My posting to this blog has gone into a semi-involuntary hiatus this fall because I am on the academic job market right now, and am dedicating nearly 100% of my time to that process.
I’m breaking that trend to talk about some awesome new papers I saw last weekend. I was lucky enough to go to NEUDC for the first time, to I present my job market paper. In the other sessions I attended, I came across some fascinating stuff. A few highlights that I can’t resist sharing:
“Alcohol and Self Control – A Field Experiment with Cycle Rickshaw Pullers in India”, Frank Schilbach (only an abstract is currently available online)
In some parts of the developing world people drink very heavily, and this could contribute to getting trapped in poverty, since alcohol can exacerbate self-control problems. Schilbach uses a randomized incentive to stay sober to show that cutting down on drinking during the work day is as effective as providing people with access to commitment savings accounts, among his high-alcohol use population. This is a fascinating result, and I wonder how much it will generalize to other populations where alcoholism is a less-severe problem (his subjects drink, on average, 6 days a week, at a rate of something like 5 drinks per day.
“The Cost of Keeping Track”, Johannes Haushofer
Haushofer augments a standard rational model of intertemporal choices in a very simple, intuitive way: if you decide to undertake a transaction in the future, you must pay a fixed cost in each period to keep track of that decision. He motivated this brilliantly in the session by asking the audience if they had ever paid a bill before it was due, and pointing out that that is technically irrational – you’re giving up interest on the money in question. But it can be rationalized by the fact that it’s not worth the effort to remember to take care of the bill in the future. This augmentation generates a bunch of well-known “predictable irrationalities”: for example, people tend to discount future gains “too much” compared with future losses, but actually do the opposite for future losses, discounting them too little. It also predicts loss aversion and status quo bias. I’m looking forward to more research on the empirical implications of this model, which I think has the potential to bring a lot of clarity to how we think about behavioral anomalies in decisionmaking.
“The Role of Road Quality Investments on Economic Activity and Welfare: Evidence from Indonesia’s Highways”, Paul J. Gertler, Marco Gonzalez-Navarro, Tadeja Gracner, and Alexander D. Rothenberg
Road maintenance funding in Indonesia is set according to arbitrary guidelines by the central government. The authors exploit this fact to measure the effect of higher-quality roads on household income. Higher-quality roads help the economy substantially, and they can show that this is due to better roads leading to a shift from agriculture into manufacturing. Some of the elasticities they find are massive: a 1% improvement in average road quality leads to a 6% increase in hours worked in manufacturing. This type of work is exciting and important because transportation infrastructure is vital for economic development, but the empirical evidence for exactly how big its benefits are is still pretty thin. These results can be plugged into cost-effectiveness calculations to help justify desperately-needed increases in funding for road maintenance in the developing world.
This is just a small sample of the cool research on display – I wasn’t able to go all the presentations I wanted to. I was really impressed with the quality of the work I saw across the board.
Now, back to is the joy of filling out webforms and tracking jobs in huge spreadsheets.