Identifiable life
Rokia experiment
- Donations increased with an observable life/matter ofr framing: Rokia from Malawi vs global statistics
- 2.5x higher
- We believe our contribution is minimal when fighting a huge problem
Different approach to utility
Sen’s approach
- Traditional economics often measures well-being through income, wealth, or utility (happiness/satisfaction).
- Sen argued this is too narrow.
- Instead, what matters is:
o What people are actually able to be and do
o He calls these capabilities.
- Functionings
o These are the things people actually manage to do or be.
- Capabilities
o The genuine opportunities a person has to achieve those functionings.
- Having the freedom to use these capabilities is important
Poverty and cognitive function
Mani et. al
- Poverty reduces cognitive capacity
- India sugar cane farmers were tested before and after harvest
o Via standard tests such as ravens test
- Cognitive performance lower before harvest than after
Asset trap
Balboni et. Al (2022)
- Rural Bangaldesh, people give a one time transfer or a cow
- Showed people below a certain threshold still in poverty over time, value of assets decreased, but people above certain level escaped poverty and value of assets increased
o Fits with s shaped model
- Can be shown as capital today vs capital tomorrow
o Line however would be capital depreacition
- Productivity of cow depends on complimentary assets, so those with more were at an advantage
Households at the centre
Boltz et al
- Case study on Kin Tax
o Refers to informal social obligations that force individuals to share income with family and close kin outside their household.
o Boltz et al. (2019) find that informal family sharing norms act like a kin tax on income: people are expected to redistribute part of their earnings to kin, they incur a real cost from those obligations, and this affects how they allocate and use their resources.
o Case study in Senegal on hiding and sharing option, as well as whether they should share money or keep to oneself
o Participants were willing to forgo ~9–14% of their earnings just to hide income from relatives.
o When people could hide earnings, they spent more on personal needs and investments, and less on transfers to relatives.
Reference points
Mo
- Experiment in Nepal where he shifted peoples reference points and showed their attitude changed even their economic condition remained the same
- People who were primed to feel relatively deprived were more likely to chose the risky option
o Increases risk taking, as shifts peoples reference points up, they perceive themselves to be in loss domain
Preventative Healthcare - bednets
- People value present more than future
o More spent on curative care than preventative care - Findings of free provison:
o More likely to buy it a second time
o PED of demand very elastic, so free provisions could be good
o Usage, conditional on getting a net, does not fall - Role of learning is key to narrow information gap
Mental accounting
Dupas and Robinson
- Nudge theory
- Health is a major expenditure causing people to get trapped in poverty (preventative low vs emergency spending)
- When poor households in Kenya were given simple commitment devices (like labeled savings accounts earmarked for health), they saved more and invested more in preventive health products
o Safe box increased investments by about 70%
Nurture argument - societies
Gneezy et al. (2009)
- Massai society (Tanzania) vs Khasi society, (matrilineal, India) in a ball toss game
o Payment of toss depends on whether you choose the non-competitive or competitive scheme at the start
- Findings:
o Men and women perform equally well in Khasi group, men perfoem better under pressure in Massai group
o More females chose competitive option than men in Khasi group, this is flipped for Massai group
Nurture argument - agriculture
Alesina et al.
- Early agricultural practices gender outcomes today
- Ploughs require a lot of upper body strength, lead to men more likely to do this
o Led to sexual division of labour that adopted plough agriculture
- Decedents of traditional plough use are more likely to hold attitudes favouring gender inequality
o Lower female participation shows in these areas, driven by culutural norms
Land rights
Goldstein & Udry
- Tested output of levels agricultural land in Southern Ghana, showing fallowing increases output, but in order to fallow, you must have stronger land rights due to political power
- Led to mens plots yielding greater outcome than womens
Education
Dizon-Ross (2019) – Information gap causing under investment in education
- Case study in Malawi that showed once parents understood their child’s report card, thus had better understanding of what their child would vs what they did achieve, parents make better investment decions.
- Children with this higher-level education score now tend to stay enrolled in school for longer
Conditional cash transfers
PROGRESA
- Biggest CCT program
- Two aspects
o Education
Provides monthly educational grants increasing by grade conditional on school attendance
o Nutrition
Monthly transfer and nutritional supplements conditional on family members attending monthly health clinics
- Two stage targeting, choose a geographic area and then conduct a detailed household survey
o Could be costly
- Impact
o Evidence on better retention at school
o Transition from primary to secondary school increased by 5pp
o Lower child labour supply
o More preventative healthcare
