Spring 2025

Details: Do personal values always drive individual behavior, or are there situations where social norms are more influential? I argue that the tighter individuals adhere to the social norm of their reference group, the weaker the effect of personal values on behavior. Unlike prior research, which mainly focuses on the mean or mode of the distribution of normative beliefs within a group, I examine how individual-level variation in adherence to social norms affects individual behavior. Using data from the World Values Survey across 59 countries and three behavioral domains, I find that stronger adherence to social norms weakens the effect of personal values on behavior. This finding emphasizes the importance of considering the tightness of social norms when designing more effective behavioral interventions. 

Details: The purpose of this paper is to study how the joint distribution of labour income affects household consumption decisions. Using panel survey data on income and consumption from British households between 2001 and 2008, I first show that there is no substantial variation in eleven types of household expenditure across different degrees of income correlation. Second, by comparing consumption changes following a large-scale adverse shock, I find evidence of differential consumption responses across three levels of intra-household income correlation. Finally, I show that households experiencing job loss during the shock are more likely to engage in precautionary consumption adjustments. Overall, consumption changes vary depending on the degree of labour income correlation within the household, providing evidence of the role of informal insurance in consumption smoothing. 

Details: Special Economic Zones (SEZs) have increasingly become a popular policy for promoting economic development in developing countries. However, there remains a significant gap in the literature regarding the impact of SEZs on individual firm behavior and the broader effects of SEZ firms on local economic development outside these zones. Using unique Customs and Employee data from South Africa, we provide a comprehensive analysis of how the establishment of SEZs shapes the behavior of firms operating within them and how SEZ firms influence non-SEZ firms in surrounding areas. 

Details: This paper examines how political affiliations and media exposure shape consumer inflation expectations, using high-frequency data from the Federal Reserve Bank of Cleveland’s Daily Survey of Consumer Expectations. Specifically, we investigate how news coverage across television channels and newspapers influences inflation expectations and decision-making. Our findings reveal two key insights. First, consumers react more strongly to inflation-related beliefs when exposed to TV news rather than newspaper coverage. Second, individuals who primarily report watching TV news from certain networks tend to have systematically higher inflation expectations compared to others. These results raise an important question: To what extent do media narratives influence inflation expectations, and through what mechanisms does different news consumption shape economic perceptions? 

Details: India’s Minimum Support Price (MSP) system has long influenced cropping decisions by providing a financial safety net for farmers. However, its focus on staple crops like wheat and rice has contributed to environmental challenges, including groundwater depletion and soil degradation. This study examines whether MSP reforms can incentivize farmers to adopt more climate-resilient cropping patterns. Using a theoretical model of farmer decision-making, we explore how expected revenues, costs, and risk preferences shape crop choices. Empirical analysis focuses on Haryana, where a well-established procurement system ensures MSP accessibility. By leveraging district-level data on crop yields, input costs, procurement trends, and groundwater levels, we assess whether recent MSP increases for sustainable crops have led to shifts in cultivation patterns and improvements in water conservation. Our findings will inform policy discussions on designing MSP frameworks that align economic incentives with environmental sustainability. 

Details: This study examines the relationship between the release of major U.S. economic indicators since 2004 and subsequent public attention. We focus on three key dimensions: the release date of the economic indicator, the magnitude of the data itself, and the surprising value. Our analysis incorporates both national and regional level, allowing us to compare public attention and assess whether national or regional indicators predominantly drive public interest in major economic indicators.  This study enhances our understanding of public engagement with economic data in the digital era, offering new insights into the dissemination of macroeconomic information beyond financial market responses. 

Details: Measuring the presence of foreign direct investment (FDI) firms in a cluster through the share of FDI firm’s permanent employees and the proportion of FDI firms within a cluster, we estimate their impact on the likelihood of innovation among domestic firms, an aspect often overlooked in the literature but recognised as a primary channel for productivity and wage spillovers. Using data from two rounds of the World Bank Enterprise Survey, we distinguish the effects of FDI firms on the innovation likelihood of domestic firms across three types of innovation: product, process, and management innovation. Our findings indicate that the presence of FDI firms positively contributes to innovation in new product development and efficiency-enhancing management technologies of domestic firms. The presence of FDI firms, measured by their share of permanent employees in the cluster, increases the probability of domestic firms innovating in product and process technologies, while the share of FDI firms in the cluster raises the likelihood of product. 

Details: The increasing disaster-induced migration has become a global challenge. Focusing on Indonesia, this research aims to study how social capital influences households' migration decision. Specifically, we analyze whether pre-disaster social capital in a household's origin community reduces the likelihood of migration and whether households preferentially relocate to destinations where they have greater social capital. 

Details: In 2006, the Indian government launched a program introducing community health workers, with the initial rollout between 2005 and 2009 concentrated in 18 states that were underperforming on public health indicators. This paper uses multiple rounds of the District Level Household and Facility Survey (DLHS) to examine whether these community health workers (ASHAs) had a causal impact on improving child mortality outcomes.   

Details: As more companies rely on algorithms to make hiring decisions, there is growing concern that these systems may unintentionally discourage people from investing in their own skills, especially those from disadvantaged groups. This study uses an online experiment to explore how biased beliefs embedded in hiring algorithms influence individuals’ decisions about whether to invest in improving their qualifications. We further test two interventions designed to encourage investment: providing information about successful peers (Role Model treatment) and reducing the cost of investment (Cost Cut treatment). The objective of this study is to better understand how people respond to perceived bias in algorithmic decision-making and to explore strategies that might promote fairer outcomes.