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Extrapolative income expectations and retirement savings
Cota, Marta
2023 - English
Why do employees’ retirement contributions gradually increase throughout their careers? This paper uses a structural life-cycle model based on household expectations data to explain workers’ retirement contribution decisions. The Michigan Survey of Consumers data shows that young households extrapolate from their recent income realizations and overstate the persistence and volatility of their future income. The structural life-cycle model with extrapolative expectations quantifies the difference in retirement contribution rates compared to rational expectations. Contrary to rational workers, extrapolative workers’ contributions match the data on retirement contributions over the life cycle. Consequently, mandating automatic enrollment yields negligible effects on retirement savings.
Keywords:
extrapolative expectations; forecast errors; illiquid savings
Fulltext is available at external website.
Extrapolative income expectations and retirement savings
Why do employees’ retirement contributions gradually increase throughout their careers? This paper uses a structural life-cycle model based on household expectations data to explain workers’ ...
Social ties at work and effort choice: experimental evidence from Tanzania
Chegere, M.; Falco, P.; Menzel, Andreas
2023 - English
Many firms hire workers via social networks. Whether workers who are socially connected to their employers exert more effort on the job is an unsettled debate. We address this question through a novel experiment with small-business owners in Tanzania. Participants are paired with a worker who conducts a real-effort task, and receive a payoff that depends on the worker’s effort. Some business owners are randomly paired with workers they are socially connected with, while others are paired with strangers. With a design that is sufficiently powered to detect economically meaningful effects, we find that being socially connected to one’s employer does not affect workers’ effort.\n
Keywords:
firms; hiring; productivity
Fulltext is available at external website.
Social ties at work and effort choice: experimental evidence from Tanzania
Many firms hire workers via social networks. Whether workers who are socially connected to their employers exert more effort on the job is an unsettled debate. We address this question through a novel ...
Human capital affects religious identity: causal evidence from Kenya
Alfonsi, L.; Bauer, Michal; Chytilová, Julie; Miguel, E.
2023 - English
We study how human capital and economic conditions causally affect the choice of religious denomination. We utilize a longitudinal dataset monitoring the religious history of more than 5,000 Kenyans over twenty years, in tandem with a randomized experiment (deworming) that has exogenously boosted education and living standards. The main finding is that the program reduces the likelihood of membership in a Pentecostal denomination up to 20 years later when respondents are in their mid-thirties, while there is a comparable increase in membership in traditional Christian denominations. The effect is concentrated and statistically significant among a sub-group of participants who benefited most from the program in terms of increased education and income. The effects are unlikely due to increased secularization, because the program does not reduce measures of religiosity. The results help explain why the global growth of the Pentecostal movement, sometimes described a “New Reformation”, is centered in low-income communities.
Keywords:
human capital; economic conditions; religious denomination
Fulltext is available at external website.
Human capital affects religious identity: causal evidence from Kenya
We study how human capital and economic conditions causally affect the choice of religious denomination. We utilize a longitudinal dataset monitoring the religious history of more than 5,000 Kenyans ...
Do pessimistic expectations about discrimination make minorities withdraw their effort? Causal evidence
Korlyakova, Darya
2022 - English
There is a long-standing concern that expected discrimination discourages minorities from exercising effort to succeed. Effort withdrawal could contribute to confirming negative stereotypes about minorities’ productivity and enduring disparities. This paper extends the findings of correlational research by exogenously manipulating individuals’ beliefs about discrimination against their group and exploring a causal link between perceived discrimination and individuals’ labor market behavior. For this purpose, we conduct an online experiment in the US with a diverse sample of 2,000 African Americans. We randomly assign individuals to two groups and inform one group about the frequency of discrimination against African Americans in a previous survey. To study the information effects on effort, we subsequently measure participants’ results on a math task. We document that most individuals initially overestimate discrimination against African Americans. The overestimation decreases strongly and significantly as a result of information provision. At the same time, treated individuals, males in particular, attempt and solve correctly fewer math problems compared to untreated individuals. Hence, our findings do not support the common concern that minorities’ inflated expectations about discrimination induce them to underperform.
Keywords:
perceived discrimination; racial minorities; effort
Fulltext is available at external website.
Do pessimistic expectations about discrimination make minorities withdraw their effort? Causal evidence
There is a long-standing concern that expected discrimination discourages minorities from exercising effort to succeed. Effort withdrawal could contribute to confirming negative stereotypes about ...
Information, perceived returns and college major choices
Kudashvili, Nikoloz; Todua, Gega
2022 - English
Students may hold inaccurate beliefs about earnings and employment opportunities when making their education decisions. This paper analyzes the effects of information provision on student’s intended and actual college major choices in Georgia. Secondary school students in our experiment systematically overestimated the earnings and unemployment rates of college graduates. We find that 10 percent more students who received information on actual earnings and unemployment changed their actual college major choices than others. The changes in their majors are partly driven by differences in the perceived and actual unemployment rates, whereas the earning differences do not appear to play a role. We also estimate spillover effects on students who do not receive information directly, and show that they matter, but only for older students who are closer to high school graduation. Importantly, we find that the immediate changes in the intended choices are not linked to the final major choices, suggesting that measuring the effects of information on immediately expressed intentions may not be sufficient to understand how information affects actual real-life decisions. We find that both direct and indirect information provision have sizable effects on student college major choices.
Keywords:
college major; perceived unemployment; perceived earnings
Fulltext is available at external website.
Information, perceived returns and college major choices
Students may hold inaccurate beliefs about earnings and employment opportunities when making their education decisions. This paper analyzes the effects of information provision on student’s intended ...
Social networks and surviving the Holocaust
Bělín, M.; Jelínek, T.; Jurajda, Štěpán
2022 - English
Survivor testimonies link survival in deadly POW camps, Gulags, and Nazi concentration camps to the formation of close friendships with other prisoners. We provide statistical evidence consistent with these fundamentally selective testimonies. We study the survival of the 140 thousand Jews who entered the Theresienstadt ghetto, where 33 thousand died and from where over 80 thousand were sent to extermination camps. We ask whether an individual’s social status prior to deportation, and the availability of potential friends among fellow prisoners influenced the risk of death in Theresienstadt, the ability to avoid transports to the camps, and the chances of surviving Auschwitz. Pre-deportation social status protected prisoners in the self-administered society of the Theresienstadt ghetto, but it was no longer helpful in the extreme conditions of the Auschwitz-Birkenau concentration camp. Relying on multiple proxies of pre-existing social networks, we uncover a significant survival advantage to entering Auschwitz with a group of potential friends.
Keywords:
social status; social networks; Holocaust survival
Fulltext is available at external website.
Social networks and surviving the Holocaust
Survivor testimonies link survival in deadly POW camps, Gulags, and Nazi concentration camps to the formation of close friendships with other prisoners. We provide statistical evidence consistent with ...
Proximity to help matters: the effect of access to centers of legal aid on bankruptcy rates
Hrehová, Kristína; Domonkos, Š.
2022 - English
Personal bankruptcy aims to provide a fresh start to debtors. While bankruptcy is often the only solution to financial distress, large spatial distance to affordable legal services may result in its underuse by eligible debtors. Using a large administrative dataset of personal bankruptcies, we study the impact of spatial distance from public Centers for Legal Aid (CLAs) on the regional incidence of personal bankruptcy in Slovakia. We avoid endogeneity by focusing on the increased availability of legal aid controlling for the expected distance from the nearest CLA, which serves as the first contact point in the process of filing for personal bankruptcy in the Slovak Republic. Distance from these legal aid centers has a significant impact on personal bankruptcy rates: the closer the nearest CLA is, the larger the prevalence of personal bankruptcy is in a given municipality. We quantify the impact of service access on personal bankruptcy rates, showing that improved access to free legal aid has both a statistically and substantively significant impact on the use of personal bankruptcy by the public. At the end of the almost 3-year-long period analyzed, municipalities with good access to CLAs had 3.3 bankruptcies more per 1,000 inhabitants than municipalities with weak access to CLAs. This effect is significant, as the average national bankruptcy rate until December 2019 reached 6.3 bankruptcies per 1,000 persons.
Keywords:
personal bankruptcy; insolvency; policy analysis
Fulltext is available at external website.
Proximity to help matters: the effect of access to centers of legal aid on bankruptcy rates
Personal bankruptcy aims to provide a fresh start to debtors. While bankruptcy is often the only solution to financial distress, large spatial distance to affordable legal services may result in its ...
Is longer maternal care always beneficial? The impact of a four-year paid parental leave
Bičáková, Alena; Kalíšková, Klára
2022 - English
We study the impact of an extension of paid family leave from 3 to 4 years on child long-term outcomes. Using a difference-in-differences design and comparing the first-affected with the last-unaffected cohorts of children, we find that an additional year of maternal care at the age of 3, which primarily crowded out enrollment into public kindergartens, had an adverse effect for children of loweducated mothers on human capital investments and labor-market attachment in early adulthood. The affected children were 12 p.p. more likely not to be in education, employment, or training (NEET) at the age of 21-22. The impact on daughters was larger and driven by a lower probability of attending college and higher probability of home production. Sons of low-educated mothers, on the other hand, were less likely to be employed. The results suggest that exposure to formal childcare may be more beneficial than all-day maternal care at the age of 3, especially for children with a lower socio-economic background.
Keywords:
family leave; maternal care; subsidized childcare
Fulltext is available at external website.
Is longer maternal care always beneficial? The impact of a four-year paid parental leave
We study the impact of an extension of paid family leave from 3 to 4 years on child long-term outcomes. Using a difference-in-differences design and comparing the first-affected with the ...
Setting interim deadlines to persuade
Senkov, Maxim
2022 - English
This paper studies the optimal design of self-reporting on the progress of a project by a rent-seeking agent reporting to a principal who is concerned with accomplishing the project before an exogenous deadline. The project has two stages: completing the first stage serves as a milestone and completing the second stage accomplishes the project. I show that if the project is sufficiently promising ex ante, then the agent commits to provide only the good news that the project is accomplished. If the project is not promising enough ex ante, the agent persuades the principal to start the funding by committing to provide not only good news but also the bad news that the milestone of the project has not been reached by an interim deadline.
Keywords:
dynamic Bayesian persuasion; informational incentives; interim deadline
Fulltext is available at external website.
Setting interim deadlines to persuade
This paper studies the optimal design of self-reporting on the progress of a project by a rent-seeking agent reporting to a principal who is concerned with accomplishing the project before an ...
Sequential sampling beyond decisions? A normative model of decision confidence
Rehák, Rastislav
2022 - English
We study informational dissociations between decisions and decision confidence. We explore the consequences of a dual-system model: the decision system and confidence system have distinct goals, but share access to a source of noisy and costly information about a decision-relevant variable. The decision system aims to maximize utility while the confidence system monitors the decision system and aims to provide good feedback about the correctness of the decision. In line with existing experimental evidence showing the importance of post-decisional information in confidence formation, we allow the confidence system to accumulate information after the decision. We aim to base the post-decisional stage (used in descriptive models of confidence) in the optimal learning theory. However, we find that it is not always optimal to engage in the second stage, even for a given individual in a given decision environment. In particular, there is scope for post-decisional information acquisition only for relatively fast decisions. Hence, a strict distinction between one-stage and two-stage theories of decision confidence may be misleading because both may manifest themselves under one underlying mechanism in a non-trivial manner.
Keywords:
decision; confidence; sequential sampling
Fulltext is available at external website.
Sequential sampling beyond decisions? A normative model of decision confidence
We study informational dissociations between decisions and decision confidence. We explore the consequences of a dual-system model: the decision system and confidence system have distinct goals, but ...
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