Valentina Brailovskaya, Pascaline Dupas, Jonathan Robinson
Abstract Digital credit has expanded rapidly in Africa, with opaque loan terms amidst low consumer financial literacy. Rich data from Malawi shows substantial demand for a digital loan with a base interest rate of 10% over 15 days, yet most borrowers are not aware of loan terms, repay late and incur substantial late fees. Regression discontinuity analyses show no evidence that access to small digital loans harms consumers’ perceived well-being. A short, randomised, phone-based financial literacy intervention improved knowledge but did not increase timely loan repayment, and modestly increased loan demand, ultimately increasing the likelihood of ever defaulting.
{"title":"Is Digital Credit Filling A Hole or Digging a Hole? Evidence from Malawi","authors":"Valentina Brailovskaya, Pascaline Dupas, Jonathan Robinson","doi":"10.1093/ej/uead083","DOIUrl":"https://doi.org/10.1093/ej/uead083","url":null,"abstract":"Abstract Digital credit has expanded rapidly in Africa, with opaque loan terms amidst low consumer financial literacy. Rich data from Malawi shows substantial demand for a digital loan with a base interest rate of 10% over 15 days, yet most borrowers are not aware of loan terms, repay late and incur substantial late fees. Regression discontinuity analyses show no evidence that access to small digital loans harms consumers’ perceived well-being. A short, randomised, phone-based financial literacy intervention improved knowledge but did not increase timely loan repayment, and modestly increased loan demand, ultimately increasing the likelihood of ever defaulting.","PeriodicalId":48448,"journal":{"name":"Economic Journal","volume":"56 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134943637","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Big technological improvements in a new, secondary sector lead to a period of excitement about the future prospects of the overall economy, generating boom-bust dynamics propagating through credit markets. Increased future capital prices relax collateral constraints today, leading to a boom before the realization of the shock. But reallocation of capital toward the secondary sector when the shock hits leads to a bust going forward. These cycles are perfectly foreseen in our model, making them markedly different from the typical narrative about unexpected financial shocks used to explain crises. Our dynamics obtain without a departure from rational expectations. In fact, these cycles echo Minsky’s original narrative for financial cycles, according to which “financial trauma occur as normal functioning events in a capitalistic economy.” (Minsky, 1980, p. 21).
{"title":"Technology shocks and predictable Minsky cycles","authors":"Jean-Paul L’Huillier, Gregory Phelan, Hunter Wieman","doi":"10.1093/ej/uead085","DOIUrl":"https://doi.org/10.1093/ej/uead085","url":null,"abstract":"Abstract Big technological improvements in a new, secondary sector lead to a period of excitement about the future prospects of the overall economy, generating boom-bust dynamics propagating through credit markets. Increased future capital prices relax collateral constraints today, leading to a boom before the realization of the shock. But reallocation of capital toward the secondary sector when the shock hits leads to a bust going forward. These cycles are perfectly foreseen in our model, making them markedly different from the typical narrative about unexpected financial shocks used to explain crises. Our dynamics obtain without a departure from rational expectations. In fact, these cycles echo Minsky’s original narrative for financial cycles, according to which “financial trauma occur as normal functioning events in a capitalistic economy.” (Minsky, 1980, p. 21).","PeriodicalId":48448,"journal":{"name":"Economic Journal","volume":"56 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134944331","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract People are often more influenced by opinions similar to their own and even seek information from those with whom they expect to most agree—behaviors often attributed to irrational biases. In this paper, I argue that these behaviors can be understood within the context of rational social learning by accounting for the presence of unobserved heterogeneity in preferences or priors. Individuals display local learning by placing greater weight on opinions that are closer to their own. When individuals choose whom to learn from, local learning leads to the development of echo chambers.
{"title":"Echo Chambers: Social Learning under Unobserved Heterogeneity","authors":"Cole Williams","doi":"10.1093/ej/uead081","DOIUrl":"https://doi.org/10.1093/ej/uead081","url":null,"abstract":"Abstract People are often more influenced by opinions similar to their own and even seek information from those with whom they expect to most agree—behaviors often attributed to irrational biases. In this paper, I argue that these behaviors can be understood within the context of rational social learning by accounting for the presence of unobserved heterogeneity in preferences or priors. Individuals display local learning by placing greater weight on opinions that are closer to their own. When individuals choose whom to learn from, local learning leads to the development of echo chambers.","PeriodicalId":48448,"journal":{"name":"Economic Journal","volume":"300 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134974850","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Politicians seeking to persuade voters may not always be able to say what they would like to. Adopting policy positions opposite to that of their party or contradicting their previous policy announcements may be costly. I use computational text analysis on 30,000 candidate manifestos from two-round French elections to show that politicians take these costs into account, by toeing the party line and sticking to their platform, while also strategically adjusting their campaign communication and advertising neutral non-policy issues when they need to reach a broader electorate. I provide suggestive evidence that this moderation of electoral discourse predicts better performance in office and may therefore provide valuable information to voters.
{"title":"Strategic Campaign Communication: Evidence from 30,000 Candidate Manifestos","authors":"Caroline Le Pennec","doi":"10.1093/ej/uead082","DOIUrl":"https://doi.org/10.1093/ej/uead082","url":null,"abstract":"Abstract Politicians seeking to persuade voters may not always be able to say what they would like to. Adopting policy positions opposite to that of their party or contradicting their previous policy announcements may be costly. I use computational text analysis on 30,000 candidate manifestos from two-round French elections to show that politicians take these costs into account, by toeing the party line and sticking to their platform, while also strategically adjusting their campaign communication and advertising neutral non-policy issues when they need to reach a broader electorate. I provide suggestive evidence that this moderation of electoral discourse predicts better performance in office and may therefore provide valuable information to voters.","PeriodicalId":48448,"journal":{"name":"Economic Journal","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135648620","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Women tend to experience a substantial decline in their labour income after their first child is born, while men do not. Do such ‘child penalties’ also exist in the political arena? Using comprehensive administrative data from Norway, we find that women are less likely than men to secure elected office after their first child is born. The effects manifest already from the nomination stage, where mothers receive less favourable rankings on party lists relative to comparable fathers. This paper broadens our understanding of a fundamental social issue in political representation and demonstrates how motherhood affects even positively selected women.
{"title":"Child Penalties in Politics","authors":"Jon H Fiva, Max-Emil M King","doi":"10.1093/ej/uead084","DOIUrl":"https://doi.org/10.1093/ej/uead084","url":null,"abstract":"Abstract Women tend to experience a substantial decline in their labour income after their first child is born, while men do not. Do such ‘child penalties’ also exist in the political arena? Using comprehensive administrative data from Norway, we find that women are less likely than men to secure elected office after their first child is born. The effects manifest already from the nomination stage, where mothers receive less favourable rankings on party lists relative to comparable fathers. This paper broadens our understanding of a fundamental social issue in political representation and demonstrates how motherhood affects even positively selected women.","PeriodicalId":48448,"journal":{"name":"Economic Journal","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135744628","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract We design a novel experiment to assess investors’ behavioural and physiological reactions to negative tail events. Investors who observed, without suffering from, tail events decreased their bids whereas investors suffering tail losses increased them. However, the increase in bids after tail losses was not observed for those who exhibited no emotional arousal. This suggests that emotions are key in explaining Prospect Theory prediction of risk seeking in the loss domain.
{"title":"Negative Tail Events, Emotions & Risk Taking","authors":"Brice Corgnet, Camille Cornand, Nobuyuki Hanaki","doi":"10.1093/ej/uead080","DOIUrl":"https://doi.org/10.1093/ej/uead080","url":null,"abstract":"Abstract We design a novel experiment to assess investors’ behavioural and physiological reactions to negative tail events. Investors who observed, without suffering from, tail events decreased their bids whereas investors suffering tail losses increased them. However, the increase in bids after tail losses was not observed for those who exhibited no emotional arousal. This suggests that emotions are key in explaining Prospect Theory prediction of risk seeking in the loss domain.","PeriodicalId":48448,"journal":{"name":"Economic Journal","volume":"37 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135425652","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract African Americans face shorter employment durations than similar whites. We hypothesise that employers discriminate in acquiring or acting on ability-relevant information. In our model, monitoring black but not white workers is self-sustaining. New black hires were more likely fired by previous employers after monitoring. This reduces firms’ beliefs about ability, incentivizing discriminatory monitoring. We confirm our predictions that layoffs are initially higher for black than non-black workers but that they converge with seniority and decline more with AFQT for black workers. Two additional predictions, lower lifetime incomes and longer unemployment durations for black workers, have known empirical support.
{"title":"The Boss is Watching: How Monitoring Decisions Hurt Black Workers","authors":"Costas Cavounidis, Kevin Lang, Russell Weinstein","doi":"10.1093/ej/uead079","DOIUrl":"https://doi.org/10.1093/ej/uead079","url":null,"abstract":"Abstract African Americans face shorter employment durations than similar whites. We hypothesise that employers discriminate in acquiring or acting on ability-relevant information. In our model, monitoring black but not white workers is self-sustaining. New black hires were more likely fired by previous employers after monitoring. This reduces firms’ beliefs about ability, incentivizing discriminatory monitoring. We confirm our predictions that layoffs are initially higher for black than non-black workers but that they converge with seniority and decline more with AFQT for black workers. Two additional predictions, lower lifetime incomes and longer unemployment durations for black workers, have known empirical support.","PeriodicalId":48448,"journal":{"name":"Economic Journal","volume":"98 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135476206","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract I investigate the macroeconomic impact of central bank funding becoming a more attractive funding source to financial intermediaries in times of crisis. I show that the requirement to pledge collateral has a contractionary effect on private credit everything else equal, and thereby reduces the expansionary effect that such lending otherwise has. I use an estimated New-Keynesian model with financial frictions to show that the collateral effect explains the limited growth of Italian banks’ private credit in response to the ECB’s three-year LTROs. Finally, I explore whether changes in lending policy can offset the cumulative negative effects from the collateral effect.
{"title":"Unintended Consequences of Central Bank Lending in Financial Crises","authors":"Christiaan van der Kwaak","doi":"10.1093/ej/uead078","DOIUrl":"https://doi.org/10.1093/ej/uead078","url":null,"abstract":"Abstract I investigate the macroeconomic impact of central bank funding becoming a more attractive funding source to financial intermediaries in times of crisis. I show that the requirement to pledge collateral has a contractionary effect on private credit everything else equal, and thereby reduces the expansionary effect that such lending otherwise has. I use an estimated New-Keynesian model with financial frictions to show that the collateral effect explains the limited growth of Italian banks’ private credit in response to the ECB’s three-year LTROs. Finally, I explore whether changes in lending policy can offset the cumulative negative effects from the collateral effect.","PeriodicalId":48448,"journal":{"name":"Economic Journal","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136102131","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Timothy Powell-Jackson, JessicaJC King, Christina Makungu, Matthew Quaife, Catherine Goodman
Abstract We measure the adoption of management practices in over 220 private for-profit and non-profit health facilities in 64 districts across Tanzania and link these data to process quality-of-care metrics, assessed using undercover standardised patients and clinical observations. We find that better managed health facilities are more likely to provide correct treatment in accordance with national treatment guidelines, adhere to a checklist of essential questions and examinations, and comply with infection prevention and control practices. Moving from the 10th to the 90th percentile in the management practice score is associated with a 48% increase in correct treatment. We then leverage a large-scale field experiment of an internationally recognised management support intervention in which health facilities are assessed against comprehensive standards, given an individually tailored quality improvement plan and supported through training and mentoring visits. We find zero to small effects on management scores, suggesting that improving management practices in this setting may be challenging.
{"title":"Management Practices and Quality of Care: Evidence from the Private Health Care Sector in Tanzania","authors":"Timothy Powell-Jackson, JessicaJC King, Christina Makungu, Matthew Quaife, Catherine Goodman","doi":"10.1093/ej/uead075","DOIUrl":"https://doi.org/10.1093/ej/uead075","url":null,"abstract":"Abstract We measure the adoption of management practices in over 220 private for-profit and non-profit health facilities in 64 districts across Tanzania and link these data to process quality-of-care metrics, assessed using undercover standardised patients and clinical observations. We find that better managed health facilities are more likely to provide correct treatment in accordance with national treatment guidelines, adhere to a checklist of essential questions and examinations, and comply with infection prevention and control practices. Moving from the 10th to the 90th percentile in the management practice score is associated with a 48% increase in correct treatment. We then leverage a large-scale field experiment of an internationally recognised management support intervention in which health facilities are assessed against comprehensive standards, given an individually tailored quality improvement plan and supported through training and mentoring visits. We find zero to small effects on management scores, suggesting that improving management practices in this setting may be challenging.","PeriodicalId":48448,"journal":{"name":"Economic Journal","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135207222","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract We draw on household survey data from countries of all income levels and document that average unemployment rates increase with GDP per capita. This is accounted for almost entirely by low-rather than high-educated workers. We interpret these facts in a model with frictional labor markets, a traditional self-employment sector, skill-biased productivity differences across countries, and unemployment benefits that become more generous with development. A calibrated version of the model does well in explaining the cross-country patterns we document. Counterfactual exercises point to skill-biased productivity differences as the most important factor in explaining the cross-country unemployment patterns.
{"title":"Unemployment and Development","authors":"Ying Feng, David Lagakos, James E. Rauch","doi":"10.1093/ej/uead076","DOIUrl":"https://doi.org/10.1093/ej/uead076","url":null,"abstract":"Abstract We draw on household survey data from countries of all income levels and document that average unemployment rates increase with GDP per capita. This is accounted for almost entirely by low-rather than high-educated workers. We interpret these facts in a model with frictional labor markets, a traditional self-employment sector, skill-biased productivity differences across countries, and unemployment benefits that become more generous with development. A calibrated version of the model does well in explaining the cross-country patterns we document. Counterfactual exercises point to skill-biased productivity differences as the most important factor in explaining the cross-country unemployment patterns.","PeriodicalId":48448,"journal":{"name":"Economic Journal","volume":"115 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135110704","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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