poverty and economic decision making

There is a new paper in the AER this month on "Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday,"by Leandro S. Carvalho, Stephan Meier, and Stephanie W. Wang, American Economic Review 2016, 106(2): 260–284

The abstract reads

"We study the effect of financial resources on decision-making. Low income US households are randomly assigned to receive an online survey before or after payday. The survey collects measures of cognitive function and administers risk and intertemporal choice tasks. The study design generates variation in cash, checking and savings balances, and expenditures. Before-payday participants behave as if they are more present-biased when making intertemporal choices about monetary rewards but not when making intertemporal choices about nonmonetary real-effort tasks. Nor do we find before after differences in risk-taking, the quality of decision-making, the performance in cognitive function tasks, or in heuristic judgments."

In their paper they replicate my paper with Ned Augenblick and Charles Sprenger (pp 270-272)

"Another way to disentangle the effects of economic circumstances on time preferences from liquidity constraints is to look at nonmonetary intertemporal choices. Augenblick, Niederle, and Sprenger (2015) argue that intertemporal choices about real effort are better suited than intertemporal choices about monetary rewards to capturing dynamic time-inconsistent preferences, because the latter are subject to several confounds. In the nonmonetary column of Table 3 we present subjects’ intertemporal choices between a shorter survey earlier and a longer survey later. We estimate an interval regression where the dependent variable is a measure of individual discount rate (as in Meier and Sprenger 2015).

We find that the two groups made similar intertemporal choices about a costly real-effort task: choosing between answering a shorter survey earlier and a longer survey later. In line with Augenblick, Niederle, and Sprenger (2015), both groups’ behavior was consistent with present bias: the implied monthly discount rate was  9  percentage points higher when the shorter-sooner survey had to be completed within 5 days (as opposed to 90 days).

However, there was no evidence of differential present bias between the before and after-payday group in the task when participants had to make intertemporal choices about real effort. Although one should be cautious in comparing intertemporal choices about monetary rewards to intertemporal choices about real effort (because discount rates may be domain-specific: see, e.g., Reuben, Sapienza, and Zingales 2010; Ubfal 2016), this result suggests that liquidity constraints may explain why the before-payday group behaved as if it was more present-biased in the monetary intertemporal choice task. "

Here is a pic of their main result: p 278

Notes: The bars show before-after differences for the following outcomes: expenditures (Study 2), present bias in intertemporal choices about money (Study 1), present bias in intertemporal choices about real effort (Study 1), risk aversion (Study 2), quality of decision-making measured in terms of violations of GARP and monotonicity with respect to FOSD (Study 2), memory span in working memory task (Study 1), and log of response time in numerical Stroop task (Study 2). The outcomes are scaled to comparable units by subtracting the median for the after-payday group and dividing by the median absolute deviation for the after-payday group. The height of the bar corresponds to the coefficient on the before-payday indicator variable in a regression of the outcome on the before-payday indicator variable and a constant. All regressions are OLS regressions with the exception of expenditures (median regression) and present bias effort (interval regression). In Stroop time, trial-specific dummies are included. The bands show 95 percent confidence intervals. Subjects = 2,496 (expenditures); 1,060 (present bias money); 1,025 (present bias effort); 1,119 (risk aversion); 1,119 (quality of decision-making); 1,038 (working memory); and 2,723 (Stroop time).


Summary of Main Results.—Figure 1 summarizes the main results (all outcomes are scaled to comparable units; see footnote of Figure 1 for more details). It shows that the before-payday group spent significantly less than the after-payday group. The before-payday group also behaved as if they were more present-biased when making intertemporal choices about monetary rewards, but not when they were making intertemporal choices about real effort. There are also no differences in the willingness to take risks, quality of decision-making, or in cognitive functioning.

Women and Chinese

My student David Yang pointed me to an interesting article that featured in the Chinese version of the NY times

"Enduring Prejudices of Gender Woven Into Chinese Language"
By DIDI KIRSTEN TATLOW December 4, 2015

The article starts with

"BEIJING — What if “womanwomanwoman” were the English word for rape, defilement, adultery? That is roughly how the Chinese character “jian,” or 姦, translates, as it is made up of three characters for “woman,” 女."

then

"“Why did one woman become three, and such a symbol of political and moral imagination and an object of enmity in traditional Chinese society and political theory?” asked Tong Yujie, the academic convener of the canceled exhibition, in an essay prepared for the show.

As evidence, Ms. Tong offered examples from ancient Chinese history and political texts:

• In the “Zuo Zhuan,” or “Commentary of Zuo,” dating from the fourth century B.C., “jian” is used to mean “evil”: “To cast away what is virtuous and give honor to what is evil is the greatest of calamities.”

• In the “Guoyu,” or “Discourse of States,” from the same period, a “jian” is a traitor: “Rebels inside the country are scoundrels, while those outside the country are traitors.”

"

and finally

"“In everyday language, how many Chinese speakers are aware that, in every set phrase with male-female gender reference, the male always comes first?” he said in an email.

“A married couple is 一对夫妇, a husband and wife. Your parents are your 父母, father and mother, never 母父, or mother and father. Even a phrase like 男女老少, meaning everyone, literally ‘men, women, old and young,’ subconsciously reinforces a supposedly ‘natural’ hierarchy — men over women, old over young,” Mr. Moser said."

Overconfidence and Occupational Choice

There is a new NBER working paper on "Overconfidence and Occupational Choice" by Edward P. Lazear.

The abstract reads:

"A statistical theory of overconfidence is proposed and applied to the issue of occupational choice. Individuals who can choose whether to engage in an activity or not must estimate their performance. The estimates have error and that error has positive expectation among those who engage in the activity. As a result, an unbiased ex ante estimate of performance in an occupation results in an ex post biased estimate of ability among those enter. The statistical theory of overconfidence provides a number of testable implications, most significant of which is that overconfidence should be more prevalent in occupations where estimates of ability are noisier. This and other implications are tested and found to hold using the Current Population Survey and Panel Study of Income Dynamics data."

Gender Wage gap

There is a new NBER working paper:
THE GENDER WAGE GAP:EXTENT, TRENDS, AND EXPLANATIONS 
by Francine D. Blau and Lawrence M. Kahn

The abstract reads:
"Using PSID microdata over the 1980-2010, we provide new empirical evidence on the extent of and trends in the gender wage gap, which declined considerably over this period. By 2010, conventional human capital variables taken together explained little of the gender wage gap, while gender differences in occupation and industry continued to be important. Moreover, the gender pay gap declined much more slowly at the top of the wage distribution that at the middle or the bottom and by 2010 was noticeably higher at the top. We then survey the literature to identify what has been learned about the explanations for the gap. We conclude that many of the traditional explanations continue to have salience. Although human capital factors are now relatively unimportant in the aggregate, women’s work force interruptions and shorter hours remain significant in high skilled occupations, possibly due to compensating differentials. Gender differences in occupations and industries, as well as differences in gender roles and the gender division of labor remain important, and research based on experimental evidence strongly suggests that discrimination cannot be discounted. Psychological attributes or noncognitive skills comprise one of the newer explanations for gender differences in outcomes. Our effort to assess the quantitative evidence on the importance of these factors suggests that they account for a small to moderate portion of the gender pay gap, considerably smaller than say occupation and industry effects, though they appear to modestly contribute to these differences."

One conclusion in terms of future work is to understand better what psychological factors matter, and how much they do matter. While there has been some work on that line, it is really very far from giving a great answer, I believe.

I count my own work in that vein, as a step in the right direction: showing the importance of psychological factors, though hard to assess their impact on the gender wage gap, see Thomas Buser and Hessel Oosterbeek “Gender, Competitiveness and Career Choices,” receives a very nice summary (see also my former blogposts on it here and here)

Gender Session online

The ASSA filmed our Session: Gender at Work. You can watch it here. For me, it only works on explorer, but they may eventually fix that. Note also the big (pretty useless) podium, which for some women posed almost a height challenge...

This is the session you can watch:

Gender at Work: Evidence from Experimental Economics (C9, J7)

Presiding: CATHERINE ECKEL (Texas A&M University)

Knowing When to Ask: The Cost of Leaning In
CHRISTINE EXLEY (Stanford University)
MURIEL NIEDERLE (Stanford University)
LISE VESTERLUND (University of Pittsburgh)

A University-Wide Field Experiment on Gender Differences in Job Entry Decisions
ANYA SAMEK (University of Southern California)

Born to Lead? Gender Differences in Incentive Provision and Its Evaluation
ALEXANDRA VAN GEEN (Erasmus University)
OLGA SHURCHKOV (Wellesley College)

Gender Differences in Negotiation by Communication Method
ADAM GREENBERG (University of California-San Diego)
RAGAN PETRIE (George Mason University)

Stress and the gender difference in willingness to compete
THOMAS BUSER (University of Amsterdam)
ANNA DREBER ALMENBERG (Stockholm School of Economics)
JOHANNA MOLLERSTROM (George Mason University)

Discussants:
CHRISTINE EXLEY (Stanford University)
ANAT BRACHA (Federal Reserve Bank of Boston)
KATHERINE COFFMAN (Ohio State University)
ALEXANDRA VAN GEEN (Erasmus University)

Really, in this day and age? 30 nominees for a grand prize in comics, and how many are female?

The biggest comic festival in Angouleme, France, has as the most prestigious prize a career prize, the grand prix. Of all the past winners since 1974, there was only one woman. They write about their prize: "Le Grand Prix décerné chaque année vise à récompenser un-e auteur-e pour l'ensemble de son œuvre et sa contribution à l'évolution de la bande dessinée."

This year, 30 cartoonists are nominated: they are all men. Apparently, this at a time where there are plenty excellent female artists. While I've heard of many of the nominees, (while aiming to not lose my remainder of my french, I started to read comics or graphic novels, and got a little hooked for a while) it is indeed easy to come up with female names that would be in no way stand out as not belonging among the very best of this list: 

Marjane Satrapi and Posy Simmonds (both have apparently been nominated in the past), Alison Bechdel,  Rutu Modan, Claire Bretecher...

In light of this, two of the nominees declined to be nominees for this prize: Both big figures in the comics world, one french, and one I believe american.

Riad Sattouf writes:

"Bonjour!

J'ai découvert que j'étais dans la liste des nominés au grand prix du festival d'Angoulême de cette année. Cela m'a fait très plaisir ! 

Mais, il se trouve que cette liste ne comprend que des hommes. 

Cela me gêne, car il y a beaucoup de grandes artistes qui mériteraient d'y être. 

Je préfère donc céder ma place à par exemple, Rumiko Takahashi, Julie Doucet, Anouk Ricard, Marjane Satrapi, Catherine Meurisse (je vais pas faire la liste de tous les gens que j'aime bien hein !)... 

Je demande ainsi à être retiré de cette liste, en espérant toutefois pouvoir la réintégrer le jour où elle sera plus paritaire! Merci!

On se voit à Angoulême!

Riad"

and Daniel Clowes" "I support the boycott of Angouleme and am withdrawing my name from any consideration for what is now a totally meaningless 'honor.' What a ridiculous, embarrassing debacle," says Clowes."

I have to admit, I'm a little surprised. 30 is a big number...

An update: As of yesterday night (the night of Jan 6), that number has climbed to 9. So, of the 30 men nominated, 9 declined to be nominees... And the prize committee actually announced that they will generate an expanded list...

A second update: I have to admit, I was quite impressed with almost a third of people (and not the third that had the lowest chances of winning) to decline to be nominated. As of today (January 7), the prize committee decided not to generate a list of nominees but make everyone eligible to be voted on. 

Female emails

Christina Cauterucci in Slate writes: "New Chrome App Helps Women Stop Saying “Just” and “Sorry” in Emails"

"With her company’s new Chrome browser extension, Reiss has put a bull’s-eye on the tempering words and phrases—just, I think, sorry—that clutter up her emails, undermine her authority, and dilute her leadership capacity."..

And

"The Just Not Sorry extension, which is downloadable at the Chrome app store, underlines self-demeaning phrases like “I’m no expert” and qualifying words like “actually” in red in Gmail like they’re spelling errors. Hover your mouse over the red words, and you’ll see explanatory quotes from women like Tara Mohr (“‘Just’ demeans what you have to say. ‘Just’ shrinks your power.”) and Sylvia Ann Hewlett (“Using sorry frequently undermines your gravitas and makes you appear unfit for leadership.”)."

And

"“I am queen of the ‘does this makes sense?’ ” Reiss told me in a phone call, referencing one of the phrases the app targets. "

Reading through some of my emails, I do use some of those words or semi-sentences, but actually, I think I'm not sure if that's really an issue...

ASSA Jan 05: Gender Sessions

Jan 05, 2016 8:00 am, Hilton Union Square, Continental – Parlor 9
American Economic Association
Gender Differences in Career Outcomes (J1, J7)
Presiding: LISE VESTERLUND (University of Pittsburgh)

Gender Dynamics in Referral-Based Hiring: A Field Experiment
ANNA SANDBERG (Stockholm University)
KARIN HEDEROS ERIKSSON (Stockholm University)
LUKAS KVISSBERG (Stockholm School of Economics)
ERIK POLANO (Stockholm School of Economics)

Does Gender Matter for Academic Promotion? Evidence from Two Large Scale Randomized Natural Experiments
MANUEL BAGUES (Aalto University Helsinki)
NATALIA ZINOVYEVA (Aalto University Helsinki)

Gender Bias in Performance Evaluations
FRIEDERIKE MENGEL (University of Essex)
JAN SAUERMANN (Stockholm University)
ULF ZÖLITZ (Institute for the Study of Labor (IZA))

Dynamic Evolution of Individual Willingness to Compete
THOMAS BUSER (University of Amsterdam)

Discussants:
KATHERINE COFFMAN (Ohio State University)
SCOTT CARRELL (University of California-Davis)
ESZTER CZIBOR (University of Chicago)
JOHANNA MOLLERSTROM (George Mason University)

Jan 05, 2016 10:15 am, Hilton Union Square, Golden Gate 8 
American Economic Association
Gender Economics (J7)
Presiding: KIMMARIE MCGOLDRICK (University of Richmond)

Gender Differences in Networking at Work
FRIEDERIKE MENGEL (University of Essex and Maastricht University)

Gender Biases in Student Evaluations of Teachers and their Impact on Teacher Incentives
ANNE BORING (Sciences Po)

How Stress Affects Willingness to Compete Across Genders
JANA CAHLIKOVA (Max Planck Institute for Tax Law and Public Finance)
LUBOMIR CINGL (Charles University-Prague)
IAN LEVELY (Charles University-Prague)

Gender Differences in Credit for Group Work
HEATHER SARSONS (Harvard University)


Jan 05, 2016 10:15 am, Marriott Marquis, Pacific B 
Association for Social Economics/International Association for Feminist Economics
Financialisation and Gender (J1, G1)
Presiding: ALICIA GIRON (National Autonomous University of Mexico)

Seven Ways to Knit Your Portfolio: Is Investor Communication Neutral?
HENRIËTTE PRAST (Tilburg University)

Child Marriage as a Financial and Economic Transaction
QUENTIN WODON (World Bank)

Family Labor Supply and the Timing of Cash Transfers: Evidence from the Earned Income Tax Credit
TZU-TING YANG (University of British Columbia and Academia Sinica)

Economics of the Unschooled Child Worker: Parental Motivation and Human Development Consequences for the Girl Child
SANJUKTA CHAUDHURI (University of Wisconsin-Eau Claire)

ASSA: Gender sessions on Jan 04

Today I present at the ASSA session, looks like a great session!

Jan 04, 2016 8:00 am, Hilton Union Square, Continental Ballroom 4
American Economic Association
Gender at Work: Evidence from Experimental Economics (C9, J7)

Presiding: CATHERINE ECKEL (Texas A&M University)

Knowing When to Ask: The Cost of Leaning In
CHRISTINE EXLEY (Stanford University)
MURIEL NIEDERLE (Stanford University)
LISE VESTERLUND (University of Pittsburgh)

A University-Wide Field Experiment on Gender Differences in Job Entry Decisions
ANYA SAMEK (University of Southern California)

Born to Lead? Gender Differences in Incentive Provision and Its Evaluation
ALEXANDRA VAN GEEN (Erasmus University)
OLGA SHURCHKOV (Wellesley College)

Gender Differences in Negotiation by Communication Method
ADAM GREENBERG (University of California-San Diego)
RAGAN PETRIE (George Mason University)

Stress and the gender difference in willingness to compete
THOMAS BUSER (University of Amsterdam)
ANNA DREBER ALMENBERG (Stockholm School of Economics)
JOHANNA MOLLERSTROM (George Mason University)

Discussants:
CHRISTINE EXLEY (Stanford University)
ANAT BRACHA (Federal Reserve Bank of Boston)
KATHERINE COFFMAN (Ohio State University)
ALEXANDRA VAN GEEN (Erasmus University)


Then there is

Jan 04, 2016 10:15 am, Marriott Marquis, Walnut
Association for the Study of Generosity in Economics/International Association for Feminist Economics
Gender and Altruistic Decisions (D6, J1)
Presiding: CATHERINE ECKEL (Texas A&M University)

Making Decisions for Others: The Consequences of Gender Stereotypes
CATHERINE ECKEL (Texas A&M University)

Finding Excuses to Decline the Ask: A Field Experiment
RAGAN PETRIE (George Mason University)
CHRISTINE EXLEY (Harvard University)

The Importance of Fuzzy Beliefs
KATHERINE COFFMAN (Ohio State University)
MURIEL NIEDERLE (Stanford University)

Mitigating Gender Gaps in Competitiveness and the Response to Performance Feedback: Evidence from Randomized Educational Interventions
SULE ALAN (University of Essex)
SEDA ERTAC (Koc University)

Discussants:
JONATHAN MEER (Texas A&M University)


Jan 04, 2016 10:15 am, Hilton Union Square, Continental – Parlor 3 
American Economic Association
Education and Gender (I2, J1)
Presiding: SHULAMIT KAHN (Boston University)

The STEM Gender Gap: Evidence from the CA State Science Fair
NANNEH CHEHRAS (University of California-Irvine)

Educational Mobility across Three Generations of American Women
SARAH KROEGER (University of Wisconsin-Milwaukee)
OWEN THOMPSON (University of Wisconsin-Milwaukee)

Student Appearance and Class Performance
CHRISTINA PETERS (Metropolitan State University of Denver)
REY HERNANDEZ-JULIAN (Metropolitan State University of Denver)

The Math Gender Gap: The Role of Culture
NÚRIA RODRÍGUEZ-PLANAS (City University of New York-Queens College)
NATALIA NOLLENBERGER (IAE-CSIC)
ALMUDENA SEVILLA (Queen Mary University of London)

Discussants:
SHULAMIT KAHN (Boston University)
GARY SOLON (University of Arizona)
TANYA ROSENBLAT (University of Michigan)
MARGARET E. BLUME-KOHOUT (New Mexico Consortium and Mount Holyoke College)


Jan 04, 2016 10:15 am, Marriott Marquis, Sierra K 
Union for Radical Political Economics/International Association for Feminist Economics
Gender and Educational Investment (I2)
Presiding: LINDA LUCAS (University of South Florida)

Empowered or Not? Exploring the Conundrum of Increasing Female Schooling and Stagnant Female Labor Market Participation in Japan, China and India
SUCHARITA SINHA MUKERJEE (College of Saint Benedict and Saint John’s University)

Family Wealth Shock: The Allocation of Property Rights within Marriage and Children’s Education Investment
JING LIU (Central University of Finance and Economics)
LIANGSHU QI (Tsinghua University)

An Early Assessment of Extension of Compulsory School Attendance in Turkey: Evidence from a Natural Experiment
BILGE ERTEN (Northeastern University)

The Pre-School Effects: Analyzing the Causal Effects of Pre-School Attendance on Income, Educational Attainment, and Mother's Labor Force Participation
ALYSSA SCHNEEBAUM (Vienna University of Economics and Business)

Discussants:
LINDA LUCAS (University of South Florida)
LEANNE RONCOLATO (Franklin and Marshall College)

Jan 04, 2016 12:30 pm, Marriott Marquis, Sierra B 
International Association for Feminist Economics
Gendered Responses to Upheaval and Recession (F6)
Presiding: JOYCE JACOBSEN (Wesleyan University)

What are the Implications of Austerity Policy Chosen by the Government of Canada in the Midst of the Great Depression 2008-2009 for Women Workers in the Medium to Long-Run? Gender Analysis of the Socio-Economic Status of Canadian Women Workers and Policy Prescriptions for Select Case Studies
ANA ANDROSIK (New School )

Gender, Class and the Crisis
MARCELLA CORSI (Sapienza University of Rome)
CARLO D’IPPOLITI (Sapienza University of Rome)

The Impact of the Financial Crisis on Gender Inequalities: Evidence from Europe
ESTHER JEFFERS (University of Paris 8)
CAROLE BRUNET (University of Paris 8)

Gender, Socieconomic Status, Time-Use, and the Great Recession in the U.S.
EBRU KONGAR (Dickinson College)
MARK PRICE (Keystone Research Center)

Discussants:
JOYCE JACOBSEN (Wesleyan University)
YANA VAN DER MUELEN RODGERS (Rutgers University)

Jan 04, 2016 2:30 pm, Hilton Union Square, Franciscan C 
American Economic Association
Experimental Gender Economics (C9, D8)
Presiding: MURIEL NIEDERLE (Stanford University)

Affirmative Action and Stereotype Threat
ANAT BRACHA (Federal Reserve Bank of Boston)
ALMA COHEN (Harvard University)
LYNN CONELL-PRICE (Carnegie Mellon University)

Risk in the Background: How Men and Women Respond
ALEXANDRA VAN GEEN (Erasmus University)

After You: Gender and Group Decision-Making
PEDRO BORDALO (Royal Holloway)
KATHERINE COFFMAN (Ohio State University)
NICOLA GENNAIOLI (Bocconi University)
ANDREI SHLEIFER (Harvard University)

Bursting the Bubble: Gender Differences in Financial Bubbles with Anonymous Traders
CATHERINE ECKEL (Texas A&M University)
SASCHA FÜLLBRUNN (Radboud University)

Discussants:
JOHANNA MOLLERSTROM (George Mason University)
RAGAN PETRIE (George Mason University)
ANYA SAMEK (University of Southern Califiornia)
OLGA SHURCHKOV (Wellesley College)

ASSA: Gender Sessions on January 03

Jan 03, 2016 8:00 am, Hilton Union Square, Golden Gate 6 & 7
American Economic Association
Gender in Corporation Management (G3, J4)
Presiding: MARIANNE BERTRAND (University of Chicago)

Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Styles
ANTOINETTE SCHOAR (Massachusetts Institute of Technology)
LUO ZUO (Cornell University)

Gender Diversity and Skill Contribution to Corporate Boards
DAEHYUN KIM (University of Texas-Austin)
LAURA STARKS (University of Texas-Austin)

Golf Buddies and Board Diversity
SUMIT AGARWAL (National University of Singapore)
WENLAN QIAN (National University of Singapore)
DAVID M. REEB (National University of Singapore)
TIEN FOO SING (National University of Singapore)

Women in Finance
RENÉE B. ADAMS (University of New South Wales)
TOM KIRCHMAIER (University of Manchester)

Discussants:
FRANCISCO PEREZ-GONZALEZ (Instituto Tecnológico Autónomo de México)
DAVID YERMACK (New York University)
CAROLA FRYDMAN (Northwestern University)
GLENN ELLISON (Massachusetts Institute of Technology)

Jan 03, 2016 10:15 am, Hilton Union Square, Imperial A 
American Economic Association
Gender Gaps in Childhood: Skills, Behavior, and Labor Market Preparedness (I2)
Presiding: DAVID AUTOR (Massachusetts Institute of Technology)

Gender Differences in Intergenerational Mobility Across the U.S.
RAJ CHETTY (Harvard University)
NATHANIEL HENDREN (Harvard University)

Family Disadvantage and the Gender Gap in Behavioral and Educational Outcomes
DAVID AUTOR (Massachusetts Institute of Technology)
DAVID FIGLIO (Northwestern University)
KRZYSZTOF KARBOWNIK (University of Uppsula)
JEFFREY ROTH (University of Florida)
MELANIE WASSERMAN (Massachusetts Institute of Technology)

What Explains the Gender Gap in Education? Experimental and Administrative Evidence
INGVILD ALMAS (Norwegian School of Economics)
ALEXANDER CAPPELEN (Norwegian School of Economics)
KJELL G. SALVANES (Norwegian School of Economics)
ERIK SORENSEN (Norwegian School of Economics)
BERTIL TUNGODDEN (Norwegian School of Economics)

Discussants:
DAVID FIGLIO (Northwestern University)
MELISSA S. KEARNEY (University of Maryland)
ABIGAIL PAYNE (McMaster University)

Jan 03, 2016 10:15 am, Marriott Marquis, Sierra J 
Union for Radical Political Economics/International Association for Feminist Economics
Gender, Credit, and Microfinance (G2)
Presiding: BILGE ERTEN (Northeastern University)

The Development of Women’s Creditworthiness: Another Step for Women’s Economic Citizenship
DORENE ISENBERG (University of Redlands)

Gender Biases in Bank Lending: Lessons from Microcredit in France
ANASTASIA COZARENCO (Montpellier Business School and CERMi)
ARIANE SZAFARZ (Université Libre de Bruxelles, CEB, and CERMi)

The Impact of Microfinance on Factors Empowering Women: Differences in Regional and Delivery Mechanisms in India’s SHG Programme
RANJULA BALI SWAIN (Södertörn University and Uppsala University)

Gold Backed Microcredit and Women’s Autonomy in Pakistan
GHAZEL ZULFIQAR (Lahore University of Management Sciences)

Discussants:
BILGE ERTEN (Northeastern University)
SUCHARITA SINHA MUKERJEE (College of Saint Benedict and Saint John’s University)

Shengwu Li, Obviously

My other student on the job market, Shengwu Li, is a powerful theorist (with a strong interest in market design) as well as a behavioral & experimental economist.

His JM paper, "Obviously Strategy-Proof Mechanisms" considers the classical question on what makes it easier for people to understand whether a mechanism is strategy-proof. For example, while people in general know not to overbid in an ascending auction, in a strategically equivalent second price sealed bid auction participants in experiments bid both above and below their private value.

Shengwu says that a strategy obviously dominates another if, basically, at the earliest time in the game tree when the the two strategies deviate: the best outcome of the deviation can be no better than the worst outcome under the original strategy. So, to understand whether a strategy obviously dominates another, agents have to only compare the best in a set of possible outcomes from deviating to the worst outcome under the original strategy. This is, of course, intuitively, much simpler than computing expectations over outcomes.

The beauty of Shengwu's paper is that he then finds two equivalences for mechanisms that are obviously strategy-proof (OSP), that is that implement the dominant strategy equilibrium in obviously dominant strategies. The first equivalence concerns a specific model of bounded rationality: Consider an agent who only knows at each moment what the set of possible outcomes can be, but not how those outcomes depend on actions of other players. Shengwu shows that a strategy is obviously dominant in a game if and only if it is dominant in every game the boundedly rational agent cannot distinguish from the current game. His second equivalence concerns a classical mechanism design problem: Consider a mechanism designer who lacks commitment power, but has partial commitment. Specifically, the planner can bilaterally communicate and commit vis-a-vis an agent to actions observable to that agent. Shengwu then shows that an allocation rule can be implemented by an OSP mechanism if and only if there is a bilateral commitment game that implements it and in which each agent has a dominant strategy. The paper therefore makes a nice link between a model of cognitive limitations and one in which the mechanism designer has only partial commitment.

Shengwu's paper is very complete, as it has two more parts. The first is an experiment where he confirms for the standard second price versus the english auction but also for a novel auction format that implementations via OSP generate "better" behavior than the implementation in only dominant strategies. Shengwu then shows that this is also the case when comparing an OSP implementation of a serial dictatorship to a strategy-proof implementation. Finally, Shengwu provides for a wide class of situations a characterization of the set of OSP-implementable allocation rules.

Happy new year to you all!

The new year starts with big meetings where you can look at two of my students, Sandro Ambuehl and Shengwu Li (whom I'll write about tomorrow).

Sandro is a great behavioral/experimental economist with a strong theory background (he has a nice theoretical matching paper on unraveling, probably the nicest theoretical treatment on unraveling there is) and interest in financial education.

Sandro's JM paper "An Offer You Can't Refuse? Incentives Change How We Think" starts with the common (well, at least among non-economists) intuition that offering substantial payments can constitute “undue inducement” and "coercion" that may harm the agent. This quite vague intuition that has no empirical evidence is the foundation for nearly universal laws that prohibit living organ sales (such as kidneys) as well as incentives that can be paid to participants in experiments, egg donors, surrogate mothers etc. Despite the large economic consequences of such laws, economists have been rather silent on the subject (apart from iterating loudly and clearly that markets are efficient). Empirically, given the universality of laws against payments for organ donation, economists certainly appear not to have had a large impact, at least so far.

Sandro points out that incentives may not only direct affect choices, but also people's beliefs about the consequences of various choices. He theoretically shows how incentives affect the information acquisition process and points out that larger incentives will lead people look more for information about the upside of the transaction and less about the downside. As a result it can be that a person offered higher incentives will have different posteriors than a person offered low incentives about how bad it is to participate. Specifically, it may be that for many prices the "high incentives" person is happy to take the offer given her posteriors than the person who gathered information under low incentives. As a result it appears as if people try to persuade themselves to participate when incentives are high: while this may "feel" irrational, it can be perfectly Bayesian.

Sandro runs an experiment to test whether he finds such effects. To think of a relevant domain, Sandro picks a transaction with visceral consequences, which many people may do "just for the money" and where people have uncertainty how they will feel about doing it: His has people eat insects.

He finds that participants offered high incentives skew their information gathering as predicted. Furthermore, participants given high incentives are more willing to eat insects at many prices. Finally, Sandro shows in a more stylized experiment that incentives cause participants to skew their beliefs in a way that is consistent with Bayes law.

Sandro's paper points out that it is important to understand the reason behind the nearly universal laws: is it because of the (erroneous) belief that incentives affecting beliefs is "irrational", because people who receive high incentives become optimistic about the transaction above and beyond what is warranted by Bayesian updating, or for other reasons? Different reasons have different policy implications about whether we will see a change in these laws, and what should be done to minimize harm (the chance to update in a non-Bayesian way).

Sandro's paper attracts a lot of attention: Tyler Cowen on marginalrevolution wrote in November in "Incentives change how we think" about his paper "I found this to be the most interesting job market paper of the year..." Cass Sunstein tweeted: "Brilliant & original paper on some effects of incentives on how we think..." and Jeff Guo wrote about his paper in "The secret to why money is so good at changing people’s minds" in the Washington Post on December 11.