Knowledge that Transforms

The urban poor in developing countries face challenging living environments, which may interfere with good sleep. Using actigraphy to measure sleep objectively, we find that low-income adults in Chennai, India, sleep only 5.5 hours a night on average despite spending 8 hours in bed. Their sleep is highly interrupted, with sleep efficiency-sleep per time in bed-comparable to those with disorders such as sleep apnea or insomnia. A randomized three-week treatment providing information, encouragement, and improvements to home sleep environments increased sleep duration by 27 minutes a night by inducing more time in bed. Contrary to expert predictions and a large body of sleep research, increased nighttime sleep had no detectable effects on cognition, productivity, decision making, or well being, and led to small decreases in labor supply. In contrast, short afternoon naps at the workplace improved an overall index of outcomes by 0.12 standard deviations, with significant increases in productivity, psychological well-being, and cognition, but a decrease in work time.

Exploiting the exogenous and regional nature of the Great East Japan Earthquake of 2011, this article provides a quantification of the role of input-output linkages as a mechanism for the propagation and amplification of shocks. We document that the disruption caused by the disaster propagated upstream and downstream along supply chains, affecting the direct and indirect suppliers and customers of disaster-stricken firms. Using a general equilibrium model of production networks, we then obtain an estimate for the overall macroeconomic impact of the disaster by taking these propagation effects into account. We find that the earthquake and its aftermaths resulted in a 0.47 percentage point decline in Japan’s real GDP growth in the year following the disaster.

Folklore is the collection of traditional beliefs, customs, and stories of a community passed through the generations by word of mouth. We introduce to economics a unique catalog of oral traditions spanning approximately 1,000 societies. After validating the catalog's content by showing that the groups' motifs reflect known geographic and social attributes, we present two sets of applications. First, we illustrate how to fill in the gaps and expand upon a group's ethnographic record, focusing on political complexity, high gods, and trade. Second, we discuss how machine learning and human classification methods can help shed light on cultural traits, using gender roles, attitudes toward risk, and trust as examples. Societies with tales portraying men as dominant and women as submissive tend to relegate their women to subordinate positions in their communities, both historically and today. More risk-averse and less entrepreneurial people grew up listening to stories wherein competitions and challenges are more likely to be harmful than beneficial. Communities with low tolerance toward antisocial behavior, captured by the prevalence of tricksters being punished, are more trusting and prosperous today. These patterns hold across groups, countries, and second-generation immigrants. Overall, the results highlight the significance of folklore in cultural economics, calling for additional applications.

Should policy communications aim at anchoring expectations of the policy instrument (“keep interest rates at zero until date τ”) or of the targeted outcome (“do whatever it takes to bring unemployment down to y%”)? We study how the optimal approach depends on a departure from rational expectations. People have limited depth of knowledge and rationality, or form otherwise distorted beliefs about the behavior of others and the general equilibrium (GE) effects of policy. The bite of this distortion on implementability and welfare is minimized by target-based guidance if and only if GE feedback is strong enough. This offers a rationale for why central banks should shine the spotlight on unemployment when faced with a prolonged liquidity trap, a steep Keynesian cross, or a large financial accelerator.

This article sheds new light on the long-run evolution of political cleavages in 21 Western democracies. We exploit a new database on the socioeconomic determinants of the vote, covering more than 300 elections held between 1948 and 2020. In the 1950s and 1960s, the vote for social democratic, socialist, and affiliated parties was associated with lower-educated and low-income voters. It has gradually become associated with higher-educated voters, giving rise in the 2010s to a disconnection between the effects of income and education on the vote: higher-educated voters now vote for the “left,” while high-income voters continue to vote for the “right.” This transition has been accelerated by the rise of green and anti-immigration movements, whose distinctive feature is to concentrate the votes of the higher-educated and lower-educated electorates. Combining our database with historical data on political parties’ programs, we provide evidence that the reversal of the education cleavage is strongly linked to the emergence of a new “sociocultural” axis of political conflict.

Family and social networks are widely believed to influence important life decisions, but causal identification of those effects is notoriously challenging. Using data from Chile, Croatia, Sweden, and the United States, we study within-family spillovers in college and major choice across a variety of national contexts. Exploiting college-specific admissions thresholds that directly affect older but not younger siblings’ college options, we show that in all four countries a meaningful portion of younger siblings follow their older sibling to the same college or college-major combination. Older siblings are followed regardless of whether their target and counterfactual options have large, small, or even negative differences in quality. Spillover effects disappear, however, if the older sibling drops out of college, suggesting that older siblings’ college experiences matter. That siblings influence important human capital investment decisions across such varied contexts suggests that our findings are not an artifact of particular institutional detail but a more generalizable description of human behavior. Causal links between the postsecondary paths of close peers may partly explain persistent college enrollment inequalities between social groups, and this suggests that interventions to improve college access may have multiplier effects.

We experimentally test a theory of risky choice in which the perception of a lottery payoff is noisy due to information processing constraints in the brain. We model perception using the principle of efficient coding, which implies that perception is most accurate for those payoffs that occur most frequently. Across two preregistered laboratory experiments, we manipulate the distribution from which payoffs in the choice set are drawn. In our first experiment, we find that risk taking is more sensitive to payoffs that are presented more frequently. In a follow-up task, we incentivize subjects to classify which of two symbolic numbers is larger. Subjects exhibit higher accuracy and faster response times for numbers they have observed more frequently. In our second experiment, we manipulate the payoff distribution so that efficient coding modulates the strength of valuation biases. As we experimentally increase the frequency of large payoffs, we find that subjects perceive the upside of a risky lottery more accurately and take greater risk. Together, our experimental results suggest that risk taking depends systematically on the payoff distribution to which the decision maker’s perceptual system has recently adapted. More broadly, our findings highlight the importance of imprecise and efficient coding in economic decision making.

We use large-scale federal survey data linked to administrative death records to investigate the relationship between Medicaid enrollment and mortality. Our analysis compares changes in mortality for near-elderly adults in states with and without Affordable Care Act Medicaid expansions. We identify adults most likely to benefit using survey information on socioeconomic status, citizenship status, and public program participation. We find that prior to the ACA expansions, mortality rates across expansion and nonexpansion states trended similarly, but beginning in the first year of the policy, there were significant reductions in mortality in states that opted to expand relative to nonexpanders. Individuals in expansion states experienced a 0.132 percentage point decline in annual mortality, a 9.4% reduction over the sample mean, as a result of the Medicaid expansions. The effect is driven by a reduction in disease-related deaths and grows over time. A variety of alternative specifications, methods of inference, placebo tests, and sample definitions confirm our main result.

U.S. states increasingly require identification to vote—an ostensible attempt to deter fraud that prompts complaints of selective disenfranchisement. Using a difference-in-differences design on a panel data set with 1.6 billion observations, 2008–2018, we find that the laws have no negative effect on registration or turnout, overall or for any group defined by race, gender, age, or party affiliation. These results hold through a large number of specifications. Our most demanding specification controls for state, year, and voter fixed effects, along with state and voter time-varying controls. Based on this specification, we obtain point estimates of −0.1 percentage points for effects both on overall registration and turnout (with 95% confidence intervals of [−2.3; 2.1 percentage points] and [−3.0; 2.8 percentage points], respectively), and +1.4 percentage points for the effect on the turnout of nonwhite voters relative to whites (with a 95% confidence interval of [−0.5; 3.2 percentage points]). The lack of negative impact on voter turnout cannot be attributed to voters’ reaction against the laws, measured by campaign contributions and self-reported political engagement. However, the likelihood that nonwhite voters were contacted by a campaign increases by 4.7 percentage points, suggesting that parties’ mobilization might have offset modest effects of the laws on the participation of ethnic minorities. Finally, strict ID requirements have no effect on fraud, actual or perceived. Overall, our findings suggest that efforts to improve elections may be better directed at other reforms.

How does mobile broadband internet affect approval of government? Using Gallup World Poll surveys of 840,537 individuals from 2,232 subnational regions in 116 countries from 2008 to 2017 and the global expansion of 3G mobile networks, we show that on average, an increase in mobile broadband internet access reduces government approval. This effect is present only when the internet is not censored, and it is stronger when the traditional media are censored. 3G helps expose actual corruption in government: revelations of the Panama Papers and other corruption incidents translate into higher perceptions of corruption in regions covered by 3G networks. Voter disillusionment had electoral implications. In Europe, 3G expansion led to lower vote shares for incumbent parties and higher vote shares for the antiestablishment populist opposition. Vote shares for nonpopulist opposition parties were unaffected by 3G expansion.