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Working Papers

Do No Harm? -- The Welfare Consequences of Behavioural Interventions - Submitted

with Harrison, G.W., Schneider, M.

Abstract: The stated premises of many behavioural policy interventions suggest they are built on a solid welfare foundation, where they are typically presumed to direct individuals towards a decision that is welfare-improving for the individual. This presumption should be questioned if individuals poorly understand the decision context and implies that welfare effects should be measured in a way that does not assume that agents necessarily understand how financial choices and interventions that are evaluated affect their welfare. Welfare measurement then needs to allow for mistakes, and for welfare losses. We design a range of informational and nudging interventions that are typically used to promote financial products, usually with a view to enhance the welfare of consumers. We then test the effect of these interventions on take-up of products with varying quality, understanding of the product, and structural estimates of expected welfare gains and losses in terms of individual preferences, allowing for any decision to purchase or not purchase the product to be a mistake. We demonstrate that our informational interventions increase understanding, and almost all of our interventions increase take-up on average. The increased take-up, however, also occurs when product quality is low. Our structural welfare estimates suggest that our behavioural interventions do not significantly increase expected consumer welfare for all interventions.

The Welfare Consequences of Processing Compound Risk -- Submitted

with Harrison, G.W., Martínez-Correa, J., Ng, J.M., Swarthout, J.T.

Abstract: For consumers to make efficient financial decisions, the mapping of beliefs about probabilities of states of the world with potential outcomes is an important cognitive process. Many financial decisions, as a part of this mapping, require consumers to be able to process compound risk. This ability, and an individual’s potential violations of the Reduction of Compound Lotteries (ROCL) axiom could play an important role in explaining demand and welfare for these financial products. We investigate this link in the context of insurance with compound risk, and show that individuals who violate ROCL excessively purchase insurance, leading to welfare losses. However, when these ROCL violators are given a decision aid that helps them process compound risk, they purchase less insurance and do no worse in terms of welfare than individuals who do not violate ROCL. An important policy implication of our findings is that average consumer welfare should increase if providers of financial products such as insurance, pensions and warranties, are required to inform consumers, transparently, and in a balanced manner, about the compounded probabilities of all potential states that the product does and does not cover.

Targeting Men, Women or Both to Reduce Child Marriage

with Cassidy, R., Dam, A., Janssens, W., Kiani, U.


Abstract: Interventions that aim to change outcomes for women and children typically target women. Yet in contexts where men are dominant decision-makers, male preferences and beliefs may remain the binding constraint. We ask -- when we target men, women, or both, with the same intervention in the same context -- how their updating of beliefs trade off to change household outcomes. We conduct a cluster-randomized control trial of an edutainment intervention aimed at delaying marriage of adolescent children in rural Pakistan. We find that targeting men only reduces child marriages in the short- and long-run, but only in target households. Targeting women only has limited impacts in the long-run in target households, but does reduce child marriages at village-level. Only when men and women are jointly targeted do reductions in child marriages occur both in target households in the long-run, and at village-level. Underlying this, we show that whenever men or women are treated, they both update on the spousal quality returns to delaying marriage. When women are treated, either alone or jointly, prevailing age-of-marriage norms become salient to them. Changes in child marriage outcomes in target households then only occur when beliefs about these norms are updated, consistent with village-level reductions in child marriages.

Interventions that disrupt the peace: Intimate partner violence when edutainment is targeted at men, women or both

with Cassidy, R., Dam, A., Janssens, W., Kiani, U., Veldhoven, A.

Abstract: With almost one-third of women globally reporting that they have experienced intimate partner violence (IPV), we should be concerned about IPV impacts when targeting interventions to change outcomes for women to different household members. Using exogenous variation from a cluster-randomised controlled trial of an edutainment intervention addressing child marriage in rural Pakistan, we study the effects on IPV from targeting females only, males only, or both jointly with the same information about the decision to delay marriage for girls. We find an increase in IPV in the short term when targeting women, either alone or jointly with men. In the long run there are no average effects of the intervention on emotional and physical IPV, but this masks strong heterogeneity, where women with high baseline bargaining power experience an increase in physical IPV when they are targeted jointly with men.

Work in Progress

Intimate Partner Violence, Preferences, and Economic Decision-making.

with Anderberg, D., Cassidy, R., Dam, A.

Summary: This project puts forward and tests the hypothesis that domestic violence (DV) negatively impacts women’s economic decision-making. We investigate this using a “lab-in-the-field" experiment with a sample of women across urban and semi-urban settings in Ethiopia, where reported DV prevalence is high. Respondents in the treatment group are primed to think about episodes of DV they may have experienced, using a well-established survey instrument. In the control arms, respondents are primed to think about poverty, or about positive experiences. The participants then perform incentivized computer-based tasks to elicit cognitive function, risk and time preferences; as well as unincentivized altruism, self-efficacy, and beliefs about employment-related outcomes.

Tailoring Advice and Incentives to Enhance Consumer Welfare from Livestock Insurance

with Barrett, C.B., Gidey, T.G., Harrison, G.W, Jensen, N.D., Schneider, M., Swarthout, J.T.

Summary: We aim to investigate how individual-specific tailored advice about expected consumer surplus from index-based livestock insurance (IBLI), combined with incentives for insurance agents aligned with the tailored advice, impact take-up and consumer welfare from IBLI. To do so, we conduct a cluster-randomized controlled trial with 2400 pastoralists in 240 zones in Borena, Ethiopia. Zones were randomly assigned to three treatment arms. In the first arm pastoralists received status quo insurance promotion activities from the insurance company via insurance agents and insurance agents received a status quo sales incentive for their activities. In the second arm pastoralists received tailored financial advice based on elicited risk preferences, actual herd size, and subjective beliefs about herd losses and weather conditions and insurance agents received status quo sales incentives. In the third arm pastoralists received tailored financial advice, and insurance agents received incentives linked to the expected welfare generated by pastoralist's decisions.

Learning to work towards goals: The impact of a goal setting intervention on improving learning outcomes.

with Dam, A, Gray-Lobe, G. Kremer, M, de Laat, J.

Summary: We use a randomized control trial with around 2000 students in 110 schools in Kenya.We study whether a soft skill intervention of “goal setting," that teaches students in their penultimate year of primary school how to set academic goals, improves learning outcomes on year-end exams. Students in treatment schools receive the goal setting intervention, which consists of of 25 lesson of 35 minutes each. We aim to answer the following questions: 1) To what extent does a goal setting intervention have an impact on improving learning outcomes (i.e., test scores on year-end exams)?; 2) To what extent are there gender differences in the impacts of a goal setting intervention on learning outcomes?; and 3) Are there any adverse impacts of the intervention on subpopulations (e.g. gender, low/high-performance) of students?

Long-term Effects of Index-Based Livestock Insurance

with Barrett, C.B., Jensen, N., Son, H.H.

Summary: The original research designs to evaluate the impact of Index-Based Livestock Insurance offered discount coupons after randomly selecting the recipients and the discount rates that they will receive. We instrument the cumulative IBLI purchase experiences with these past coupon receipt experiences to estimate the long-term effects of IBLI.

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