypothesis. The analysis is based on 139 outcomes from 44 papers, involving more than 25,000 people on almost every continent. The main finding is that contact interventions are effective in reducing prejudice, with typically moderate magnitudes, and few instances of backlash. However, several worrying signs of publication bias are identified. Furthermore, an online experiment highlights the considerable diversity of contact interventions. Surprisingly, the common goal condition, often emphasized in the literature, is negatively correlated with effect size. Lastly, a lasso estimation is used to identify relevant determinants of effect sizes, revealing limited explanatory power. These findings have important implications for future research on intergroup contact.

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Is the Price Right? The Role of Morals, Ideology, and Tradeoff Thinking in Explaining Reactions to Price Surges.

Elías, Julio J., Lacetera, Nicola, and Macis, Mario.

NBER Working Papers 29963. (2023).

  • Public authorities often introduce price controls in response to price surges, potentially causing inefficiencies and shortages. In a survey experiment with 7,612 Canadian and US respondents, we find that unregulated price increases cause general disapproval and strong moral reactions. However, acceptance is higher, and demand for regulation lower, when potential economic tradeoffs between controlled and unregulated prices are salient, and if the incentives resulting from price surges ultimately enhance access to goods. Highlighting tradeoffs also reduces the polarization of moral reactions between supporters and opponents of unregulated pricing. Text analysis of open-ended answers further supports our findings, and a donation experiment shows consistency between stated and revealed preferences.

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Proud to Not Own Stocks: How Identity Shapes Financial Decisions.

Henkel, Luca, and Zimpelmann, Christian.

IZA Discussion Paper No. 16246 (2023)

  • This paper introduces a key factor influencing households’ decision to invest in the stock market: how people view stockholders. Using surveys we conducted with nearly 8,500 individuals from eleven countries, we document that a large majority of respondents view stockholders negatively – they are perceived as greedy, gambler-like, and selfish individuals. We then provide experimental evidence that such perceptions of identityrelevant characteristics causally influence decision-making: if people view stockholders more negatively, they are less likely to choose stock-related investments. Furthermore, by linking survey and administrative data, we show that negative perceptions strongly predict households’ stock market participation, more so than leading alternative determinants. Our findings provide a novel explanation for the puzzlingly low stock market participation rates around the world, new perspectives on the malleability of financial decision-making, and evidence for the importance of identity in economic decision-making.

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Ends versus Means: Kantians, Utilitarians, and Moral Decisions.

Luca Henkel, Roland Bénabou and Armin Falk.

(2024)

  • Choosing what is morally right can be based on the consequences (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 six main games are supplemented with six classical self-versus-other 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 44%) of nonconsequentialist 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 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.

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Eliciting Moral Preferences under Image Concerns: Theory and Experiment.

Luca Henkel, Bénabou, Roland, Falk, Armin, and Tirole, Jean.

(2024)

  • We analyze how the impact of image motives on behavior varies with two key features of the choice mechanism: single versus multiple decisions, and certainty versus uncertainty of consequences. Using direct elicitation (DE) versus multiple-price-list (MPL) or equivalently Becker-DeGroot-Marschak (BDM) schemes as exemplars, we characterize how image-seeking inflates prosocial giving. The signaling bias (relative to true preferences) is shown to depend on the interaction between elicitation method and visibility level: it is greater under DE for low image concerns, and greater under MPL/BDM for high ones. We experimentally test the model’s predictions and find the predicted crossing effect.

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Adam Smith: Experimental Innovator through the Lenses of Conceptual Innovators.

Elias, Julio J., and Castro, Walter.

Asociación Argentina de Economía Política: Working Papers 4649 (2023).

  • Many scholars, especially from other disciplines, have voiced concerns regarding an oversimplified interpretation of Adam Smith's ideas, asserting that it has been exploited to advance a particular free market ideology. This paper uses Galenson's economic framework for creativity to analyze Adam Smith's approach to innovation and some of his main contributions. Galenson distinguishes between two types of innovators in art: the conceptual and the experimental. We show that Smith exhibits all the characteristics of the experimental innovator. His experimental approach is evident in the development of The Theory of Moral Sentiments and many of the ideas developed in The Wealth of Nations. Smith has had a significant influence on important conceptual innovators in economics of the 20th century, such as Paul Samuelson, George Stigler, Robert Lucas and Gary Becker. Conceptual innovators often tend to simplify by using abstraction. Their effort to formalize and incorporate Smith ideas using a conceptual language may explain why there is a simplified understanding of Smith and his contributions.

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The Competing Impacts of Self-Employment on Intimate Partner Violence and Women’s Economic Autonomy.

Seither, Julia, Casabianca, María Sofía, Durán, Catalina, and Lang, Megan.

(2023)

  • Women’s economic autonomy can protect against intimate partner violence (IPV), but the process of increasing economic autonomy may generate adverse effects. We provide experimental evidence on the impacts of an important pathway to economic autonomy for women: self-employment. We randomize women in Uganda to a control group or two versions of an entrepreneurship program. Both follow the same curriculum but differ in how they deliver mentoring. In Intensive Mentoring, mentors seek out women at their home or business. Women in Opt-In Mentoring can visit mentors at the training venue. Women in Intensive Mentoring experience large reductions in IPV relative to control and Opt-In Mentoring. However, women have a strong revealed preference for Opt-In Mentoring. Intensive Mentoring appears to increase spousal knowledge of women’s businesses, allowing women to negotiate for better household outcomes but limiting household decision-making power and control over their business. Our results underline the trade-offs women make when building economic autonomy.

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Toward an Understanding of Tax Amnesties: Theory and Evidence from a Natural Field Experiment.

Holz, Justin, Simon, Andrew, Gil, Patricia, Zentner, Alejandro and List, John A.

(2023)

  • In modern economies, when debt and trust issues arise, a partial forgiveness policy is often the solution to induce payment and increase disclosure. For their part, governments around the globe continue to use tax amnesties as a strategy to allow debtors to make amends for past misdeeds in exchange for partial debt forgiveness. While ubiquitous, much remains unknown about the basic facts of how well amnesties work, for whom, and why. We present a simple theoretical construct that provides both economic clarity into tax amnesties as well as insights into the necessary behavioral parameters that one must estimate to understand the consequences of tax amnesties. We partner with the Dominican Republic Tax Authorities to design a natural field experiment that is linked to the theory to estimate key causal mechanisms. Empirical results from our field experiment, which covers 125,452 taxpayers who collectively owe $5.2 billion (5.5% of GDP) in known debt, highlight the import of deterrence laws, beliefs about future amnesties, and tax morale for debt payment and increased disclosure. Importantly, we find large short run effects: our most effective treatment (deterrence) increased payments of known debt by 25% and hidden debt by 48%. Further, we find no evidence of our intervention backfiring on subsequent tax payments.

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Early Childhood Programs Change Test Scores But Do They Change Brain Activity?

Ye, Karen J., Anya Samek, Yoder, Keith J., Decety, Jean, Hortacsu, Ali, and List, John A.

Reject & Resubmit at The Economic Journal. (2022)

  • Early childhood programs impact test scores, but do they affect brain activity, and how do such neural changes impact future skills? To study these questions, we use a field experiment that randomized children to preschool or to a control group for one year. Following the intervention, we collected data on children’s neural activity during academic and executive functioning tasks using electro-encephalography (EEG). Compared to children in the control group, children assigned to preschool had greater brain activity related to executive functioning. Further, this activity was predictive of executive functioning skills up to four years after the intervention. 

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Integrating Immigrants as a Tool for Broad Development: Experimental Evidence for Portugal and Cape Verde.

Seither, Julia. Batista, Catia, and Gazeaud, Jules.

(2022)

  • International migration can contribute importantly to sustainable economic growth. The effects of migration for both origin and host countries, however, depend on immigrant integration. We experimentally evaluate the impact of information and migrants’ aspirations on immigrant integration using a field experiment among Cape Verdean immigrants in Portugal. The interventions promote integration outcomes such as migration status regularization and better quality employment of migrants. They furthermore affect those left behind. While the impact on material remittances is muted, targeting migrant integration barriers improves democratic processes and attitudes over gender equity in origin countries. In addition, providing immigrants with better information sources about integration processes affects migration intentions and expectations of prospective migrants.

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Injecting Adam Smith’s Ideas in the Market for Kidney Transplants.

Elías, Julio Jorge, and Castro, Walter.

CEMA Working Paper (2022).

  • Organs for transplantation are extremely valuable, and their shortage has become one of the most burning public policy issues in most countries with developed transplant programs. Could the kidney transplantation system benefit from an injection of Adam Smith's ideas? In this paper, we combine Adam Smith’s ideas of both The Theory of Moral Sentiments and The Wealth of Nations to analyze the main developments of the market for kidney transplantation, including kidney exchange, default rules for deceased donations (presumed consent versus informed consent), priority rules, and proposals to pay organ donors. Injecting Adam Smith’s ideas into this problem bring new insights in terms of public policy and market design. For instance, his theory of equalizing differences, exposed in Book I, Chapter X, of the Wealth of Nations, provide a base to estimate what would be the price of a kidney in a legal market (Becker and Elias 2007). His views about human decisions struggling between ‘passions’ and the ‘impartial spectator’ and on the difficulties of organizing the economic life appealing mainly to benevolence, and other sentiments toward close ones, are illuminating for policy design of any system of donation (paid, non-directed donations, or exchanges) by providing an understanding of what motivates people in the context of markets. Considering Adam Smith’s ideas, we also evaluate many restrictions currently in place in the market for kidney transplantations that impose severe limits on individual decisions, some of them to make up for a possible lack of self-command. We hope we show with our analysis not only the topicality of Smith´s ideas but the importance for the economic analysis of combining both the Theory of Moral Sentiments and the Wealth of Nations, and not to consider them separately as isolated masterpieces.

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Improving the Perception of the Police by the Youth.

Clochard, Gwen-Jiro.

(2021)

  • While previous research has highlighted the positive consequences of a high trust in the police, parts of the French population exhibit a lack of trust toward the police. In this paper, I use a lab-in-the-field experiment in two high-schools in France to investigate the effect of a brief and controlled discussion-contact-between police officers and students on trust. Results indicate a positive effect of contact on trust at the individual level, i.e. toward the specific police officer met. The magnitude corresponds to an increase of approximately 0.4 standard deviation. However, the effect fails to translate to an increase in the police in general. A theoretical model of belief formation can shed light on why a single contact cannot be sufficient in case of prior-negative-interactions. This paper has implications for the most widely used policy to improve the perception of the police, namely community policing.

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Bringing Contact Interventions to the Lab: Effects of Bilateral Discussions on interethnic Trust in Senegal.

Clochard, Gwen-Jiro, Hollard, Guillaume and Sene, Omar.

(2024)

  • The contact hypothesis posits that interaction with outgroup members can reduce prejudice and improve intergroup relations. While the overall effects of contact have been found to be positive, some studies have found null or even negative effects. We aim to contribute to the understanding of the scope conditions of contact interventions, by singling out the effects of a common component of all existing contact interventions, namely bilateral discussions. Contact is found to be effective in increasing interethnic trust toward the individuals met during the intervention, in line with previous results from longer interventions. However, the results do not generalize to the collective level. Our heterogeneity analysis finds no evidence that the effects of contact are driven by anything other than ethnic differences.

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Toward an Understanding of Discrimination: The Case of Parsing Multiple Sources.

Clochard, Gwen-Jiro, Ahmadi, Majid, Lachman, Jeffrey, and List, John A.

(2022)

  • When multiple forces potentially underlie discriminatory behavior it is difficult to parse the sources of discrimination, rendering proposed policy solutions as speculative. This study advances an empirical approach to parse two specific channels of discrimination: customer side and manager side bias. To showcase our general idea, we combine proprietary data and several publicly available data sets to identify channels of discrimination within the Major League Baseball draft. In doing so, we show that customer preferences are importantly linked to the players drafted at the top end of the draft–players who are most likely to receive immediate public attention and end up playing for the club. Alternatively, we find manager homophily in the latter parts of the draft, when players who receive little attention and have a scant chance to ever play with the club are drafted. The opportunity cost of expressing such preferences is considerable foregone success of the club. Our results have general implications for future work measuring discrimination and how to tackle the multiple channel problem.

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Do farmers prefer result-based, hybrid or practice-based agri-environmental schemes?”

Gars, Jared, Kuhfuss, L., Lankoski, J., and Guerrero, S.

(2023)

  • This study assesses farmers’ relative preferences for practice-based, result-based and hybrid agrienvironmental schemes in three countries. The data comes from a choice experiment conducted by the Organization for Economic Cooperation and Development (OECD) with a focus on biodiversity, climate, and water quality. Our results show that result-based contracts were the least preferred option, and hybrid schemes were the preferred option only for low levels of biodiversity objectives and with a low share of payment conditioned to biodiversity results. In all other cases farmers preferred practice-based schemes. A cost-benefit analysis illustrates how these preferences impact the schemes’ relative cost-effectiveness.

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