not all price endings are created equal price points and asymmetric price rigidity abstract we document an asymmetry in the rigidity of 9 ending prices relative to non 9 ending prices consumers have difficulty noticing higher prices if they are 9 ending or noticing price increases if the new prices are 9 ending because 9 endings are used as a signal for low prices price setters respond strategically to the consumer heuristic by setting 9 ending prices more often after price increases than after price decreases 9 ending prices therefore remain 9 ending more often after price increases than after price decreases leading to asymmetric rigidity 9 ending prices are more rigid upward than downward these findings hold for both transaction prices and regular prices and for both inflation and no inflation periods

status and poverty we present a model in which individuals preferences are defined over their consumption transfers to offspring and social status associated with income we show that a separating equilibrium exists where individuals expenditure on conspicuous consumption is a signal for their unobserved income in this equilibrium poor families that climb up the social ladder by the accumulation of wealth engage in conspicuous consumption that prevents them from escaping poverty our model may explain why the poor make some choices that do not appear to help them escape poverty jel d91 o11 o12 o15

how endowments accumulations and choice determine the geography of agricultural productivity in ecuador spatial disparity in incomes and productivity is apparent across and within countries most studies of the determinants of such differences focus on cross country comparisons or location choice among firms less studied are the large differences in agricultural productivity within countries related to concentrations of rural poverty for policy understanding the determinants of this geography of agricultural productivity is important because strategies to reduce poverty often feature components designed to boost regional agricultural incomes census and endowment data for ecuador are used to estimate a model of endogenous technology choice to explain large regional differences in agricultural output and factor productivity a composite error estimation technique is used to separate systemic determinants from idiosyncratic differences simulations are employed to explore policy avenues the findings suggest a differentiation between the types of policies that promote growth in agriculture generally and those that are more likely to assist the rural poor

getting to the top of mind how reminders increase saving we provide evidence from field experiments with three different banks that reminder messages increase commitment attainment for clients who recently opened commitment savings accounts messages that mention both savings goals and financial incentives are particularly effective whereas other content variations such as gain versus loss framing do not have significantly different effects nor do we find evidence that receiving additional late reminders has an additive effect these empirical results do not map neatly into existing models so we provide a simple model where limited attention to exceptional expenses can generate undersaving that is in turn mitigated by reminders data as supplemental material are available at http dx doi org 10 1287 mnsc 2015 2296 this paper was accepted by teck hua ho behavioral economics

the institutional causes of china s great famine 1959 1961 this paper studies the causes of china s great famine during which 16 5 to 45 million individuals perished in rural areas we document that average rural food retention during the famine was too high to generate a severe famine without rural inequality in food availability that there was significant variance in famine mortality rates across rural regions and that rural mortality rates were positively correlated with per capita food production a surprising pattern that is unique to the famine years we provide evidence that an inflexible and progressive government procurement policy where procurement could not adjust to contemporaneous production and larger shares of expected production were procured from more productive regions was necessary for generating this pattern and that this policy was a quantitatively important contributor to overall famine mortality

imputed income from owner occupied housing and income inequality imputed income from owner occupied housing is generally not included in analyses of the distribution of income yet the value of homeownership is undoubtedly an important element distinguishing the economic status of one family from another in this paper using a new method to decompose income inequality by income source we analyze the impact of potential income derived from the net worth of housing on a representative national sample of us homeowners using 1980 survey of residential finance data we find that housing income adds less to inequality per dollar of income than does income from all other sources

income housing wealth and gender inequality gender inequalities in income are relatively widely documented but their realisation in the housing system is less well understood this paper examines the relationship between incomes access to housing and housing costs among widowed divorced separated and never married single people in australia while the relative financial advantages of single men are sustained throughout the housing system there is some evidence that gender discrepancies in income are reduced once housing costs are taken into account lone mothers however fare least well and face a disproportionate loss of disposable income through housing expenditures

saving rates and poverty the role of conspicuous consumption and human capital poor families around the world spend a large fraction of their income consuming goods that do not appear to alleviate poverty while saving at low rates we suggest that individuals care about economic status and interpret this behaviour as conspicuous consumption intended to provide a signal about unobserved income we show that if human capital is observable and correlated with income then a signalling equilibrium in which poor individuals tend to spend a large fraction of their income on conspicuous consumption can emerge this equilibrium gives rise to an increasing marginal propensity to save that might generate a poverty trap

malnutrition and child labor in pre industrial and developing economies it is common to find i entire families including children working together in family farms or urban factories and ii a positive link between a person s consumption and her productivity this paper argues that there is a natural reason for the concurrence of i and ii as a rule households are characterized by intra household altruism an increase in the income of an individual increases the consumption of all household members hence when an employer pays an adult worker a high wage to enhance her productivity part of it ends up augmenting her children s consumption and productivity one way for the employer to prevent this leakage and internalize the externality is to employ the children as well this explains the higher incidence of family labor in poor societies where ii is more likely to be true

inequality control rights and rent seeking sugar cooperatives in maharashtra this paper presents a theory of rent seeking within farmer cooperatives in which inequality of asset ownership affects relative control rights of different groups of members the two key assumptions are constraints on lump sum transfers from poorer members and disproportionate control rights wielded by wealthier members transfers of rents to the latter are achieved by depressing prices paid for inputs supplied by members and diverting resulting retained earnings the theory predicts that increased heterogeneity of landholdings in the local area causes increased inefficiency by inducing a lower input price and a lower level of installed crushing capacity predictions concerning the effect of the distribution of local landownership on sugarcane price capacity levels and participation rates of different classes of farmers are confirmed by data from nearly 100 sugar cooperatives in the indian state of maharashtra over the period 1971 93

theories of poverty traps and anti poverty policies in this paper we provide a conceptual overview of alternative mechanisms leading to poverty traps at the individual level making a distinction between those that are due to external frictions e g market failure and those that are due to behavior under extreme scarcity in the absence of any frictions we develop a common theoretical framework to examine alternative scenarios characterizing conditions under which poverty traps in the sense of multiple stable steady states arise as opposed to possibly conditional convergence to a unique steady state we apply this framework to discuss the relative merits of alternative anti poverty policies such as unconditional and conditional cash transfers and direct interventions aimed at improving market access to the poor or improving public service delivery jel codes d13 d23 o12 o15

happiness and productivity some firms say they care about the well being and happiness of their employees but are such claims hype or scientific good sense we provide evidence for a classic piece rate setting that happ

time use and labor productivity the returns to sleep abstract we investigate how the largest use of time sleep affects productivity time use data from the united states allow us to test a model in which sleep improves productivity consistent with t

sunset time and the economic effects of social jetlag evidence from us time zone borders abstract the rapid evolution into a 24 h society challenges individuals ability to conciliate work schedules and biological needs epidemiological research suggests that social and biological time are increasingly drifting apart social jetlag this study uses a spatial regression discontinuity design to estimate the economic cost of the misalignment between social and biological rhythms arising at the border of a time zone in the presence of relatively rigid social schedules e g work and school schedules exploiting the discontinuity in the timing of natural light at a time zone boundary we find that an extra hour of natural light in the evening reduces sleep duration by an average of 19 minutes and increases the likelihood of reporting insufficient sleep using data drawn from the centers for disease control and prevention and the us census we find that the discontinuity in the timing of natural light has significant effects on health outcomes typically associated with circadian rhythms disruptions e g obesity diabetes cardiovascular diseases and breast cancer and economic performance per capita income we provide a lower bound estimate of the health care costs and productivity losses associated with these effects

the economics of poverty traps and persistent poverty empirical and policy implications the moral and economic imperatives to intervene in poverty traps motivate the identification of poverty traps and their structural causes so as to inform the design of appropriate policy responses however empirical identification remains challenging because of poverty traps complexity after reviewing mechanisms that can generate poverty traps we focus on one multiple financial market failures emphasising its heretofore underappreciated testable implications including specific behaviours that are rational only in the presence of a poverty trap we therefore recommend tests for these behaviours rather than more econometrically challenged efforts to directly test for poverty traps in estimated asset dynamics

home owner residential property taxes and their burden on net personal wealth an empirical study for australia domestic residential property taxes can be viewed as a substitute for a tax on personal wealth this paper measures the formal distributional characteristics of residential property taxes in australia with respect to the net wealth of home owners and the net wealth of all households in the personal sector net wealth is estimated by a combination of investment income and survey methods the study emphasises three major findings first on controlling for stage in the life cycle the formal incidence of residential property taxes on home owners net wealth is clearly regressive with respect to the income of home owners secondly residential property taxes are a relatively high burden on young home owner households net personal wealth finally though tenants are not liable for residential property taxes in australia and the choice of owner occupation is income elastic the residential property tax burden on personal sector wealth is not distributed progressively

alcohol and self control a field experiment in india this paper studies alcohol consumption among low income workers in india in a 3 week field experiment the majority of 229 cycle rickshaw drivers were willing to forgo substantial monetary payments in order to set incentives for themselves to remain sober thus exhibiting demand for commitment to sobriety randomly receiving sobriety incentives significantly reduced daytime drinking while leaving overall drinking unchanged i find no evidence of higher daytime sobriety significantly changing labor supply productivity or earnings in contrast increasing sobriety raised savings by 50 percent an effect that does not appear to be solely explained by changes in income net of alcohol expenditures

what have we learned from a decade of empirical research on growth comment on growth empirics and reality by william a brock and steven n durlauf

inequality as a determinant of malnutrition and unemployment policy this paper explores the policy implications that are obtained once it is recognized that at low nutrition intakes a person s productivity is an increasing function of intake in the context of a fully general equilibrium model it is shown that if aggregate assets in an economy are neither large nor small certain patterns of lorenz improving asset redistributions or nutrition transfers increase aggregate output and reduce the volume of involuntary unemployment and the incidence of undernourishment copyright 1987 by royal economic society

the economics of non convex ecosystems introduction the word convexity is ubiquitous in economics but absent from economics in this paper we explain why and show what difference it makes to economic analysis if ecosystem non convexities are taken seriously a simple proof is provided of the connection between self similarity and power laws we also provide an introduction to each of the papers in the symposium and draw out the way in which they form a linked set of contributions

cheap promises evidence from loan repayment pledges in an online experiment abstract across domains people struggle to follow through on their commitments this can happen for many reasons including dishonesty forgetfulness or insufficient intrinsic motivation social scientists have explored the reasons for persistent failures to follow through suggesting that eliciting explicit promises can be an effective way to motivate action this paper presents a field experiment that tests the effect of explicit promises in the form of honor pledges on loan repayment rates the experiment was conducted with lendup an online lender and targeted 4 883 first time borrowers with the firm individuals were randomized into four groups with the following experimental treatments 1 having no honor pledge to complete control 2 signing a given honor pledge 3 re typing the same honor pledge as in 2 before signing and 4 coming up with a personal honor pledge to type and sign i also randomized whether or not borrowers were reminded of the honor pledge they signed prior to the repayment deadline the results suggest that the honor pledge treatments had minimal impacts on repayment and that reminders of the pledges were similarly ineffective this suggests that borrowers who fail to repay loans do so not because of dishonesty or behavioral biases but because they suffer from true financial hardship and are simply unable to repay

adaptation to land constraints is africa different since the seminal works of malthus and boserup scientists have long debated the impact of population growth and land constraints on the wellbeing of rural people today these concerns are particularly relevant to africa with its rapid population growth very small farms and chronic food insecurity in this paper we examine adaptation to falling land labor ratios using a comprehensive theoretical framework in which households faced with binding land constraints can respond in three ways intensifying agricultural production diversifying out of agriculture and reducing fertility rates using cross country data and drawing upon the existing literature we reach three conclusions first population density is associated with reduced fallows and more intensive use of land but not fertilizer use or irrigation indicating major challenges in achieving sustainable intensification or agricultural productivity growth second there is little evidence of successful non farm diversification in response to land pressures in africa from domestic or international income sources third rural africans in land constrained countries desire smaller families but have thus far benefited little from family planning policies these findings underscore the need for a coordinated multi sectoral approach to sustainably reduce poverty in the region

reproductive externalities and fertility behaviour abstract this article studies reproductive externalities within rural communities in poor countries it is shown that such externalities create a link between household poverty household size and the local natural resource base each of which is viewed as being endogenous the models presented here offer an explanation for the fact that in recent decades large groups of people in various parts of the world have been unable to lift themselves out of acute poverty even while their national economies have on average enjoyed economic growth implications for policy and institutional changes are drawn

two tier land tenure system and sustained economic growth in post 1978 rural china abstract the two tier land tenure system has been widely blamed for the problems in land allocation and in land specific investment observed in the postreform rural china greater privatization of property rights in land has been proposed to enable productive farmers to acquire more land to promote land circulation to improve farmers access to credit and to encourage farm investment it is argued here that in the presence of multiple market distortions land privatization is unlikely to provide a solution to the agricultural problems rather an approach which refines the existing framework of the two tier ownership system offers more promise

minding small change among small firms in kenya abstract many micro enterprises in kenya have low productivity we focus on one particular business decision which may indicate low productivity keeping enough change on hand to break larger bills this is a surprisingly large problem our estimates suggest that the average firm loses approximately 5 8 of total profits because they do not have enough change we conducted two experiments to shed light on why this happens surveying firms weekly about lost sales thereby increasing the salience of change and explicitly informing firms about lost sales we find that both interventions significantly altered change management and reduced lost sales this largely rules out many potential explanations such as the risk of theft or the costs of holding change being too high one explanation consistent with firms response to the survey and information on their lost sales is that firms were not perfectly attentive to change management prior to the interventions

potatoes milk and the old world population boom abstract this paper explores the role of two foods potatoes and milk in explaining the increase in economic development experienced throughout the old world in the 18th and 19th centuries nunn and qian 2011 show the introduction of the potato from the new world has a significant explanatory role for within country population and urbanization growth over this period i expand on this by considering the role of milk consumption which is hypothesized to be a complement in diet to potatoes due to a differential composition of essential nutrients using a country level measure for the suitability of milk consumption the frequency of lactase persistence i show that the marginal effect of potatoes on post 1700 population and urbanization growth is positively related to milk consumption as the frequency of milk consumption approaches unity the marginal effect of potatoes more than doubles in magnitude compared to the baseline estimate of nunn and qian

height skills and labor market outcomes in mexico abstract taller workers are paid higher wages a prominent explanation for this pattern is that physical growth and cognitive development share childhood inputs inducing a correlation between adult height and two productive skills strength and intelligence this paper explores the relative roles of strength and intelligence in explaining the labor market height premium among mexican men while cognitive test scores account for a limited share of the height premium roughly half of the premium can be attributed to the educational and occupational choices of taller workers taller workers obtain more education and sort into occupations with greater intelligence requirements and lower strength requirements suggesting a possible role for cognitive skill

focusing effect and the poverty trap abstract i build a dynamic consumption savings model in which agents choices are distorted by the focusing effect agents overweight the utility of goods in which their options differ more i show that the consumption savings choice depends both on the marginal return on savings and on the total return on savings implying that the incentive to save may increase with the initial level of wealth as a consequence a salience based poverty trap may exist when the marginal return on savings is sufficiently high and sufficiently flat i also consider the case of a perfect credit market and show that a poverty trap may emerge when the salience of consumption is bounded above i discuss policy implications in particular imposing upon an agent a punishment for decreasing savings below a threshold leads to a higher level of savings even when the threshold triggering the punishment is not binding

nutrition non convexities and redistributive policies of the varying motivations underlying research in economics forecasting has proved to be the most discomfiting it is not so much that economists are not good at it it is more that we do not have any firm idea if we are bad at it we do not yet have a consensus on how to judge the matter what i shall therefore do in this note is avoid even trying to make a prediction of which way we will be moving in economics research instead i will outline the kind of work i would like to see come to fruition in the field in which my current research interest lies namely the economics of destitution we need a redirection in how we go about our research in this area my motivation here springs from an unease i have over methodological matters in current studies of poverty in poor countries in what follows i will first present in abstract terms how i think we are going wrong i will then exemplify this with a key example

nudging farmers to use fertilizer theory and experimental evidence from kenya we model farmers as facing small fixed costs of purchasing fertil izer and assume some are stochastically present biased and not fully sophisticated about this bias such farmers may procrastinate post poning fertilizer purchases until later periods when they may be too impatient to purchase fertilizer consistent with the model many farmers in western kenya fail to take advantage of apparently profit able fertilizer investments but they do invest in response to small time limited discounts on the cost of acquiring fertilizer free deliv ery just after harvest calibration suggests that this policy can yield higher welfare than either laissez faire policies or heavy subsidies

introduction to development theory abstractthisarticle introduces the symposium on economic development theory 2007 elsevier inc all rights reserved jel classi cation o11 o12keywords development economics development economics a subject that studies institutions growth inequality and povertyin the developing world is a large lively and exciting area of research the objective of thissymposium is to put together some contributions in economic theory with a distinct focus ondevelopment questions much of early development economics as typi ed in the work of paul rosenstein rodan arthurlewis ragnarnurkse tiborscitovsky allynyoung gunnarmyrdal harveyleibenstein alberthirschman amartyasenandothers wastheoretical thoughnotnecessarilyinthesenseofformalmodel building theseauthorsallfelttheneedtobringnewconceptsintoeconomictheory ideas that would capture the essential features of underdevelopment and provide explanationsof the development process existing economic theory with its focus on competitive markets depersonalized exchange steady technical progress and balanced growth simply did not seemrightwhenmatchedwiththegroundrealitiesofunderdevelopment fragmented imperfect orjustplain missing markets highly personalized transactions in credit insurance or agrarian tenancy ambiguousornonexistentpropertyrights andwidespreadevidenceofpovertytrapsandhistoricallock ins a fair bit of modern economic theory was born in some of these early development writings young s article 40 on increasing returns was perhaps the rst systematic study of noncon vexities in economic growth rosenstein rodan s celebrated paper 32 on post war interven tion in europe provided a conceptual foundation for modern thinking on coordination failures

risk taking behavior in the presence of nonconvex asset dynamics a growing literature on poverty traps emphasizes the links between multiple equilibria and risk avoidance however multiple equilibria may also foster risk taking behavior by some poor people we illustrate this idea with a simple analytical model in which people with different wealth and ability endowments make investment and risky activity choices in the presence of known nonconvex asset dynamics this model underscores a crucial distinction between familiar static concepts of risk aversion and forward looking dynamic risk responses to nonconvex asset dynamics even when unobservable preferences exhibit decreasing absolute risk aversion observed behavior may suggest that risk aversion actually increases with wealth near perceived dynamic asset thresholds although high ability individuals are not immune from poverty traps they can leverage their capital endowments more effectively than lower ability types and are therefore less likely to take seemingly excessive risks in general linkages between behavioral responses and wealth dynamics often seem to run in both directions both theoretical and empirical poverty trap research could benefit from making this two way linkage more explicit jel d81 o12 d90

limited attention and income distribution economists have long been interested in the idea that there is a direct circular relation between poverty and low productivity and not just one that is mediated by market failures usually in asset markets the nutrition based efficiency wage model partha dasgupta and debraj ray 1987 is the canonical example of models where this happens however it has been variously suggested see for example t n srinivasan 1994 that the link from nutrition to productivity and especially the link from productivity to nutrition is too weak to be any more than a small part of the story partha dasgupta himself acknowledges this when he writes nutrition productivity construct provides a metaphor for an economic environment harboring poverty traps partha dasgupta 1997 page 5 we propose an alternative approach to this question based on the idea that attention is a scarce resource that is important for productivity specifically people may not be able to fully attend to their jobs if they are also worrying about problems at home and being distracted in this way reduces productivity but not paying attention at home is also costly early symptoms of a child s sickness may go unnoticed water may run out at the end of the day kerosene for lighting lamps at home might run out and make it hard to do homework etc finally the extent to which home life distracts depends on the nature of home life specifically certain goods e g a good baby sitter a 24 hour piped water supply a connection to a power supply grid can reduce the extent of home life distraction these three assumptions generate an interesting relation between income and productivity that is at the core of our model the non poor in this model by virtue of owning distraction saving goods and services at home are able to focus more on their work hence they will be more productive at work and will be able to afford more distraction saving goods this simple two way relationship between in this abstract was borrowed from another version of this item

housing and poverty a major goal of social programs in a time of fiscal austerity is to focus available assistance on those households in the greatest need this seemingly simple dictum has become increasingly difficult to follow as the dynamics of poverty have been clarified through analysis of longitudinal panel data in recent years we can illustrate the importance of these dynamics using the following findings about the future incomes of the 22 million people in poverty in 1967

electoral competition with rationally inattentive voters how do voters allocate costly attention to alternative political issues and how does selective ignorance of voters interact with policy design by politicians we address these questions by developing a model of electoral competition with rationally inattentive voters rational inattention amplies the eects of preference intensity because voters pay more attention where stakes are higher the model has many potential applications and those that we discuss in more detail imply that extremist voters are more attentive and inuential public goods are under provided divisive issues receive more attention and less transparent candidates choose more extreme policies endogenous attention can also lead to multiple equilibria explaining how poor voters in developing countries can be politically empowered by welfare programs

stochastic wealth dynamics and risk management among a poor population we use herd history data collected among pastoralists in southern ethiopia to study stochastic wealth dynamics among a poor population although covariate rainfall shocks plainly matter household specific factors including own herd size account for most observed variability in wealth dynamics we find no support for the tragedy of the commons hypothesis past studies may have conflated costly self insurance with stocking rate externalities biophysical shocks move households between multiple dynamic wealth equilibria the lowest suggesting a poverty trap according to nonconvex path dynamics these findings have broad implications for development and relief strategies among a poor population vulnerable to climatic shocks a vast economic literature on risk management rests explicitly or implicitly on the classic friedmanite permanent income hypothesis studies of portfolio management consumption smoothing social insurance and the like all depend on the canonical assumption that stochastic income realisations are drawn from a stationary income distribution leading to consumption smoothing off a stable asset base the possibility of asset accumulation connects this literature to the immense literature on the theory and empirics of economic growth

the effects of human capital on wages and the determinants of labor supply in a developing country abstract the heckman procedure is used to correct for sample selection bias in estimating wage offer and net labor market supply equations the findings show that wages are affected by education and experience in addition the wage offer is influenced by other genetic and environmental influences captured in the wage of one s father calories as predicted by exogenous instruments are also shown to influence the wage offer suggesting that better nutrition increases labor productivity the probability of market labor participation as well as the amount of net market labor supply declined with the size of paddy landholding in addition to the net market supply elasticity increasing with the amount of land owned and being lower for urban than rural workers

middle income classes and food crises the new food feed competition famine was averted the novelty was that a 3 shortfall in grain production led to a 250 price increase this specific manifestation of the food crisis was the result of the congruence of an old force population pressure with new ones the income explosion and income inequality in a world in which the economic distance between the rich and the poor grows ever greater even minor food shortages are likely to assume major proportions the agricultural price instability that will ensue represents a major threat to the food security of less developed countries examination of the ingredients of modern food crises can help explain some of the new ramifications of the age old problem of world hunger the three elements that are reflected in the food demand situation are population incomes and prices to avoid needless complexity i will reserve my examination of prices to the end population and incomes deserve more detailed analysis