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Essays in Behavioral and Development Economics

  • Author(s): Rao, Gautam
  • Advisor(s): DellaVigna, Stefano
  • et al.
Abstract

This dissertation is comprised of three essays in empirical economics. These essays are united by three clear intellectual and methodological themes. First, each essay attempts to bring theories and insights from psychology to bear on open questions in economics, with a focus on topics of importance to developing countries. Second, they use experiments - both randomized field experiments and natural experiments - to test economic theory. Finally, each paper attempts to measure economically important but difficult-to-observe behaviors and preferences - self-control problems in Chapter 1, social norms in Chapter 2, and discrimination and fairness preferences in Chapter 3.

In chapter one, coauthors Liang Bai, Edward Miguel, Ben Handel and I construct a simple model of preventive health behavior under present biased time preferences, and show how beliefs about future time preferences (sophistication, partial naivete, and perfect naivete) affect how agents are predicted to use, under-use or misuse different types of commitment contracts. We propose a type of commitment contract that has the potential to benefit not just sophisticated present biased agents, but also naifs. We conduct a field experiment focused on increasing the share of patients who actively manage their hypertension by visiting a doctor periodically. The experiment is closely tied to the theory, allowing us to estimate the key parameters of the model.

In chapter two, coauthors Stefano DellaVigna, John List, Ulrike Malmendier and I ask the question: Why do people vote? We argue that social image plays a significant role in explaining turnout. People vote because others will ask. The expectation of being asked motivates turnout if individuals derive pride from telling others that they voted, or feel shame from admitting that they did not vote, provided that lying is costly. We design a field experiment to estimate the effect of social image concerns on voting. In a door-to-door survey about election turnout, we experimentally vary (i) the informational content and use of a flyer pre-announcing the survey, (ii) the duration and payment for the survey, and (iii) the incentives to lie about past voting. Our estimates suggest significant social image concerns. For a plausible range of lying costs, we estimate the monetary value of voting because others will ask to be in the range of $5-$15 for the 2010 Congressional election. In a complementary get-out-the-vote experiment, we inform potential voters before the election that we will ask them later whether they voted. We find suggestive evidence that the treatment increases turnout.

In chapter three, I exploit a natural experiment in India to identify how mixing rich and poor students in schools affects social preferences and behaviors. A policy change in 2007 forced many private schools in Delhi to meet a quota of poor children in admissions. This led to a sharp increase in the presence of poor children in new cohorts in those schools, but not in older cohorts or in other schools. Exploiting this variation, I study impacts on three classes of outcomes: (i) prosocial behavior, (ii) discrimination, and (iii) academic outcomes. First, I find that having poor classmates makes wealthy students more prosocial. In particular, they become more likely to volunteer for a charity at school. Second, having poor classmates makes wealthy students discriminate less against poor children, measured by their teammate choice in an sports contest. Third, I find marginally significant negative effects on test scores in English, but no effect on Hindi or Math. Overall, I conclude that mixing in schools had substantial positive effects on the social behaviors of wealthy students, at the cost of negative but arguably modest impacts on academic achievement. To shed light on mechanisms, I exploit administrative records on the idiosyncratic assignment of students to study groups and find that the effects on social behaviors are largely driven by personal interactions between wealthy and poor students, rather than by changes in teacher behavior or curriculum.

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