VoxDev Development Economics

How automatic payments can help individuals save more and better protect themselves against consumer risks
Read “Learning to navigate a new financial technology: Evidence from payroll accounts” by Emily Breza, Martin Kanz, and Leora F. Klapper here.

Access to fast cash through digital credit may put consumers at risk for over-indebtedness and likelihood of default
Read “Too fast, too furious? Digital credit delivery speed and repayment rates” by Alfredo Burlando, Michael A. Kuhn, and Silvia Prina here.

Bundling interventions that offer parents health information along with cash transfers might yield more sustainable changes in early-life health outcomes for children

Bundling interventions that offer parents health information along with cash transfers might yield more sustainable changes in early-life health outcomes for children
Read “The impacts of a multifaceted pre-natal intervention on human capital accumulation in early life” by Pedro Carneiro, Lucy Kraftman, Giacomo Mason, Lucie Moore, Imran Rasul and Molly Scott here.

Policymakers might seek to address the frictions that prevent potentially beneficial migration to urban areas from taking place
Read “Urban-Rural Gaps in the Developing World: Does Internal Migration Offer Opportunities?” by David Lagakos here. 

Despite evidence of increasing household wages, anti-poverty schemes in India can have an adverse effect by lowering human capital investment
Read “Workfare and Human Capital Investment: Evidence from India” by Manisha Shah and Bryce Millet Steinberg here.

People are less likely to ask questions in their communities if it exposes the limits of their knowledge.
Read “Signaling, shame, and silence in social learning” by Arun G. Chandrasekhar, Benjamin Golub, and He Yang here.

More frequent assessment of student performance fails to deliver on improved outcomes when the administrative burden on teachers is high

Nearly a billion people around the world are not connected to the electricity grid, and even more have unreliable access. In this VoxDevTalk, Robin Burgess discusses his paper with Michael Greenstone, Nicholas Ryan, and Anant Sudarshan in which the authors argue that a social norm that all people deserve access to electricity regardless of payment may actually be undermining the universal access called for in Sustainable Development Goal 7.  When people feel no compulsion to pay for the electricity they use, whether or not they are able to, government-owned distribution companies need to ration supply to limit their losses, either by enforcing blackouts or restricting access. This tends to affect those living in the poorer areas of countries more, and research on the relationship between electricity consumption and GDP suggests that it also has a macro impact on economic growth. One possible way to move from this low-payment, low-access equilibrium to a high-payment, high-access one is for governments to provide targeted subsidies towards getting connected to the grid, and for people to then pay for the electricity they use.

Incentivising agent performance is a double-edged sword: while it can encourage agents to perform better, it might also nudge them into cheating and manipulating results to their benefit. In this VoxDevTalk, Guojun He discusses his work with Michael Greenstone, Ruixue Jia, and Tong Liu on this classic principal-agent problem in the context of how Chinese local governments self-report meeting air pollution-reduction targets imposed (and incentivised) by the central government. An analysis of these reports reveals evidence of significant under-reporting by local governments before the central government installed automated real-time pollution monitoring devices across the country. Under-reporting was larger in areas with higher levels of actual pollution, ostensibly since these local governments face greater challenges in meeting pollution-reduction targets. How accurately local governments report pollution figures also has impacts on public welfare, with people exposed to pollution information more likely to search for information on face masks and air filters. Biased information thus prevented people from optimally protecting themselves prior to the introduction of automation.