Knowledge that Transforms

Are application hassles, or “ordeals,” an effective way to limit public program enrollment? We provide new evidence by studying (removal of) an auto-enrollment policy for health insurance, adding an extra step to enroll. This minor ordeal has a major impact, reducing enrollment by 33 percent and differentially excluding young, healthy, and economically disadvantaged people. Using a simple model, we show adverse selection—a classic feature of insurance markets—undermines ordeals’ standard rationale of excluding low-value individuals since they are also low-cost and may not be inefficient. Our analysis illustrates why ordeals targeting is unlikely to work well in selection markets. (JEL D82, G22, H75, I13, I18)

This paper investigates the effect of voters’ short-term memory on political outcomes by considering politics as a collective learning process. We find that short-term memory may lead to cycles of polarization and consensus across parties’ platforms. Following periods of party consensus, short-term memory implies that there is little variation in voters’ data and therefore limited information about the true state of the world. This in turn allows parties to further their own interests and hence polarize by offering different policies. In contrast, periods of polarization and turnover involve sufficient variation in the data that allows voters to be confident about what the correct policy is, forcing both parties to offer this policy. (JEL D72, D83, E61)

Social movements are catalysts for crucial institutional changes. To succeed, they must coordinate members’ views (consensus building) and actions (mobilization). We study union leaders within Myanmar’s burgeoning labor movement. Union leaders are positively selected on both ability and personality traits that enable them to influence others, yet they earn lower wages. In group discussions about workers’ views on an upcoming national minimum wage negotiation, randomly embedded leaders build consensus around the union’s preferred policy. In an experiment that mimics individual decision-making in a collective action setup, leaders increase mobilization through coordination. (JEL D91, J38, J51, O15)

This paper explores global perceptions and understanding of climate change and policies, examining factors that influence support for climate action and the impact of different types of information. We conduct large-scale surveys with 40,000 respondents from 20 countries, providing new international data on attitudes toward climate change and respondents’ socioeconomic backgrounds and lifestyles. We identify three key perceptions affecting policy support: perceived effectiveness of policies in reducing emissions, their impact on low-income households, and their effect on respondents’ households (self-interest). Educational videos clarifying policy mechanisms increase support for climate policies; those merely highlighting climate change’s impacts do not. (JEL C83, D83, D91, Q54, Q58)

We develop a two-country model in which currency and bond markets are populated by different investor clienteles, and segmentation is partly overcome by arbitrageurs with limited capital. Risk premia in our model are time-varying, connected across markets, and consistent with the empirical violations of uncovered interest parity and expectations hypothesis. Through risk premia, large-scale bond purchases lower domestic and foreign bond yields and depreciate the currency, and short-rate cuts lower foreign yields, with smaller effects than bond purchases. Currency returns are disconnected from long-maturity bond returns, and yet the currency market is instrumental in transmitting bond demand shocks across countries. (JEL E43, E44, E52, F31, G12, G15)

Online labor platforms for short-term, remote work have many more job seekers than available jobs. Despite their relative abundance, workers capture a substantial share of the surplus from transactions. We draw this conclusion from demand estimates that imply workers' wages include significant markups over costs and a survey that validates our surplus estimates. Demand-side search frictions and differentiated characteristics prevent workers from competing away supply-side surplus. Finally, we show that applying traditional employment regulations to online gig economy platforms would lower job posting and hiring rates, reducing aggregate surplus for all market participants, including workers.