Publications
The Psychology of Poverty: Where do we stand?
Social Philosophy and Policy (in press)
(with Johannes Haushofer)
Media coverage in VoxDevTalks
Short summary: In recent years, the psychological causes and consequences of poverty have received renewed attention from scientists and policymakers. In this review, we summarize new developments in this literature. First, we discuss advances in our understanding of the relationship between income and psychological well-being. There is a robust positive relationship between the two, both within and across countries, and in correlational and causal analyses. Second, we summarize recent work on the impact of “scarcity” and stress on economic preferences and decision-making. Our view of this literature is that the evidence is relatively weak. Third, we summarize evidence on the impact of psychological interventions on economic outcomes. Light-touch psychological interventions, such as videos that aim to raise aspirations, have shown some promise in encouraging investment and improving economic well-being. Similarly, psychotherapy and pharmacological mental health treatments have positive effects on economic outcomes. Relative to the effects of cash transfers, these impacts are small in absolute terms and large in per-dollar terms. We conclude by discussing whether a psychological poverty trap is plausible.
Work in Progress
Information Intervention to Promote Safe Water Consumption: Evidence from an RCT in arsenic affected areas in India
(with Shambhavi Priyam and Matthias Sutter)
Short summary: We study the consequences of a light-touch information intervention on changes in water quality, safe water practices, and health outcomes. In the rural areas of the state of Bihar in India, we work in a region naturally affected by toxic arsenic in the groundwater. As arsenic in the groundwater is tasteless, colorless, and odorless, villagers consuming it are mainly unaware of the health issue. We use a randomized controlled trial with more than 2,300 households, where we wanted to understand if information about low-cost/low-effort techniques of arsenic mitigation would change the arsenic quantity of the households’ water source. We implement two treatments to study which type of delivery format is most effective for information dissemination and for affecting behavior. The intervention was successful in spreading knowledge, and persuading respondents to adopt healthy water treatment practices even one year afterwards. The overall effects of spreading information individually are stronger than in small groups. In addition to larger gains in knowledge, we also find a sizable reduction in the consumption of unsafe water, and reductions for severe health issues. With our findings, we provide evidence for respondents being more willing to act on information when it is conveyed individually.
Impact of Financial Shocks on Decision Making: Experimental evidence from Kenya
[Pre-registration can be requested]
(with Carsten de Dreu, Angelo Romano and Matthias Sutter)
Short summary: We investigate the impact of financial shocks on economic decision-making among low-income individuals. Using a lab-in-the-field experiment with 1,917 factory workers in Nairobi, we manipulated poverty levels and financial shocks by varying monthly paydays and credit exposures. Our results reveal significant impacts on several dimensions of economic decision-making, including time preferences, higher order risk preferences, and competitiveness. These findings are further supported by a cluster analysis revealing distinct clusters of economic preferences among participants. Overall, this study highlights the importance of considering the impact of financial shocks in understanding economic decision-making in low-income populations facing persistent poverty.
Heterogeneity in Effort Provision: Evidence from a lab-in-the-field experiment
(with Zvonimir Bašić, Stefania Bortolotti, Stefan Schmidt, Sebastian O. Schneider and Matthias Sutter)
Short summary: Understanding how to motivate people to provide effort is of key importance for the success of firms and the economy at large. In this study, we test if there is an interaction between incentives and traits/personal characteristics. We run a lab-in-the-filed experiment with high school students in Germany to gain a better understanding of how pupils with given traits respond to different compensation contracts.
How to Contain Arsenic-Contaminated Groundwater: An RCT in India and its effects on health
(with Shambhavi Priyam and Matthias Sutter)
Short summary: We recruit a set of 3,700 households to identify effective interventions to contain arsenic-contaminated groundwater. We address hurdles such as lack of knowledge and limited resources in a 2x2 design. The first factor addresses information provision, by sending audio push-calls with information on arsenic contamination. The second factor address the questions of sufficient resources for taking action to avoid arsenic contamination. Here we distribute water filters with which arsenic contamination can be avoided altogether. Households are revisited eight weeks after the intervention to study effects on arsenic levels in the water. We measure take-up rates as well as health and productivity effects of this intervention.