Week of September 27, 2019

1. Jobs: I've written a good bit here on the "Great Convergence" from the perspective of financial inclusion--that the US and middle-income countries have more in common in that domain than they have ever had--but another version of the "Great Convergence" is the common focus on jobs in countries across the per-capita income spectrum.
It's useful to put the current convergence in historical perspective--the recognition that creating jobs was critical and that "national champion" industrial development was not creating them played a large role in the development of the microfinance movement. The failure of microcredit to produce much beyond self-employment alternatives to casual labor has brought job creation, and especially job creation through SMEs, back to the top of the agenda of international development. At the same time, the failure of richer economies to produce very many "quality" jobs in the 10 years since the Great Recession (and arguably since the 1970s) or for the foreseeable future has put the question of jobs at the top of the list of concerns for policymakers in those countries.
Paddy Carter, the director of research for CDC (UK, not US), and Petr Sedlacek have a new report on how DFIs and social investors should think about job creation that lays out some of the issues (e.g. boosting productivity can both create and destroy jobs) quite nicely. MIT's "Work of the Future Task Force" also has a new report, this more from the perspective of policymakers in wealthier countries, with a call to focus on job quality more than job quantity. Stephen Greenhouse has a new book on dignity at work, which of course has a lot to do with job quality. Here's a talk he gave recently at Aspen's Economic Opportunities Program.
Seema Jayachandran has a new working paper on a specific part of the jobs conversation: how social norms limit women's labor market participation and what might be done about that. For me it also opens the question about microcredit-driven self-employment being a higher "dignity" job for women in many contexts than the jobs that are available to them otherwise. More on that in a moment.

2. Household Finance: I don't have a lot of links here, just some thoughts from conversations in the last few days. But to kick things off, Felix Salmon had a nice gibe at financial literacy this week that had my confirmation bias going. But in hindsight, I actually disagree: teaching financial literacy actually doesn't seem to be that hard based on the many papers that show that running a class leads to passing a financial literacy test. The hard part is making higher financial literacy pay off in terms of changed behavior. But there I agree with Felix's basic point: higher financial literacy doesn't lead to improved decision making for the poor or the wealthy. The wealthy just have more structure and protection (both formal in terms of regulation and practices at private firms who know better than to routinely screw profitable customers, and informal in terms of slack and cushion) from bad choices. On the flip side, Joshua Goodman has a new paper in the Journal of Labor Economics that finds that more compulsory high school math leads African-American students to complete more math coursework and to higher paying jobs (there's a nice little estimate that the return to additional math courses makes up half of the gains from an additional year of school).
Part one of "more on that in a moment" is that Seema with a rockstar list of development economists (Erica Field, Rohini Pande, Natalia Rigol, Simone Schaner and Charity Troyer Moore) has another new paper on whether access to, deposits into and training on using a personal bank account affects women's labor supply and gender norms. They find that it does increase women's labor supply and shifts norms to be more accepting of women working. Here's the indispensible Lyman Stone with a somewhat skeptical take on the interpretation of the data.
Finally, in a conversation with Northern Trust this week about their financial coaching work (see a recent summary here) a really fascinating insight came up: people in the coaching programs seem to have much more success when "saving" is framed as "debt reduction" than when it's framed as "saving." These sort of things always grab my attention because Jonathan's paper Borrowing to Save was a seminal piece for my interest and thinking in financial inclusion. But it also got me thinking: what would happen if retirement savings programs were framed as debt + loss aversion? Specifically, if when you started a job, the employer said: "I'm loaning you $10K, deposited into an IRA and you owe me $x monthly, until you pay it off--and if you don't I take it back." Obviously you couldn't run an experiment like that in the US because of regulations, but is there somewhere you could? Maybe someone has already done it? Let me know if you have any thoughts.

3. Digital Finance: I linked this a few weeks ago, but I keep coming back to it, so I'm going to link it again: CGAP's data set on how Kenyans use m-Pesa. MicroSave also has some new data on Kenya, built in partnership with the Smart Campaign and the SPTF, specifically on the prevalence and use of digital credit, which "highlights some positive signs and some persistent problems." Honestly I see a lot more of the persistent problems than of the positive signs.
That's reflected in a new post from David Porteous at Next Billion about the nearly completed FIBR project (no the acronym doesn't make any sense to me either) which looks at digitization and financial inclusion. Among the persistent problems: for most of the world digital finance isn't different from mobile money (in other words there isn't deeper engagement with formal finance by individuals or much progress on digitization of business finance), and new players with unclear (or non-existent) commitment to social goals are dominant. Let me expand quickly on one point that David frames positively which I am much more cautious of: the extension of digital credit to small business by large organizations with access to their data. Here's the home page of the Responsible Business Lending Coalition which exists because of all the ways that increased access to data and digitization is facilitating predatory small business lending in the US.
Speaking of new players, Juvo has "announced" "Financial Identity as a Service", complete with ridiculous acronym FiDaas). I'm not sure if there is a there there, but you can also guess my priors about this based on the above two paragraphs. And here's a WSJ piece on Google Pay's success in India, which came very much as a surprise to me. It turns out part of the reason is Google launched the service in India in advance of regulations that slowing competitors down.

4. Evidence/Methods: We often talk around here about the barriers to getting policymakers to take evidence into account in their decision-making. It turns out that a first step toward more evidence-based policy might be teaching statistics students not to be so availability-biased and frequentist.
Before you chuckle to yourself too much about psychology vs. economics, keep reading. Here's a new paper on the multiple testing problem that inevitably results from natural experiments--once one paper identifies the natural experiment there are often many other papers that follow using the same "event" to test other hypotheses. This is certainly not the last word, but it raises big questions. Stuart Buck has some big questions of his own about how to account for multiple hypothesis testing and how we should even think about these problems.
Another domain of economics research that hasn't gotten enough attention is how to do cost-benefit analysis that is meaningful from a policy perspective. Caitlin Tulloch has been all over this issue and she and her collaborators have a new report on best practices for cost-efficiency analysis of basic needs programs.
While it's not the sort of thing I usually include in methods, the AEA's climate survey report is out. And it makes it clear that the harassment of women and minorities in the economics discipline is in fact a method that has shaped and continues to shape the profession and the research.

5. Philanthropy: Speaking of methods that shape development economics--seeking funding from billionaire philanthropists is another core method that shapes the discipline. Here's an interaction I had with Justin Sandefur and others on how the intersection of demands of the profession, the state of evidence-based policymaking and the existence of large-scale philanthropy shapes what the median development economist should focus on. It's in part a preview of my chapter in the upcoming book on RCTs in development economics edited by Isabelle Guerin, Florent Bedecarrats and Francois Roubaud.
Here's Kelsey Piper making the positive case for the role of private mega-philanthropy, through the lens of modern contraception.
And here's a video of two of my favorite thinkers in philanthropy, Rob Reich and Phil Buchanan, fiercely debating each other about the role of private philanthropy in American society, based on their recent books (Rob's Just Giving; Phil's Giving Done Right). My sympathies lie more with Rob, but what I think is really going on in these conversations between Phil and Rob is about differing theories of change. Rob is trying to move the Overton Window on how we talk about philanthropy in order to create space for serious conversations about shifting policy; Phil is worried that Rob will shift the Overton Window too far too fast. But the best part is that I got to add to my idiosyncratic collection of books signed by the intellectual anti-thesis of the author (see also: Angus Deaton signing my copy of Poor Economics).

No particular reason that this came to mind. Source:  Stephan Pastis  And by the way, any parent with kids between 8 and 13, if you haven't stocked your house with the  entire Timmy Failure series by Pastis , you're doing parenting wrong.

No particular reason that this came to mind. Source: Stephan Pastis
And by the way, any parent with kids between 8 and 13, if you haven't stocked your house with the entire Timmy Failure series by Pastis, you're doing parenting wrong.

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