Economics Still Has A Diversity Problem
January 7, 2020
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Graduate Development Economics – Spring 2020
Spring
2020
Economics 270B
Madeline Duhon (mduhon@berkeley.edu)
This course covers leading research issues in Development Economics, with a particular focus on human capital, psychology and economics, political economy, and research design topics. It is taught at a level appropriate for Ph.D. students in Economics, Agricultural and Resource Economics, and related fields.
Self-Control and Demand for Preventive Health: Evidence from Hypertension in India
Bai, Liang, Benjamin Handel, Edward Miguel, and Gautam Rao
2020
HealthEducation and Human CapitalOther
Self-control problems constitute a potential explanation for the under-investment in preventive health in low-income countries. Behavioral economics offers a tool to solve such problems: commitment devices. We conduct a field experiment to evaluate the effectiveness of different types of theoretically-motivated commitment contracts in increasing preventive doctor visits by hypertensive patients in rural India. Despite achieving high take-up of such contracts in some treatment arms, we find no effects on actual doctor visits or individual health outcomes. A substantial number of individuals pay for commitment but fail to follow through on the doctor visit, losing money without experiencing health benefits. We develop and structurally estimate a pre-specified model of consumer behavior under present bias with varying levels of naivete. The results are consistent with a large share of individuals being partially naive about their own self-control problems: sophisticated enough to demand some commitment, but overly optimistic about whether a given level of commitment is suffciently strong to be effective. The results suggest that commitment devices may in practice be welfare diminishing, at least in some contexts, and serve as a cautionary tale about their role in health care.
Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata
Joan Hamory Hicks, Marieke Kleemans, Nicholas Y. Li, and Edward Miguel
2020
African DevelopmentHealthEducation and Human CapitalOther
Recent research has pointed to large gaps in labor productivity between the agricultural and non-agricultural sectors in low-income countries, as well as between workers in rural and urban areas. Most estimates are based on national accounts or repeated cross-sections of micro-survey data, and as a result typically struggle to account for individual selection between sectors. This paper uses long-run individual-level panel data from two low-income countries (Indonesia and Kenya) to explore these gaps. Accounting for individual fixed effects leads to much smaller estimated productivity gains from moving into the non-agricultural sector (or urban areas), reducing estimated gaps by roughly 67 to 92%. Furthermore, gaps do not emerge up to five years after a move between sectors. We evaluate whether these findings imply a re-assessment of the conventional wisdom regarding sectoral gaps, discuss how to reconcile them with existing cross-sectional estimates, and consider implications for the desirability of sectoral reallocation of labor.
Experimental Evidence on the Economics of Rural Electrification
Kenneth Lee, Edward Miguel, and Catherine Wolfram
2020
African DevelopmentEnvironment and ClimateResearch Methodology
We present results from an experiment that randomized the expansion of electric grid infrastructure in rural Kenya. Electricity distribution is a canonical example of a natural monopoly. Experimental variation in the number of connections, combined with administrative cost data, reveals considerable scale economies, as hypothesized. Randomized price offers indicate that demand for connections falls sharply with price. Among newly connected households, average electricity consumption is very low, implying low consumer surplus. We do not find meaningful medium-run impacts on economic and noneconomic outcomes. We discuss implications for current efforts to increase rural electrification in Kenya and highlight how various factors may affect interpretation.