Knowledge that Transforms

Abstract Many social insurance programs have low take-up, but it is unclear whether this is due to administrative barriers, information, or low insurance valuations. We study a Thai policy that offered large incentives for informal workers in selected provinces to enroll. The incentives increased insurance coverage by 67 percentage points- from 6 percent of informal workers to 73 percent- within two months. However, 12 months later, only 13 percent remained insured. Using choices among insurance tiers to back out revealed valuations, we find that low social insurance enrollment may be due to low ex-ante valuations of insurance, rather than administrative barriers.

Abstract We investigate the extent and underlying mechanisms behind race beliefs on hiring decisions. In an incentivized experiment, workers with names perceived to be Black are 30 percentage points less likely to be hired. Results indicate that race serves as a decision heuristic: large perceived race gaps among candidates lead to faster and more confident decisions, and the race gap in hiring increases by 25% when employers are forced to make quick decisions. Estimates from a drift-diffusion model reveal that most employers initially focus on worker race, but certain employer groups shift their attention to productivity-related attributes when given sufficient time.

Abstract Social Security Disability Insurance (DI) awards rise in recessions, especially for workers over age 50. We use Medicare data to investigate how health, entry costs, and age-based DI eligibility rules shape this pattern. Entrants induced by recessions have lower medical spending and mortality than typical recipients. Entry responses to unemployment jump two- to fourfold at ages 50 and 55, when eligibility rules relax. Using these age-based discontinuities as instruments, we find no shift in marginal entrants' health across unemployment levels. These findings show that DI's age-based eligibility rules are a primary driver of cyclical entry, while health shocks are not.

Abstract Competition authorities have expressed concern that firms selling broadband internet and TV subscriptions may employ usage-based pricing (UBP) of internet to steer consumers toward TV over streaming video. We study this issue with household-level panel data from an internet service provider's UBP experiment, capturing the prices' effects on internet and TV subscriptions, internet usage, and firm revenue. We find that this specific UBP policy largely served to meter internet usage by high-demand households rather than steer them toward TV. Households' payments increased due to usage-related overage charges and internet subscription upgrades to avoid overages. Some households avoided internet-related payments by reducing usage rather than adding TV subscriptions.

Abstract This paper proposes a robust method for semiparametric identification and estimation in panel multinomial choice models, where we allow for infinite-dimensional fixed effects that enter into consumer utilities in an additively nonseparable way, thus incorporating rich forms of unobserved heterogeneity. Our identification strategy exploits multivariate monotonicity in parametric indices, and uses the logical contraposition of an intertemporal inequality on choice probabilities to obtain identifying restrictions. We provide a consistent estimation procedure, and demonstrate the practical advantages of our method with Monte Carlo simulations and an empirical illustration on popcorn sales with the NielsenIQ data.

Abstract The effect of health insurance on consumption risk depends in part on how it interacts with other risks beyond health care cost risk, such as income risk. Using a variety of approaches, I find that for U.S. households, the interaction with other risks transforms the risk protection from health insurance. Standard contracts amplify the impact of other risks, due to both subsidizing normal goods and undoing the protection against other risks from discounts, charity care, and bad debt. Alternative contracts that account for other risks, such as contracts that limit out-of-pocket spending relative to income, can provide better risk protection.

Abstract This paper studies the causal effect of foreign currency dependence on international trade by exploiting Brazil and Argentina's 2008 introduction of a bilateral payments system that eliminated the U.S. dollar as vehicle currency. I identify causal effects using a triple-difference design comparing exports across municipalities with varying bank access and across destinations to control for contemporaneous shocks including the financial crisis. Firm-level analysis finds that local currency adoption increased export values significantly, with effects concentrated among non-commodity exporters. These results demonstrate that foreign currency dependence constitutes a meaningful barrier to emerging market trade.

Abstract Most of China's fertility decline predates the famous One Child Policy — and instead occurred under its predecessor, the Wan Xi Shao, or Later, Longer, Fewer (LLF) campaign. Studying LLF's contribution to fertility and sex selection behavior, we find that LLF i) reduced China's total fertility rate by 0.95 births per woman (explaining 30.6% of its fertility decline), ii) doubled the use of male-biased fertility stopping rules, and iii) promoted postnatal selection (implying 180,000 previously unrecognized missing girls, or 19% of the total during our study period). Considering Chinese population policy to be extreme in global experience, our paper demonstrates the limits of population policy — and its potential human costs.

Abstract This paper proposes a spatial model of imperfect competition in markets with adverse or advantageous selection. The model shows that a reduction in competition exacerbates the inefficiency created by adverse selection but can ameliorate the inefficiency created by advantageous selection. However, reduced competition never corrects the inefficiency perfectly because it introduces an allocative inefficiency. By contrast, the inefficiency can be corrected perfectly through a corrective tax when there is perfect competition. Our results have implications for competition policy in credit and insurance markets, as they caution against viewing imperfect competition as a solution to the inefficiencies created by selection.

Abstract Economics papers increasingly report balance, pretrend, placebo, and other “sniff tests,” rejection of which is bad news for authors, undermining the credibility of their main results. We derive nonparametric bounds on the latent proportion of significant sniff tests removed by the publication process (whether by p-hacking or relegation to the file drawer) and the proportion whose significance was due to true misspecification, not bad luck. Using a hand-collected sample of nearly 30,000 sniff tests, we estimate a removal rate of more than 30% for balance tests in randomized controlled trials and a misspecification rate of more than 40% for other tests.