- Microeconomic Development Economics
- Experimental Economics
- Behavioral Economics
- Environmental Economics
- Labor Economics
Job Market Paper
Creating markets for formal insurance is a popular proposal to improve welfare among subsistence level farmers in the developing world. Both theory and empirical evidence support this conjecture, but farmers have had low rates of adoption when markets are created. I hypothesized that this empirical puzzle may be caused by a tradition of informal sharing within these communities that could crowd out the adoption of formal insurance. To test this hypothesis, I designed a laboratory experiment in which a market for formal insurance was introduced to groups of individuals who made risky investments and could share yields with each other. I also examined group design, comparing random assignment to an alternate assignment, in which individuals were grouped based on their preferences over pairs of paintings. I ran this experiment on two populations: American undergraduates and Kenyan adults. The main result is that participants treated formal and informal insurance as substitutes. I also found that Kenyan groups tended to informally share less than US groups and that painting-matched groups shared more than randomly assigned groups.
Title: Experimental Techniques Applied to Development Economics
- Committee: Robert Hammond (chair), Mitch Renkow, Zachary Brown, Erin O. Sills
I use experimental methods to evaluate economic development policies. Experimental techniques allow for a clearer understanding of causality and provide reliable evidence of the treatment effect of a policy change. Field experiments have been a mainstay of development economics. More recently, laboratory experiments have been used to understand individual behavior and, to a lesser extent, been applied to questions of development. I take advantage of both of these techniques to analyze two policies: making formal insurance available in developing countries and encouraging households to adopt improved cookstoves. I use a laboratory experiment to analyze the investment effect formal insurance has on individuals operating in small groups. While individuals make independent investment and insurance decisions, they are able to informally share income with each other. Using a laboratory experiment allows me to disentangle the effects of formal and informal insurance on investment decisions. In my third chapter, I take advantage of field experiment data to analyze the effect cookstove adoption has on demand for firewood as fuel. The common theme of these two projects is my use of experimental techniques to offer insight into policies for the developing world.
In my first essay, I create an experiment in which individuals make private decisions but may also interact within a small group. To simulate real world social networks, I also manipulate the designation of groups. Random assignment of individuals into groups is the discipline’s standard, but I test this against two other assignments. The first alternate assignment, called Quasi-Endogenous and following previous literature, is to group individuals based on their preferences over pairs of paintings. The second alternate assignment, called Endogenous, is to group individuals based on their membership in a campus group or class, while retaining anonymity. I test these groups in an experiment of risky investment decisions made in conjunction with decisions to freely share with fellow group members and to buy formal insurance. I find that group type does have significant effects. Specifically, my results indicate that randomly matched groups tend to invest and risk smooth the least, Quasi-Endogenous groups informally share more, and Endogenous groups formally insure more. Though the underlying reason for these effects is not clear, these findings suggest that how groups are modeled in the lab should be an important component of future research in this area.
In my second essay, I extend my insurance experiment to a new population in Kenya. Running the experiment with adults who live in an informal settlement outside of Nairobi, I add to the development and experimental literatures by providing a cross-cultural analysis of offering formal insurance to groups that may informally insure themselves. I hypothesize that results will differ significantly across cultures and hope to better account for cultural effects in the decision to risk smooth. I find that Kenyans tend to invest less and adopt more formal insurance. I also find that within the Kenyan population, formal insurance is a substitute to informal insurance. Finally, I find that group assignment mechanisms have different effects cross-culturally, which reinforces the need for future research and experimental consideration of grouping mechanisms in the lab.
Works in Progress
- Effects of improved Cookstove Use on Fuelwood Demand
The third chapter of my dissertation utilizes a field experiment wherein households are randomly assigned to receive a certain type of improved cookstove. My contribution to this experiment is to analyze the effect improved cookstove endowment has on household demand for firewood as fuel. Improved cookstoves are those that emit less pollution in comparison to traditional ones, though cooking time and fuel inputs may also differ. Households can collect firewood as fuel, which puts pressure on local forests, or they can buy firewood or charcoal. The introduction of new stoves may result in a substitution effect toward or away from firewood collection and it may also result in a positive or negative income effect. The effect improved cookstoves may have on the local environment is often cited as a motivation for encouraging the use of improved cookstoves but the effect on forests receives less analysis in the literature.
The Impact of Human Capital, Family Characteristics and Country of Origin on the Poverty Status of Immigrant Women (with Michael Seeborg)
We use panel data from the Current Population Survey (CPS) to estimate the determinants of poverty, with a focus on marital status, for immigrant women relative to both native-born women and immigrant men. Preliminary results suggest that immigrant women are more likely to be in poverty than native-born women and immigrant men. We also find that unmarried immigrant women are no more likely to be in poverty than unmarried native-born women.
- Intergenerational Transfer of Human Capital among Immigrant Families
While immigrants in the United States tend to earn less than comparable natives, their children close the earnings gap. The purpose of this study is to determine how differences in intergenerational transfer of human capital between immigrant families and native families affect different earning outcomes for respondents of each group. Specifically, this study uses a human capital framework to analyze both the direct effect of parental education on respondent earnings and the indirect effect on earnings by first affecting respondent education, which in turn affects respondent earnings. Data from the 1979 National Longitudinal Survey of Youth allows background variables within a family from 1979 to be related to respondent earnings in 2006. Thus, human capital investments made by parents can be linked to respondent outcomes several years later. The analysis shows that while parental education is a strong predictor of respondent education and earnings in the native population, it is weaker for second generation immigrants. Perhaps second generation immigrants overcome deficiencies in their parents’ human capital through higher levels of motivation.