Working Papers

Do No Harm -- The Welfare Consequences of Behavioural Interventions

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

 Abstract: The rapid expansion of access to finance, low levels of financial literacy, and increasing complexity of financial products, raises serious concerns about the extent to which consumers are able to make financial decisions that increase consumer welfare. We evaluate the consumer welfare implications of a wide range of behavioural interventions that are typically used in the promotion of financial products. Based on laboratory experiments where subjects make risky choices, we estimate subject's individual risk preferences, and then randomly assign subjects to behavioural interventions before they make insurance purchase decisions. We estimate the expected consumer surplus gained or foregone from observed take-up decisions and compare these across the intervention arms. We show that while our treatments typically increase take-up on average, they reduce consumer welfare. Allowing individuals to self-select interventions, or targeting specific interventions to specific sub-groups, shows potential for welfare improvements. 

Compound Risk and the Welfare Consequences of Insurance -- Submitted

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

Abstract: A focus on consumer welfare of financial decisions implies that we cannot rely on direct revealed preference, or purchase of financial products as a metric. It also implies that we need to evaluate financial decisions in terms of the heterogenous preferences and beliefs of consumers. We assess the welfare implications of decisions of individuals to purchase or not purchase index insurance by eliciting individual preferences that are relevant to financial decisions with compound risk: risk preferences over simple and compound risk, probability weighting, and violation of the Reduction of Compound Lotteries (ROCL) axiom. We find that individuals realize, on average, only 48% of the potential welfare improvements that they could have achieved by making decisions more in line with their preferences, and we show that this is strongly driven by excess purchase. A decomposition of the sources of welfare gains and losses shows that subjects who consistently violate ROCL experience larger welfare losses. A between-subject treatment where we vary the choice architecture by presenting the compound risk in a simple and reduced form, suggests that this negative effect of ROCL violations on the welfare of financial decisions can be mitigated.

Work in Progress


Father of the Bride, or Steel Magnolias? Targeting Men, Women or Both to reduce Child Marriage

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

Interventions that aim to change outcomes for women and girls typically target women and girls directly. However, in contexts where men are still the dominant decision-makers in households and communities, the preferences and beliefs of men and boys may remain the binding constraint to changing outcomes for women and girls, and development outcomes more broadly. We conduct a cluster-randomized control trial of an edutainment intervention in rural Pakistan, to test whether targeting women and girls, men and boys, or all jointly is most effective in reducing child marriage. We collect panel survey data from 5100 individuals – fathers, mothers, and adolescent boys and girls – in 1700 households, as well as monthly village-level observational data on marriages. We find that targeting the intervention at males significantly reduces child marriage for girls in participating households, but not at the village level. In contrast, targeting females or males and females jointly leads to significant reductions in child marriage for girls at the village level, but not in participating households directly.


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

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

We ask to what extent violence in the household affects preferences of the spouses, and thereby their cooperation and economic decision making. We conduct an artefactual field experiment with spouses in urban slums of Addis Ababa, Ethiopia to examine the effects of priming women’s experiences of intimate partner violence on their cooperation and economic decision-making.

Incentivising Insurance Promotors to Provide Tailored Consumer Welfare Advise to Pastoralists in Ethiopia

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

The rapid expansion of financial products such as insurance, along with low levels of financial literacy, and the increasing complexity of products, raises serious concerns about the extent to which the demand for these products increases welfare for consumers. We apply two insights from behavioural welfare economics in a cluster-randomized control trial with 2000 Ethiopian pastoralists in 240 communities in which we try to improve and evaluate Index-Based Livestock Insurance. The first insight is a recognition that many widely used observable measures, such as product take-up, are not in fact measuring welfare when we allow for the preferences and beliefs that are actually driving choices to purchase or not. The second insight is that heterogeneity of welfare impact might provide an under-utilised and general basis for normatively designing better, conditional interventions. Rather than just providing one-size-fits-all interventions, our behavioural interventions will be tailored to provide specific interventions designed for the behavioural characteristics of those making insurance decisions. These are ``behaviourally smart'' conditional interventions, not unconditional ``nudges.''

Addressing Intimate Partner Violence: Evaluating Interventions with Male Perpetrators vs Female Victims

with Bhalotra, S., Carvalho, J.R., Biroli, P., Vecci, J.

Intimate Partner Violence (IPV) is a marker of conflict, a breakdown of cooperation between partners. Often both perpetrator and victim experienced IPV in childhood and repeatedly selected into violent relationships, and both sides are caught in patterns of behaviours that perpetuate cycles of violence. Therefore, interventions targeting both partners have more potential for success, but engaging perpetrators has proven challenging. We collaborate with the Brazilian judiciary to conduct a randomised control trial which introduces interventions with both partners in parallel.  The male intervention targets men’s violent attitudes and behaviours. The female intervention focuses on empowering women. We investigate their independent and joint impact on relationship status, cooperation, and IPV.

Can teaching adolescents how to set, pursue and evaluate academic goals help improve learning outcomes? Experimental Evidence from Uganda

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

A Behavioral Approach to Promote Gender Equality and Learning Outcomes for Boys and Girls.

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