This paper documents strong pressure to share income faced by entrepreneurs in a developing country setting. This ‘kinship tax’ can distort productive decisions, including investment. A lab experiment with 361 Kenyan entrepreneurs reveals that a third of them face distortionary pressure to share income. This kinship tax is higher for men, and increasing in entrepreneurial ability. Using a pre-existing randomized cash transfer experiment, I find that only male entrepreneurs who do not face distortionary kinship taxation invest these transfers. Imposing some parametric assumptions, I estimate that kinship taxation decreases aggregate productivity among firms in this sample by one quarter.
{"title":"Kinship taxation as an impediment to growth: Experimental evidence from Kenyan microenterprises","authors":"Munir Squires","doi":"10.1093/ej/ueae025","DOIUrl":"https://doi.org/10.1093/ej/ueae025","url":null,"abstract":"\u0000 This paper documents strong pressure to share income faced by entrepreneurs in a developing country setting. This ‘kinship tax’ can distort productive decisions, including investment. A lab experiment with 361 Kenyan entrepreneurs reveals that a third of them face distortionary pressure to share income. This kinship tax is higher for men, and increasing in entrepreneurial ability. Using a pre-existing randomized cash transfer experiment, I find that only male entrepreneurs who do not face distortionary kinship taxation invest these transfers. Imposing some parametric assumptions, I estimate that kinship taxation decreases aggregate productivity among firms in this sample by one quarter.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"252 3","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140730583","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Konrad Burchardi, Jonathan de Quidt, Selim Gulesci, Munshi Sulaiman
We use a cash transfer to relax households’ borrowing constraints, then elicit their willingness to pay (WTP) for a remedial education program offering tutoring and life-skills training. Lottery losers were willing to pay 3,300 Tanzanian Shillings for the program, seven percent of per-capita monthly expenditures. For those identified at baseline as able to borrow, WTP increases by three percent upon winning a lottery prize of 3,200 TSh. For those unable to borrow, WTP increases by 27 percent upon winning the lottery. We conclude that borrowing constraints limit access to educational programs, and may increase inequality of educational attainment.
{"title":"Borrowing Constraints and Demand for Remedial Education: Evidence from Tanzania","authors":"Konrad Burchardi, Jonathan de Quidt, Selim Gulesci, Munshi Sulaiman","doi":"10.1093/ej/ueae024","DOIUrl":"https://doi.org/10.1093/ej/ueae024","url":null,"abstract":"We use a cash transfer to relax households’ borrowing constraints, then elicit their willingness to pay (WTP) for a remedial education program offering tutoring and life-skills training. Lottery losers were willing to pay 3,300 Tanzanian Shillings for the program, seven percent of per-capita monthly expenditures. For those identified at baseline as able to borrow, WTP increases by three percent upon winning a lottery prize of 3,200 TSh. For those unable to borrow, WTP increases by 27 percent upon winning the lottery. We conclude that borrowing constraints limit access to educational programs, and may increase inequality of educational attainment.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"50 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140600071","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article presents examples of arbitrage deterrence from the pharmaceutical, chemical, and auto industries. Based on these cases, it develops two models where a monopolist prices and spends to deter arbitrage. The models differ in whether the lower price is set by the firm or negotiated with a representative of consumers. In both models, imports into the high-price market are completely deterred, but the two markets are nonetheless linked by the threat of arbitrage. If this linkage is ignored and the absence of arbitrage is misattributed to exogenous factors, econometric estimates of firm bargaining power will be biased upwards.
{"title":"Spending and pricing by a monopolist to deter arbitrage","authors":"Stephen W Salant","doi":"10.1093/ej/ueae023","DOIUrl":"https://doi.org/10.1093/ej/ueae023","url":null,"abstract":"This article presents examples of arbitrage deterrence from the pharmaceutical, chemical, and auto industries. Based on these cases, it develops two models where a monopolist prices and spends to deter arbitrage. The models differ in whether the lower price is set by the firm or negotiated with a representative of consumers. In both models, imports into the high-price market are completely deterred, but the two markets are nonetheless linked by the threat of arbitrage. If this linkage is ignored and the absence of arbitrage is misattributed to exogenous factors, econometric estimates of firm bargaining power will be biased upwards.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140202132","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Popular and academic discussions have mostly concentrated on large donors, even though small donors are a major source of financing for political campaigns. We propose a theory of small donors with a key novelty: it centers on the interactions between small donors and the parties’ fund-raising strategy. In equilibrium, parties microtarget donors with a higher contribution potential (i.e., richer and with more intense preferences) and increase their total fundraising effort in close races. The parties’ strategic fundraising amplifies the effect of income on contributions, and leads to closeness, underdog and bandwagon effects. We then study the welfare effects of a number of common campaign finance laws. We find that, due to equilibrium effects, those tools may produce outcomes opposite to intended objectives. Finally, we identify a tax-and-subsidy scheme that mutes the effect of income while still allowing donors to voice the intensity of their support.
{"title":"A Theory of Small Campaign Contributions","authors":"Laurent Bouton, Micael Castanheira, Allan Drazen","doi":"10.1093/ej/ueae021","DOIUrl":"https://doi.org/10.1093/ej/ueae021","url":null,"abstract":"Popular and academic discussions have mostly concentrated on large donors, even though small donors are a major source of financing for political campaigns. We propose a theory of small donors with a key novelty: it centers on the interactions between small donors and the parties’ fund-raising strategy. In equilibrium, parties microtarget donors with a higher contribution potential (i.e., richer and with more intense preferences) and increase their total fundraising effort in close races. The parties’ strategic fundraising amplifies the effect of income on contributions, and leads to closeness, underdog and bandwagon effects. We then study the welfare effects of a number of common campaign finance laws. We find that, due to equilibrium effects, those tools may produce outcomes opposite to intended objectives. Finally, we identify a tax-and-subsidy scheme that mutes the effect of income while still allowing donors to voice the intensity of their support.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"13 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140202085","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Many products sold on online platforms have additional features like fees for services, shipping, luggage, upgrades etc. We study when a two-sided platform shrouds additional features towards potentially-naive buyers. We explore a novel mechanism according to which platforms shroud to manipulate network externalities between buyers and sellers. Exploring this mechanism, we argue the advent of online marketplaces led to less-transparent markets. First, platforms have stronger incentives to shroud seller fees than sellers themselves. Second, platforms shroud their own fees less if they earn more revenue from sellers; so when sellers on the platform compete more fiercely, platforms—somewhat perversely—shroud more. We connect these results to many applications and the current debate on regulating online platforms.
{"title":"Deceptive Features on Platforms","authors":"Johannes Johnen, Robert Somogyi","doi":"10.1093/ej/ueae016","DOIUrl":"https://doi.org/10.1093/ej/ueae016","url":null,"abstract":"Many products sold on online platforms have additional features like fees for services, shipping, luggage, upgrades etc. We study when a two-sided platform shrouds additional features towards potentially-naive buyers. We explore a novel mechanism according to which platforms shroud to manipulate network externalities between buyers and sellers. Exploring this mechanism, we argue the advent of online marketplaces led to less-transparent markets. First, platforms have stronger incentives to shroud seller fees than sellers themselves. Second, platforms shroud their own fees less if they earn more revenue from sellers; so when sellers on the platform compete more fiercely, platforms—somewhat perversely—shroud more. We connect these results to many applications and the current debate on regulating online platforms.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"23 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140156071","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Hashibul Hassan, Asad Islam, Abu Siddique, Liang Choon Wang
Using a randomized experiment in 200 Bangladeshi villages, we evaluate the impact of an over-the-phone learning support intervention (telementoring) among primary school children and their mothers during Covid-19 school closures. Post-intervention, treated children scored 35% higher on a standardized test, and the homeschooling involvement of treated mothers increased by 22 minutes per day (26%). We also found that the intervention forestalled treated children's learning losses. When we returned to the participants one year later, after schools briefly reopened, we found that the treatment effects had persisted. Academically weaker children benefited the most from the intervention that only cost USD 20 per child.
{"title":"Telementoring and Homeschooling During School Closures: A Randomized Experiment in Rural Bangladesh","authors":"Hashibul Hassan, Asad Islam, Abu Siddique, Liang Choon Wang","doi":"10.1093/ej/ueae014","DOIUrl":"https://doi.org/10.1093/ej/ueae014","url":null,"abstract":"Using a randomized experiment in 200 Bangladeshi villages, we evaluate the impact of an over-the-phone learning support intervention (telementoring) among primary school children and their mothers during Covid-19 school closures. Post-intervention, treated children scored 35% higher on a standardized test, and the homeschooling involvement of treated mothers increased by 22 minutes per day (26%). We also found that the intervention forestalled treated children's learning losses. When we returned to the participants one year later, after schools briefly reopened, we found that the treatment effects had persisted. Academically weaker children benefited the most from the intervention that only cost USD 20 per child.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"10 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140116110","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Large-scale student assessments are a cornerstone of proposed educational reforms to improve student achievement from very low levels in low and middle-income countries. Yet, this promise relies on their presumed reliability. I use direct audit evidence from a large Indian state (Andhra Pradesh) to show that, as currently administered, official learning assessments substantially overstate proficiency and understate the ‘learning crisis’ of low student achievement. In an experiment covering over 2400 schools, I evaluate whether digital tablet-based testing could reduce distortion. Although paper-based assessments proctored by teachers severely exaggerate achievement, tablet-based assessments closely match independent test data and are much less likely to be flagged for cheating. Further, I use the direct audit-based retest to directly validate of existing (indirect) statistical procedures for detecting cheating at scale and establish that it would be feasible to monitor data integrity cheaply and at scale with such methods. Overall, these results suggest that well-designed technology-aided interventions may improve data integrity at scale, without which these learning assessments are unlikely to serve as a catalyst for policy action.
{"title":"Improving administrative data at scale: Experimental evidence on digital testing in Indian schools","authors":"Abhijeet Singh","doi":"10.1093/ej/ueae017","DOIUrl":"https://doi.org/10.1093/ej/ueae017","url":null,"abstract":"\u0000 Large-scale student assessments are a cornerstone of proposed educational reforms to improve student achievement from very low levels in low and middle-income countries. Yet, this promise relies on their presumed reliability. I use direct audit evidence from a large Indian state (Andhra Pradesh) to show that, as currently administered, official learning assessments substantially overstate proficiency and understate the ‘learning crisis’ of low student achievement. In an experiment covering over 2400 schools, I evaluate whether digital tablet-based testing could reduce distortion. Although paper-based assessments proctored by teachers severely exaggerate achievement, tablet-based assessments closely match independent test data and are much less likely to be flagged for cheating. Further, I use the direct audit-based retest to directly validate of existing (indirect) statistical procedures for detecting cheating at scale and establish that it would be feasible to monitor data integrity cheaply and at scale with such methods. Overall, these results suggest that well-designed technology-aided interventions may improve data integrity at scale, without which these learning assessments are unlikely to serve as a catalyst for policy action.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"180 5","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140256221","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Why are high monetary payments prohibited for certain goods, thereby causing shortages in their supply? I conduct (i) a framed field experiment with a general population sample, and (ii) a survey experiment with this sample and with ethics committees. In the experiment, participants can prohibit others from being offered money to register as stem-cell donors. I document that, whereas the majority of participants do not respond to changes in the incentives (63%) or become more in favour of the offer with higher incentives (20%), a minority of 17% prohibit high incentives. I show that this minority wants to protect individuals who are persuaded by high incentives. I also show that a lottery scheme reduces their objections to high incentives. Finally, I document that the public is much more supportive of high incentives than are ethics committees.
{"title":"Why High Incentives Cause Repugnance: A Framed Field Experiment","authors":"Robert Stüber","doi":"10.1093/ej/ueae018","DOIUrl":"https://doi.org/10.1093/ej/ueae018","url":null,"abstract":"Why are high monetary payments prohibited for certain goods, thereby causing shortages in their supply? I conduct (i) a framed field experiment with a general population sample, and (ii) a survey experiment with this sample and with ethics committees. In the experiment, participants can prohibit others from being offered money to register as stem-cell donors. I document that, whereas the majority of participants do not respond to changes in the incentives (63%) or become more in favour of the offer with higher incentives (20%), a minority of 17% prohibit high incentives. I show that this minority wants to protect individuals who are persuaded by high incentives. I also show that a lottery scheme reduces their objections to high incentives. Finally, I document that the public is much more supportive of high incentives than are ethics committees.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"48 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140100237","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We build and estimate a dynamic, structural model of the world oil market to quantify the impact of the shale revolution. We model the shale revolution as a decrease in shale production costs and find that the resultant increase in shale production lowers oil prices by 24% in the short run and 48% once the shale oil transition is complete. Current oil price volatility is lowered by 8 to 23% depending on the horizon. We also find OPEC Core acts to keep its market share constant in the face of the dramatic increase in shale production.
{"title":"The Shale Revolution and the Dynamics of the Oil Market","authors":"Nathan S Balke, Xin Jin, Mine Yücel","doi":"10.1093/ej/ueae013","DOIUrl":"https://doi.org/10.1093/ej/ueae013","url":null,"abstract":"We build and estimate a dynamic, structural model of the world oil market to quantify the impact of the shale revolution. We model the shale revolution as a decrease in shale production costs and find that the resultant increase in shale production lowers oil prices by 24% in the short run and 48% once the shale oil transition is complete. Current oil price volatility is lowered by 8 to 23% depending on the horizon. We also find OPEC Core acts to keep its market share constant in the face of the dramatic increase in shale production.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"28 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140072292","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
People often receive feedback influenced by external factors, yet little is known about how this affects self-serving biases. Our theoretical model explores how multi-dimensional uncertainty allows additional degrees of freedom for self-serving bias. In our Primary experiment, feedback combining an individual’s ability and a teammate’s ability leads to biased belief updating. However, in a Follow-up with a random fundamental replacing the teammate, unbiased updating occurs. A Validation experiment shows belief distortion is greater when outcomes originate from human actions. Overall, our experiments highlight how multi-dimensional environments can enable self-serving biases.
{"title":"What to Blame? Self-Serving Attribution Bias with Multi-Dimensional Uncertainty","authors":"Alexander Coutts, Leonie Gerhards, Zahra Murad","doi":"10.1093/ej/ueae005","DOIUrl":"https://doi.org/10.1093/ej/ueae005","url":null,"abstract":"People often receive feedback influenced by external factors, yet little is known about how this affects self-serving biases. Our theoretical model explores how multi-dimensional uncertainty allows additional degrees of freedom for self-serving bias. In our Primary experiment, feedback combining an individual’s ability and a teammate’s ability leads to biased belief updating. However, in a Follow-up with a random fundamental replacing the teammate, unbiased updating occurs. A Validation experiment shows belief distortion is greater when outcomes originate from human actions. Overall, our experiments highlight how multi-dimensional environments can enable self-serving biases.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"23 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140054628","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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