Behavioral Biases and Firm Behavior: Evidence from Kenyan Retail Shops

By Michael Kremer, Jean Lee, Jonathan Robinson, and Olga Rostapshova

American Economic Review, May 2013

Many subjects in lab experiments exhibit small-stakes risk aversion, consistent with loss aversion. Those with greater math skills are less likely to show small-stakes risk aversion. We argue that departures from expected utility maximization may help exp...

The Home Economics of E-Money: Velocity, Cash Management, and Discount Rates of M-Pesa Users

By Isaac Mbiti and David N. Weil

American Economic Review, May 2013

We study the mobile phone-based money transfer system in Kenya. Based on aggregate data, we estimate that the velocity with which units of e-money are transferred among users is approximately four times per month, and that the average number of transfers ...

Informal Risk Sharing, Index Insurance, and Risk Taking in Developing Countries

By Ahmed Mushfiq Mobarak and Mark R. Rosenzweig

American Economic Review, May 2013

Preliminary findings are presented from a research project which examined the interactions between informal risk sharing, index insurance and risk-taking. Rainfall insurance contracts were randomly offered to cultivating and landless households in a set o...

Profitability of Fertilizer: Experimental Evidence from Female Rice Farmers in Mali

By Lori Beaman, Dean Karlan, Bram Thuysbaert, and Christopher Udry

American Economic Review, May 2013

We conducted an experiment providing fertilizer grants to female rice farmers in Mali. We found that women who received fertilizer used both more fertilizer and more complementary inputs such as herbicides and hired labor. This shows that farmers respond ...

Deposit Collecting: Unbundling the Role of Frequency, Salience, and Habit Formation in Generating Savings

By Suresh de Mel, Craig McIntosh, and Christopher Woodruff

American Economic Review, May 2013

We report on a field experiment using several methods for collecting deposits made in formal bank accounts in rural areas in Sri Lanka. We find that only frequent, face-to-face collection increases aggregate household savings. Collection involving communi...

Benefit-Cost Analysis for Financial Regulation

By Eric Posner and E. Glen Weyl

American Economic Review, May 2013

Calls for benefit-cost analysis in rule-making, based on the Dodd-Frank Wall Street Reform Act, have revealed a paucity of work on allocative efficiency in financial markets. We propose three principles to help fill this gap. First, we highlight the need ...

Financial Innovation and Portfolio Risks

By Alp Simsek

American Economic Review, May 2013

I illustrate the effect of financial innovation on portfolio risks by using an example with risk-sharing needs and belief disagreements. I consider two types of innovation: product innovation, formalized as an expansion of new financial assets; and proces...

Reflections on Finance and the Good Society

By Robert J. Shiller

American Economic Review, May 2013

The concept of the Good Society--grounded in principles of reciprocity and the Golden Rule--is as ancient as human civilization. To many the concept may appear in conflict with the goings-on of financial markets. This may be especially true after the fina...

Can Financial Engineering Cure Cancer?

By David E. Fagnan, Jose Maria Fernandez, Andrew W. Lo, and Roger M. Stein

American Economic Review, May 2013

Traditional financing sources such as private and public equity may not be ideal for investment projects with low probabilities of success, long time horizons, and large capital requirements. Nevertheless, such projects, if not too highly correlated, may ...

Health Care Usage and Health Status of Immigrant Children: The Effects of Nativity versus Citizenship

By Mónica García-Pérez

American Economic Review, May 2013

This paper addresses the relationship between child access to and use of health services, perceived health, and parental nativity. Parental region of birth is identified to include the underlying cultural differences across immigrant groups. We found that...

The Effects of Job Corps Training on Wages of Adolescents and Young Adults

By German Blanco, Carlos A. Flores, and Alfonso Flores-Lagunes

American Economic Review, May 2013

Previous evaluations of Job Corps document disparate effects on the earnings of adolescents (aged 16-19) and young adults (aged 20-24). These are conjectured to be due to differential human capital accumulation within the program between these groups. If ...

The Poverty Gap in School Spending Following the Introduction of Title I

By Elizabeth U. Cascio and Sarah Reber

American Economic Review, May 2013

Title I of the 1965 Elementary and Secondary Education Act explicitly directed more federal aid for K-12 education to poorer areas for the first time in US history, with a goal of promoting regional convergence in school spending. Using newly collected da...

Achieving the DREAM: The Effect of IRCA on Immigrant Youth Postsecondary Educational Access

By Kalena E. Cortes

American Economic Review, May 2013

This paper contributes to the existing literature on the effect of legal status on educational access among immigrant youth in the United States. The Immigration Reform and Control Act (IRCA) of 1986 granted amnesty to undocumented immigrants who entered ...

HIV Risk and Adolescent Behaviors in Africa

By Anne Case and Christina Paxson

American Economic Review, May 2013

We investigate the relationship between HIV, marriage and nonmarital sexual activity, with a focus on adolescent behaviors. We use data from 45 Demographic and Health Surveys to examine how adolescent behavior among women born from 1958 to 1965 are relate...

Learning from Others' HIV Testing: Updating Beliefs and Responding to Risk

By Susan Godlonton and Rebecca L. Thornton

American Economic Review, May 2013

An individual who takes an HIV test can be informed about their own status and risk. Similarly, when friends, family or neighbors learn of a person's HIV status, they may update their beliefs about HIV infection among people they know. Using an experiment...

Do Sex Workers Respond to Disease? Evidence from the Male Market for Sex

By Manisha Shah

American Economic Review, May 2013

Sex markets play a key role in the transmission of sexually transmitted infections (STI) and HIV/AIDS in developing countries. While individuals should substitute away from risky sex as STI prevalence rises, female sex workers draw a premium for engaging ...

Inheritances, Intergenerational Transfers, and the Accumulation of Health

By Katherine Grace Carman

American Economic Review, May 2013

This paper considers the mechanisms behind a positive correlation between inheritances and health. First, there may merely be a correlation: those from families with enough wealth to provide an inheritance tend to have better health. Second, financial res...

Adult Antiretroviral Therapy and Child Health: Evidence from Scale-Up in Zambia

By Adrienne M. Lucas and Nicholas L. Wilson

American Economic Review, May 2013

One in five Zambian children lives with an HIV/AIDS-infected adult. We estimate the effect that the availability of adult antiretroviral therapy (ART) has on the health of such children. Using a triple difference specification, we find that adult access t...

SSI for Disabled Immigrants: Why Do Ethnic Networks Matter?

By Delia Furtado and Nikolaos Theodoropoulos

American Economic Review, May 2013

Immigrants residing among many coethnics are especially likely to receive SSI for a disability when they belong to high SSI take-up immigrant groups. After showing that this relationship cannot be fully explained by differences in health, we consider the ...

Boys' Cognitive Skill Formation and Physical Growth: Long-Term Experimental Evidence on Critical Ages for Early Childhood Interventions

By Tania Barham, Karen Macours, and John A. Maluccio

American Economic Review, May 2013

It is often assumed that early life circumstances, in particular before age two, are important for later human capital development. Using experimental variation in the timing of benefits from a conditional cash transfer program, we test the hypothesis tha...