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Viewing all FaiV posts with topic: Mobile Money  

Week of May 24, 2019

1. India: This year I resolved to make sure I was paying more attention to events in countries with large populations that aren't the United States, and not just treating them like an instance of a broader class. Given the elections in India, and the somewhat surprising strength of the BJP's performance, this seems like an opportune moment. Here's a Vox explainer on the elections for those of you who, like me, may have been only vaguely aware of the elections as a referendum on Modi vs. (Rahul) Gandhi. Here's an interesting essay on the most important feature of Indian politics not being the rivalry between parties but the generally uncontested move toward closing off civil liberties and a more authoritarian state. Here's 12 reasons why the BJP won, with perhaps the most interesting point being the BJP's efficiency at actually delivering welfare programs rather than just vague promises about future welfare programs. For those of you following along in the US or Australia, or any other country where right-wing populism has experienced a rebirth, there are clear parallels throughout. Here's Shamika Ravi on policy priorities for the new government (written before the election).
There is more than the election going on. So here's a couple of things that may be more of traditional interest to faiV readers. Demonetization was three years ago. And everything is back to where it was--maybe this should make programs with "null effects" feel better. And here's a fascinating study of the social lives of married women in Uttarakhand, with a particular emphasis on how "empowerment shocks" spread through social networks and decay over time. 

2. Causality and Publishing Redux: A few things popped up related to last week's focus on causality. One point I touched on was spillovers and general equilibrium effects. Here's a note from Paddy Carter of CDC on the tension for DFIs attempting to invest in ways that are "transformative" (read, lots of spillover effects) and measuring their causal impact. I also noted JDE now accepting papers based on per-analysis plans. Pre-registration isn't going so well in psychology where a new study looked at 27 preregistered plans and the ultimate papers and found all of them deviated from the plan, and only one of those noted the change. Brian Nosek's money quote: "preregistration is a skill and not a bureaucratic process." Which could serve as a theme of Berk Ozler's discussion of using pre-registration to boost the credibility of results, not just for an experiment. Very useful for those interested in developing the pre-registration skill.
This may be stretching it a bit, but Raj Chetty's incipient attempt to replace Ec10 at Harvard got a lot of attention this week. There's a lot to recommend his approach, but there are plenty of people who are concerned about the apparent glossing over of causality. I'm honestly worried that some of these things may cause Angus Deaton and other critics of causal claims from RCTs to go into apoplectic fits. Just when you thought some of the messages might be getting through, along comes a new toy. So I should probably not mention that there's an update to the oldDonohue and Levitt paper on abortion and crime that claims it has better evidencewithout dealing with any of the problems in the underlying model.
  
3. Micro-Digital Finance: Microfinance can be pretty confusing when you get beyond the simple statements and start to worry about how it actually all works, and how it's changing, and what we do and don't know. Hudon, Labie and Szafarz have a nice little primer on those issues with a microfinance alphabet. I wish I had thought of doing this.
I complained last week about "mobile money" not including payment cards, which dominate the United States. But a telecom-driven mobile money product is now available in the US. Well sort of. Not sure what to make of this yet. 
Caribou Digital and Mastercard Foundation have a new study of Kenyan microentrepreneurs "platform practices." I also don't know what to make of this, but that's probably because I haven't read it yet, but I figured many of you would be interested. 
Among other things it's hard to know what to make of, there's Earnin, a sort-of payday lender, health care cost negotiator, fintech something. It's confusing. And New York State regulators are confused too, which is probably not a good sign for Earnin. But that's nothing new--I have to point again to City of Debtors, a book that documents New York city and state regulators confusion over how to regulate small dollar lending for more than a century. 

4. US Inequality: The history of exploitative finance in New York continues to write new chapters, which unfortunately often seem to be just remixes of the old chapters. For instance, the oft-heard story of New York taxi drivers being driven to despair by the entry of Uber and Lyft, misses a big part of the story: those drivers are often operating in deep, deep predatory debt that was going to drown them whether ride-sharing came along or not. For those of you who have followed the supposed stories of microfinance driving Indian farmers to suicide, this should all sound familiar. 
One of the reasons that those loans were unsustainable is the skyrocketing cost of housing in US cities. And that's driving people out of cities, particularly the people with just enough to be able to move away. Why? It's the zoning stupid. Well it's more than that--it's economic rationality. The higher wages for unskilled workers in cities in the US have totally disappeared along with the rise in housing costs.
Overall, though the financial situation of Americans is getting better along with the job market. The new Survey of Household Economic Decisionmaking is out, and the oft-(mis)-quoted statistic about how many Americans would pay for a $400 unexpected expense with cash or a cash-equivalent is at an all time high (for the survey, which is only 6 years old). Still that's only 60%.
And so, many people feel insecure. Here's Jacob Hacker's essay on why, building on his classic book, The Great Risk Shift. Another reason is the continued increase in student debt (I'll tackle the Morehouse/Johnson/Philanthropic angle another week). Helaine Olen has a great policy prescription on that front: make student loans dischargeable in bankruptcy again (MSLDBA?). Though the mobility effects of college degrees may be substantially overstated, which makes the student debt problem even worse. And finally, what should be another reason, even if it isn't, is the many ways that the economy is corrupted by things like this

5. Three Day Weekends: Go enjoy yourself away from a screen, wherever you are.

L-IFT , a diaries research firm, is a proud sponsor of the faiV. See our video on  diaries research with 800 women microentrepreneurs in Myanmar .

L-IFT, a diaries research firm, is a proud sponsor of the faiV. See our video on diaries research with 800 women microentrepreneurs in Myanmar.

From  Alfred Twu , an illustration of "It's the Zoning Stupid" and a nice application for discussing tax incidence theory.  Source .

From Alfred Twu, an illustration of "It's the Zoning Stupid" and a nice application for discussing tax incidence theory. Source.

Week of May 17, 2019

1. Causality: In this great book I know, Jonathan Morduch describes an obsession over causality as "the marker of the tribe" of economists. Most people outside the field, then, might be surprised to find out how unsettled the science of causality is and how much, after all these years, the practice of academic economics is 80% arguing about causal inference. Well, at least in the circles of applied micro that I run in. Recently Emi Nakamura, an "empirical macroeconomist", won the Clark Medal("American economist under the age of 40 who is judged to have made the most significant contribution to economic thought and knowledge") for her work mapping macro theory to macro reality. One of her more well-known papers is a discussion of the gap between theory and evidence in macro; it has a jaw-dropping section on the best existing "evidence" on the effects of monetary policy. So much for an obsession over causal identification. 
Now before getting too holier-than-thou over what is considered evidence in macroeconomics, it's worth pointing out that the experimental micro-crowd is just getting around to measuring general equilibrium effects, the defining feature of macro debates. I've linked multiple times to recent work on GE effects of microcredit (and related programs) on labor markets (See here for links and lots of discussion on that). While I was writing about that the other day, it occurred to me to wonder, given what we know about peer effects in education, whether anyone had looked at whether spillovers/GE effects were responsible for the rapid fade-out of early childhood education interventions. Less than 24 hours later, this new paper from List, Momeni and Zenou showed up in my Twitter feed, finding large spillover effects from an early childhood intervention (1.2 SD! on non-cognitive skills, which are increasingly found to be the more important feature of such programs), which lead to substantial underestimation of program impact. On a related note, here's a short video of Paul Niehaus talking about the value of experiments at scale, including better measurement of GE effects.
Still, there are lots of appealing things about using experiments to establish causality, even if it is somewhat akin to looking for the keys under the streetlights. For instance street lights cause a 36% reduction in nighttime outdoor crime in New York City housing developments. Unfortunately, people really don't like the idea of being experimented on, or even the idea of other people being part of an experiment even when the treatment arms are "unobjectionable." (MR summary here). I'm not really sure how to think about that. 
If you want to dig deep into causality discussions, Cyrus Samii's syllabus for hisQuant II class this spring is here. Lots (and lots) of interesting and useful links there. If you're more of the video type, Nick Huntington-Klein has a new series of videos on causal inference, including one on causal diagrams and using Daggity to draw them. If you are among the obsessed and want to be even more so, Macartan Humphreys is looking for a post-doc to work with him on causal inference at WZB Berlin.

2. Academic Publishing: To understand the RCT movement you have to know something about one of the world's least efficient markets: economics journals (Yes, I'm sure someone has a paper/post explaining how the market is actually efficient after all). Seema Jayachandran tweeted this week about stats from her first year as co-editor at AEA: Applied: "4% were R&R, 36% were reject w/ reports, 60% were desk rejects." All of her R&Rs were eventually accepted and average and median time to decision was less than 2 months.
Data on the acceptance rates at all the AEA journals shows that Seema is doing an exceptional job. AEJ: Micro received 415 papers over a 12 month period, made decisions on only 55% of them, which were all rejections. Yes, zero of those 415 papers were accepted. The overall data led to this thread from Jake Vigdor with the provocative question: "If a journal...never accepts a manuscript, does it exist?" Or how about this paper from Clemens, Montenegro and Pritchett that was finally published in REStat after a decade in R&R? For the record, I have a paper with Michael that we got back for R&R after 4 years that I'm supposed to be revising but I'm writing the faiV instead. While I'm grinding an axe, let me also boost this question from Justin Sandefur on why citations still exist and haven't been replaced by hyperlinks. I wonder if an estimation of the dead weight loss from searching for, formatting and copyediting citation details could get published in an economics journal?
One of the reasons for the dismal acceptance rates in journals is the same as the dismal acceptance rates at top ranked universities. Reputation matters a lot. Tatyana Deryugina has a (revised) proposal on a different way of ranking journals that could lead to a more efficient publishing market. It's a start.
And to close out with some positive news: JDE is now prospectively accepting papers based on pre-analysis plans, without requiring the authors to commit to publishing there. It's almost as if the editors aren't maximizing their oligopolistic power. I hope they don't have their economist credentials revoked.
  
3. Digital Finance/Bangladesh: When the subject turns to mobile money, the country under discussion is still almost always Kenya even 12 years after the founding of m-Pesa. I have a particular axe to grind about counting use of mobile money without including payment cards, but there is now another reason to look beyond Kenya. There are now more people in Bangladesh with mobile money accounts than in Kenya. Of course, that's a function of population--penetration in Kenya is 73% (axe grinding: 70% of Americans have a credit card; this discussion does not include China), while it's just over 20% in Bangladesh. But we should expect adoption to accelerate in Bangladesh, and Kenya to be left well in the dust in terms of accounts.
Also, helpfully, there is an increasing amount of research on digital finance in Bangladesh. I'm a big fan of this particular paper. Here's a review of the state of digital microfinance in Bangladesh. And here's a report on the "opportunities, challenges and way forward" for the digital transformation of MFIs in Bangladesh. The latter builds off an earlier report on "retail micro-merchants" in Bangladesh that I've been meaning to link to but hadn't gotten around to. 
But that's also a platform to explain why I hadn't gotten to it: I hate the framing of "retail micro-merchants." That framing allows for comparing the "retail micro-merchant" sector to the garment industry in Bangladesh, which is honestly ridiculous. The better framing--and I am consciously trying to make this a term of art--is subsistence retail. We shouldn't be thinking of this group of people as an industry sector and looking for opportunities for growth for the same reasons that no one talks about boosting the "subsistence agriculture sector." The goal shouldn't be to boost it, but to get rid of it. To get as many people as possible out of subsistence retail as quickly as possible. These aren't frustrated entrepreneurs looking for tools to improve their business, they are frustrated employees. Now I'm not saying I think helping subsistence retailers is a bad idea. We should be looking for ways to boost their productivity, but mainly so they can invest in things that get them out of the sector and into jobs.  

4. Jobs: Which is a useful segway into the next item. An open question in my mind is whether we should consider the online-platform sector part of subsistence retail. I'm leaning toward yes. Here's a look back on what has happened to the "servant economy" companies in the 10 years since Uber's founding created a stampede of companies looking to exploit the slack of frustrated employees.
Here's Daron Acemoglu with a short essay on where good jobs come from, and specifically the insane bias in the last 20 years to investing in technology to replace low-wage workers rather than boosting productivity. Here's a new paper from David Kunst on the fall-out of that weird bias, documenting evidence of premature de-industrialization, and which jobs are being lost. Of note, there is an interesting interaction here with formality that may affect how we think about the barriers to formalization.
Getting people into good jobs is certainly a challenge the world over. Here's a new paper on an apprenticeship program in Ghana from Morgan Hardy, Isaac Mbiti, Jamie McCasland and Isabelle Salcher. The results are a bit complicated. In the short-run at least average income falls as youth shift from casual labor into self-employment. But the kids who trained with more experienced and more ex-ante profitable trainers actually do better. The paper's conclusion is that result can be improved by recruiting better trainers. I always have a problem with conclusions like that, because that option is probably not in the choice set. While spillover effects of early childhood education are probably masking some of the gains (see above), it's also likely that the decreased quality of teachers once you move from pilot programs to scale is a factor. I certainly don't know of any programs where the average quality of the staff increased as the program grew. 
Take for instance this program from the US which promised to teach coal miners to code and get them good jobs in the tech sector. I'm always amazed that people's initial reactions to programs like this isn't, "I have a better idea--let's teach them to be NBA players, they make even more money than coders!" It's about as plausible a theory of change (a classic study from the 1970s established that the productivity difference between "good" and "bad" programmers was at least 10x). Predictably, the program turns out to have been mostly a scam to enrich the founders. 

5. Our Algorithmic Overlords: In case you haven't seen it, Chris Hughes, a co-founder of Facebook, thinks it's time to break up the company. But there's a question about how much Facebook will continue to matter in a lot of the world, asChina perfects the tools of online surveillance and monitoring (I'm beginning to wonder if traveling to China ever again is going to be a good idea for me). Certainly an increasing amount of the hardware and software being used outside of the developed world is being created in China, and with TikTok even in the developed world. I specifically have to give a shout out to the subtle reference to James Scott and Seeing Like a State in that essay to explain the burgeoning black market in old Nokia feature phones.
The view of big tech coming out of China is an interesting lens to look at thediffering perspectives on big tech among right-wing populists in the US and Europe. In the US, where conservative viewpoints are traditionally stronger, big tech is viewed as an enemy of conservatism. In Europe, where the left has long had a stronger grip on more of the institutions of power, big tech is seen as an ally. And after you've thought about that for awhile, think about the new ways that tech in general provides tools of social control--say like deleting references to the ACA from US federal government websites. Why does that ring a bell? Oh yeah, because Intuit does roughly the same thing to con people into paying for their tax prep software

L-IFT , a diaries research firm, is a proud sponsor of the faiV. See our video on  diaries research with 800 women microentrepreneurs in Myanmar .

L-IFT, a diaries research firm, is a proud sponsor of the faiV. See our video on diaries research with 800 women microentrepreneurs in Myanmar.

A proposal from  Josh Zumbrun  on what the default style for all economic data charts should be, to emphasize measurement error and uncertainty. I kind of like it.  Source .

A proposal from Josh Zumbrun on what the default style for all economic data charts should be, to emphasize measurement error and uncertainty. I kind of like it. Source.


 

Week of April 12, 2019

1. Arbitrary and Biased: I feel like "arbitrary and biased" should have been the tagline for the faiV but it'll have to do as just the name this week's edition (I won't make the obvious joke). The reference here specifically is an update to my post at CGAP on impact evaluations and systematic reviews of financial inclusion interventions. Duvendack and Mader, authors of a systematic review of reviews that I've mentioned in the faiV and in that post, responded. And then I responded to them. The short version, if you don't want to click on all those links or do a lot of scrolling, is that we disagree substantially (though in good faith!) and particularly on the issues of arbitrariness and bias. My perspective on these issues have been substantially influenced by Deaton's and Pritchett's critiques of RCTs, which feels a bit ironic. Systematic reviews are useful, but they are no less arbitrary nor less biased than other attempts to synthesize the literature--they're just arbitrary and biased in different ways, albeit generally more transparent ways (though what we know about how disclosure affects people's trust leaves a question about the benefits of that disclosure). 
Reveling in the arbitrarily biased essential nature of the research enterprise, here are a couple of papers that raise different questions about how the literature on microcredit may be biased. Bedecarrats, Guerin, Morvant-Roux and Roubaudreplicate the Al-Amana microcredit impact study and find errors and issues with the data and code--though exactly how much it matters to the big picture conclusion isn't clear. Meanwhile Dahal and Fiala review the microcredit RCTs focusing on whether they have sufficient power to detect likely magnitude of effects (and find that they aren't) and find significant and meaningful effects on profits when the data is pooled. I need to read both these papers more closely, but they are interesting enough that I didn't want to wait before including them in the faiV.

2. Evidence-Based Policy/Methods: Speaking of arbitrarily biased research, the 5% statistical significance threshold is perhaps the most influential arbitrarily biased feature of modern academic research. Some people are trying to change that--well more than 800 who signed onto a letter in Nature protesting the cutoff. Before you come to a conclusion on whether that letter will make a difference, I must note, as many on Twitter did, that it's not a statistically significant portion of scientists who have signed on.
Another arbitrary bias, according to Nick Lea, deputy chief economist at DfID, is the need to run regressions in economics papers. David Evans, now ensconced at CGD, responds with a defense of regressions and some ideas on how development economics can be better.
Here's a reminder that "purely evidence-based policy doesn't exist" though I'm not sure how many people thought it did. And here's a reminder from Straight Talk on Evidence that short-term impact often fades out, something evidence-based policy really needs to take into account.
And finally, here's an interesting piece from mathemetician Aubrey Clayton adjudicating a long-running dispute between Nate Silver and Nassim Taleb over probabilities, finding that Taleb "overplays his hand."
  
3. Household Finance: The mythology of Spanish colonialism in the Americas centered heavily on cities of gold (anybody remember this?). Here's a story about the reverse--Dominicans searching Spain (and Switzerland) for lost troves of gold. It's all a scam of course, of the sort immediately recognizable by anyone who has spent time in Latin America. It's a fascinating read because of how the story delves into the psychology that has led so many Dominicans to believe (and continue to believe) an ancestor secreted billions of dollars of gold in Spanish and Swiss banks that they stood to inherit--to the point that they quit jobs and made all sorts of other bad financial decisions. When there is little hope, believing that slow, steady abstemious frugality will matter may seem as much magical thinking as hidden inheritances. Here's a piece from Morgan Housel on how much our (macro)financial experiences affect our later decision making.
The mismatch between advice, reality and experience means that most financial advice on offer today is useless for people living on low incomes--and the piece doesn't even address the problems of volatility. Here's Helaine Olen taking Suze Orman to task on the magical thinking that buying coffee makes a meaningful difference in household budgets.
Keep that in mind when you read this announcement from Walmart that customers have "moved $2 billion through" their prize-linked savings program. Don't get me wrong--that's great. But do notice that "moved...through" sounds a lot like high-frequency savings and isn't defined, while the claims remain that people are learning saving habits and becoming more financially secure.
On a related note, here's a recent Planet Money story on Purdue University's new income-share college loan program (which grew out of an idea from a Colombian economist and was piloted in Colombia). And here's a story I stumbled across on the lingering death of a much earlier program at Yale that was a miserable failure

4. Our Algorithmic Overlords/Digital Finance: Lucy Bernholz has a problem with "AI for good" and other such constructions. The big issue for civil society is not how to use the technology but to figure out how to manage, counteract, regulate, or build on the technology that is already in use. She suggests this essay on AI and the administrative state, which I haven't read yet, but I always trust Lucy's recommendations so I'm passing it on to you.
I think Lucy and I would have a similar perspective on this article, and I'm going to let you guess what that is via this quotation: "We believe that the lack of access to financial services is fundamentally a technology problem." It's a near perfect illustration of Matt Levine's dictum that the fate of FinTech is to relearn all the lessons of modern finance, painfully and in public. Now I'll take JUMO (the source of that quotation) at face value and believe that they are using AI and machine learning to find ways to include rather than exclude. But here's a different fundamental problem: it's always more profitable to fire bad customers than gain new ones.
Of course there are many more issues when it comes to applying AI and machine learning to financial services. Here Aaron Klein does a terrific job of walking through some of them. They of course don't apply to JUMO, yet, because Aaron is looking at how the application of AI and machine learning interacts with US anti-discrimination law. But it's an illustration of some actual fundamental problems of access to financial services and the potential benefits from much deeper engagement between regulators and practitioners in the US and developing and middle-income countries. 

5. Cash Transfers and UBI: We'll end with some quick hits on some new stuff on cash transfers and UBI. Here's a write-up of a survey of poor Indian households on their preferences when it comes to cash transfers versus spending on public health, roads and jobs: cash transfers come in last, public health comes first. Perhaps one reason why is a trust gap--here's a story from Kenya about the lack of transparency and limited reliability of public nutrition cash transfer programs.
Another way of determining preferences related to cash transfers is the revealed preferences of what people do with the money. That's what Almas, Haushofer and Shapiro do with the GiveDirectly cash transfers to assess whether there is a nutrition poverty trap (there isn't)

From  Natalie Michelle  and  Joshua Tait  a typology of superheroes as neoconservatives. I include this in the hope that someone will produce a version of this for superheroes as neoliberals.  Source  

From Natalie Michelle and Joshua Tait a typology of superheroes as neoconservatives. I include this in the hope that someone will produce a version of this for superheroes as neoliberals. Source 

Week of March 1, 2019

The Post-Neoliberal Edition

1. Economics: The dismal science doesn't often generate positive reviews from outside the discipline, so when it does happen it's worth noting. Julia Rohrer, who in addition to having one of the best titled blogs I've ever seen, is a psychology graduate student who procrastinated on her dissertation by attending a summer program in economics. Here is her list of things she appreciated in economics as a positive contrast to her experience in psychology.
On the other hand (hah!), economists typically have a lot to say about what is wrong with economics--certainly I encounter more "friendly-fire" in the econ literature than when I dip my toes in other disciplines (though this is perhaps my favorite example of the intra-disciplinary critique). There's an ongoing discussion about the future of economics going on in the Boston Review--I don't know if that counts as friendly-fire in terms of the outlet, but the participants are economists--starting with an essay by Naidu, Rodrik and Zucman, Economics after Neoliberalism. Then there are responses from Marshall Steinbaum, who notes that "every new generation proclaims itself to have discovered empirical verification for the first time," and from Alice Evans who focuses on the nexus of economics and political power in the form of unions.
But, because it's me writing this, I have to close on a new paper in JDE, that finds that communal land tenure explains half of the cross-country agricultural productivity gap. And here's a piece about how small teams of researchers are more innovative than large teams. generate much more innovation than big teams Neo-liberalism won't go down without a fight!

2. Migration: I haven't touched on migration for a while so it felt serendipitous that Michael Clemens and Satish Chand put out an update to their paper first released in 2008(!) on the effects of migration on human capital development in Fiji. The basic story is that in the late 80's formal discrimination against Indian-Fijians increased sharply, causing the community to both increase emigration and investment in human capital to aid emigration prospects. The net effect, rather than the dreaded "brain drain," was to increase the stock of human capital in Fiji. grapes
Cross-border migration is really the only option in Fiji, but in many countries, like Indonesia, there are lots of internal migration options. Since there is typically a large gap in productivity within countries as well as between countries, internal migrationhas always been a part of the development story. Bryan and Morten have a new article in VoxDev about this process in Indonesia, looking at the productivity gains possible from removing barriers to internal migration.
Since we started off talking about Economics, here's a post from David McKenzie considering the effects of migration on economists--or more specifically, how to think about job market papers about a candidate's country-of-origin. True to his style, David goes deep, including a model, and a survey. The post was inspired by a tweet from Pablo Albarcar who later noted it was mostly a joke about "brain drain" worries.
It is surprising to me how tenacious the brain drain idea is. When I have conversations about it, I try to cite the literature like Clemens and Chand, but I rarely find that makes a dent. People can always find an objection. So I've taken to just asking people how they feel about the "destruction" of Brazilian soccer/football culture and skill due to the mass emigration of the most skilled players. Typically, that leads to several moments of silent blinking. If you're interested here's a paper about "Rodar" the circular human capital investment, migration and development among Brazilian footballers
  
3. US Poverty and Inequality: I typically try to avoid the grab-bag approach to items of interest but I'll confess this one is a bit of a grab bag with a variety of connecting threads. We'll start by connecting to a piece I included last week about tax refunds and saving. If you haven't read that, you should. I noted I was grateful for the piece because it meant I could skip the annual ritual of linking to a piece I wrote for SSIR several years ago about rethinking tax refunds. But I should have known that the zombie idea of tax refunds being bad personal finance wouldn't die so easily. Here's Neil Irwin from the NYT on how people being angry about lower refunds shows that "humans are not always rational." I'm struck by the irony that the continuing common use of "rational" in economics requires zero-cost attention, while a foundational truth of the discipline is "nothing is zero-cost." There is nothing irrational about paying a very small fee (in foregone interest) for the valuable service of helping you to save when other services are ineffective. That's especially true if you include, as you should, the cost of the tax advisors and financial advisors required to accurately calculate the proper amount of withholding and to choose the right investment/savings account in which to store those savings. So I guess that connects to the thread about economics maybe not being post-neoliberalism quite yet. And here's a column from the Washington Post's personal finance columnist withpush back on the "refunds are bad" idea from readers who explain their rational choices in their own words.  
This week a 3 year project by the National Academy of Sciences to provide a "nonpartisan, evidence-based report" on the most effective ways to reduce child poverty in the United States was released. The summary that most everyone is latching on to is that work supports are not going to get the job done. The only way to cut child poverty by at least half is direct cash support to parents. Here's the Vox overview.
If you were thinking about intergenerational poverty, you were probably also thinking about education. The last few years have seen a proliferation of videos of "poor kids" getting into elite schools. Here's a piece about a new book on what happens to the lower-income students once they arrive at elite schools. It's not so joyous--"money remains a requirement for full citizenship in college, despite institutional declarations to the contrary."
Finally, how much do financial incentives and tax rates affect the incentives to innovate and invent? Not much--exposure to innovation matters much more

4. Management: This is a last minute "swap" of an item, since David McKenziemaligned managers in his weekly links tweet this morning. As some of you know, I have a semi-secret identity ghost-writing and editing management books, with several of them specifically about Toyota and lean process and management, so I couldn't let it lie. Of course, David's quip was a joke. The piece he links to is a terrific overview of the research on how management matters, a literature that David is a significant contributor to. It is a topic that I wish the development field paid much much more attention to (I really hope this is the most clicked link of the week), and this overview is a great introduction, both in content and structure/organization. I think I'll make some of my papers look more like this in the future.
And here's a piece about how middle managers deserve more respect. In my read of the literature above, it is middle management that is the actual missing middle in development. 

5. Digital Finance: I relinked the piece on why there's no reason to trust blockchain in the notes above. Here's another reason: "Once Hailed as Unhackable, Blockchains Are Now Getting Hacked." On the other hand, here's, "Bitcoin Has Saved My Family," from a Venezuelan economist.
One of the under-examined topics in the emergence of digital finance is the shift in the organizations and organizational structures that are providing financial services. The institutions and people in telecoms are systematically different than those in finance. That's something that always strikes me as I look at the GSMA's annual report on the state of the mobile money industry. Not because of something in the report specifically, but the fact that the report is from the GSMA.
And finally, a little curiosity that may only interest me. Uganda is opening up the purchase of government debt to individuals using mobile money, on the theory that it will reduce the government's dependence on commercial banks and institutional investors. It's historically sound, but I'm skeptical. For instance, it hasn't worked as well as hoped in Kenya.  

The musing on the quality of Brazilian football in the face of mass emigration gives me an excuse to include a video in support of my argument. If you're interested in falling down the rabbit hole a bit, here's  a short documentary on the 1982 Brazil team , which is my Platonic ideal of how the game is supposed to be played. Though that could have something to do with the fact that I was 9 that summer, and it was the first World Cup I watched. I still have a visceral rage reaction any time I see the Azurri take the field.  

The musing on the quality of Brazilian football in the face of mass emigration gives me an excuse to include a video in support of my argument. If you're interested in falling down the rabbit hole a bit, here's a short documentary on the 1982 Brazil team, which is my Platonic ideal of how the game is supposed to be played. Though that could have something to do with the fact that I was 9 that summer, and it was the first World Cup I watched. I still have a visceral rage reaction any time I see the Azurri take the field.  

Week of February 18, 2019

The Special Service Edition

1. MicroDigitalFinance (and women): Questions about gender and financial inclusion have been a part of the modern microfinance movement since the beginning, when Yunus made those initial loans to women. For a long time, the accepted wisdom was that women were more responsible borrowers, repaid at higher rates, and did better things with their earnings than men. Then came several waves of research that called that into question--finding, for instance, that men had much higher returns to capital; that women didn't spend money that differently (outside of the social norms that constrained both their income-earning and -spending choices).
Recently there has been another swing. For me it started with suggestive evidence from Nathan Fiala's grants vs. loans to men and women in Uganda that women's average low returns were driven by the women who had the hardest time protecting money from male relatives--something that didn't make it into the published paper (so factor that into your Bayesian updating). Then Bernhardt, Field, Pande and Rigol re-analysed data from the original returns to capital work and found that women who operated the sole enterprise in their household had returns as high as men. Then Hardy and Kagy dug into why returns to men and women's tailoring businesses were so different in Ghana.
Now Emma Riley has a new paper going to back to Uganda and using mobile money accounts to give a much more definitive answer to the control of funds issue that Fiala's work hinted at. Working with BRAC (it occurred to me yesterday that I think all the subsidy to global microfinance could be reasonably justified just by BRAC), she provided female business owners with a separate mobile money account to receive their loan proceeds--the theory being, of course, that this would allow them to protect the funds much better. She finds that women who received the money in the private mobile accounts had 15% higher profits and 11% higher business capitalthan controls who received the money in cash. There are number of possible mechanisms, but she finds the best explanation is indeed the ability to protect money from the family. This is a big deal.
And last year when I posted a story about Uganda implementing a social media and mobile money tax, I didn't really take it seriously. It turns out I should have. The tax went into effect and Ugandans have behaved like good homo economicuses: mobile money use and social media use is down. Say, that suddenly sounds like a useful policy intervention. 
Finally, this rang my confirmation bias bell so hard that there's no way I could leave it out or even wait another moment to put it in the faiV. Maybe I'll include it in every edition from here on out. There's No Good Reason to Trust Blockchain Technology.

2. Youth Unemployment: This wasn't supposed to be "the Uganda edition" but in other women in Uganda research news, here's a paper from a star-studded list of researchers starting with Oriana Bandiera (is it just me or has Selim Gulesci had a remarkably productive last 12 months?) forthcoming in AEJ:Applied on a program to empower adolescent Ugandan women with both vocational and sex/relationship education. They find large effects after 4 yours, boosting the number engaged in income-generating activities (all microenterprise) by 50% (5pp) and cutting teen pregnancy and reported unwanted sex by a third. That's impressive. But your homework assignment is to square these results with the five year follow-up results of Blattman and Fiala's grants to Ugandan teenagers (where all the effects fade out after 9 years) and Brudevold-Newman, Honorati, Jakiela and Ozier vocational training program for young Kenyan women where effects of training and grants dissipate after 2 years. Seriously, this is your homework. Email me with your theories. If you can work in Blattman and Dercon's Ethiopia follow-up (which as disappeared from the web, hopefully temporarily), any of the other papers from this session at ASSA2018, or McKenzie's review of vocational training programs, you get extra credit.
  
3. Economic History: I've mentioned a couple of times recently that I've been delving into Economic History to learn a bit more about financial system development and the history of banking and consumer financial services. It's been fascinating so I thought I would share a few links in that vein. There are two books that top the list, both of which I think I've mentioned, but since I now consider these as must-reads for anyone interested in financial services along with Portfolios of the PoorThe Poor and Their MoneyDue Diligence, and, y'know, coughcough cough, I'm going to mention them again. City of Debtors covers the tragically unknown history of microcredit in the United States from the 1890s on. Insider Lending is the story of how banking evolved in New England from the 1800s, specifically how economic and political forces turned something entirely self-serving for existing elites into a vital service for the masses. 
If you're intrigued by what can be learned from economic history but aren't ready to dive into a book, here's a new paper on the development of a French village from 1730 to 1895, an era very similar to conditions in many middle-income countries today. But if you're not ready for even that level of commitment, try this new Twitter account: @EmpireRomanHoly. There's a daily thread on one of the thousands of semi-independent principalities that made up the neither Holy nor Roman nor Empire. Or try this single thread about a forgotten Indian empire (though since I'm Peruvian-by-birth I have to say he gets the comparisons to the glorious Incan Empire all wrong). 

4. Our Algorithmic Overlords: I was going to give the algorithms a rest, but well, it turns out the Overlords never sleep. Well, actually, apparently they were asleep at the switch so to speak. Some Chinese company left their facial recognition database being used to track Muslims in the country exposed online.
And here's Stephanie Wykstra on some university's attempts to teach ethics to the programmers who are going to be building our overlords. I wonder if any of them have a satellite campus in China? 

5. Service Journalism: For those of you unfamiliar with the phrase, service journalism is the term of art for those articles like, "Five Ways to Eat Healthier Today" or "How to Delete Facebook From Your Phone." In my case, I often get questions about some of the tools I use, so herewith is some insight into the faiV (and my other work) behind the scenes. First up is Asana, which I apparently use in a somewhat unusual way. I've never been able to consistently use task/to-do list/project management software, which is the main use case for Asana, consistently. But a few years ago, Asana introduced a "bulletin board" style view which I now use religiously to track papers and sources whenever I'm working on a big project. I've used it for years to keep track of things for the faiV, but since the start of the year I've been experimenting with a new tool for Chrome called Workona(the tag line is "browse like it's your job" which feels a bit on the nose for me). In case it wasn't clear I'm one of those people who has upgraded every one of my machines to 16GB solely to cope with the 100+ tabs I have open on each of 4 computers I use regularly. Workona allows you to group those tabs usefully, share them between machines, suspend tabs your not using, and some other cool things. It's free for now, tough a paid model is coming, but I will be the first in line to pay because I find it so useful.
Another tool I use everyday is Synergy which allows me to park two machines beside each other and use them as one nearly seamless machine. My normal work set-up has 4 screens--two laptops side by side, each connected to a 24-inch external monitor.
Finally, I just stumbled across Perma.CC, which though I haven't used it yet, seems like something I've been looking for for a long time--a way to make sure that links don't rot. Check it out. 

Keeping with the service journalism, this week I learned that pangolins are bi-pedal and I think everyone needs to know that too. You're welcome.  

Keeping with the service journalism, this week I learned that pangolins are bi-pedal and I think everyone needs to know that too. You're welcome.  

Week of February 11, 2019

The Writing on the Wall Edition

1. Our Algorithmic Overlords: I've long argued that teaching kids to code is as much of a waste of time as financial literacy. The simplified version of the argument is that most people are terrible programmers and computers are already better at coding than the average human. As a consequence I emphasize to my own kids and to others who are blinkered enough to ask my advice, that learning how to communicate/write is a much more important tool for the future (yes, yes, cognitive dissonance).
While I still think I'm right about the first part, it turns out I'm wrong about the second part. Yesterday OpenAI "released" work on an AI system that writes shockingly good text. I use scare quotes because, in another sign of things to come, OpenAI has only published a small subset of their work because they believe that the potential malicious use of the technology is great enough to restrict access. There are a bunch of news stories about this. Here's Wired, for instance. But the most interesting one I've come across is The Guardian because they had the algorithm write an article based on their lede.
Let's stick to the disturbing for a bit, because it's that kind of day. The World Food Program has formed a partnership with Palantir to analyse its data on food distributions, apparently with the main motivation being to look for "anomalies" that indicate that aid is being diverted or wasted. The idea of handing over data about some of the world's most vulnerable people to a private company that specializes in surveillance and tracking of people hasn't gone over well with a wide variety of people. As background, here's an article about what Palantir does for their biggest client, the NSA. Sometimes it seems like some people at the UN look at the one world government kooks and think, "What could we do to make their conspiracy theories more plausible?"
On a more theoretical level, Kleinberg, Ludwig, Mullainathan and Sunstein have a new paper on "Discrimination in the Age of Algorithms," arguing that despite fears of algorithmic discrimination, proving discrimination by algorithms is a lot easier than proving discrimination by humans. Of course, that requires putting regulations in place that allow algorithms to be examined. I'm going to flatter myself by pointing out it's similar to an argument I made in my review of Automating Inequality. So I feel validated.
Speaking of transparency, regulation and of algorithmic surveillance, here's David Siegel and Rob Reich arguing that it's not too late for social media to regulate itself, by setting up something like FINRA (Financial Industry Regulatory Authority, which polices securities firms). It's an argument that I would have given short-shrift to, but the FINRA example is credible.
Finally, I'll be dating myself in the Graphic of the Week below, but here's another way to figure out how old I am: when I was an undergrad, most of the "power imbalance" between developing countries and private firms literature was about GM. Here's a new piece from Michael Pisa at CGD on the new power imbalance and it's implications: the relationship between developing countries and tech giants.

2. Digital Finance: That feels like as reasonable a transition as I'm going to get to new data from Pew on the global spread of smartphones. Given limited consumer protections, regulatory and enforcement capability, and "digital literacy" in many developing countries, I will confess this worries me a lot, cf Chris Blattman's thread on "creating a 20th Century...system in an 18th Century state."
Here's a particular instance of that concern, tieing together the last few items: the rapidly growing use of "alternative credit scores" using things like digital footprints and psychometrics. You can make an argument that such things are huge boon to financial inclusion by tackling the thorny problem of asymmetric information. But there are big questions about what such alternative metrics are actually measuring. For instance, as the article above illustrates, the argument is that in lending, character matters and that psychometrics can effectively evaluate character. But it doesn't ask whether character is in-born or shaped by circumstance? No matter which way you answer that question, you're going to have a tough time arguing that discriminating based on character is fair. And that's all before we get to all the other possible dimensions of opaque discrimination.
The growing use of alternative data is starting to get attention from developed world regulatory agencies, but the first frontier of regulation is likely to be from securities regulators. I don't think they are going to be particularly interested in protecting developing world consumers. I guess that idea about self-regulation is starting to look more appealing, particularly if it's trans-national.
Meanwhile, the frontier of digital finance is advancing rapidly, even without alternative data. Safaricom introduced what is here called a "overdraft facility" in January, but I think of it more as a digital credit card. In the first month it was available, $620 million was borrowed. The pricing seems particularly difficult to parse but that may be just the reporting. One of the very first things I wrote for FAI was arguing for development of a micro-line-of-credit. Now that it's here, I confess it makes me very nervous.
 
3. Financial Inclusion: That's not to say that digital tools don't hold lots of promise for financial inclusion, just check the Findex. This week CGAP hosted a webinar with MIX on "What Makes a Fintech Inclusive?" There are some sophisticated answers to that question with some good examples, but I often return to the simplest answer: it cares about poor and marginalized people. And so I especially worry when I see answers to that question that lead with tech.
The financial inclusion field as a whole has been in something of a slow-moving existential crisis for the last few years. The best evidence of that is the number of efforts to define or map the impact of financial services and financial inclusion, several of which I'm a part of. Last week I linked to an IPA-led evidence review on financial inclusion and resilience. The week before that to a Cochrane Collaboration review of reviews of evidence on financial inclusion. This week, the UNCDF and BFA published their take on pathways for financial inclusion to impact the SDGs (full report here). I could say I expect there will be more, but I know there will be more in this vein, if I can finish revisions, etc.

4. US Inequality: It's tax return/refund time in the US. So there's a lot of discussion of the size of tax refunds and how people should withhold less and save more of their refund etc. It's particularly an issue this year because refunds seem to be smaller because of last years tax law changes and perhaps pressure on the Treasury to reduce withholding so more people would see a quick boost in their paycheck. Justin Fox takes a look, using the US Financial Diaries and some related work to show what a dumb policy that was and saving me from reposting my annual tax time lament.
There are a few things here I've been meaning to include for a few weeks but haven't gotten to. Here's a look at how tech is "splitting the workforce in two" which has some big implications for inequality. Here's a look at how stacked against the young the US system has become, which has implications for the persistence of the current very high levels of inequality. And here's one of those very depressing looks at how well-intentioned policies to do something about inequality end up being churned up in the meatgrinder and making things worse, in this case having to do with pushing colleges to admit poorer kids. The latter two are why I have a problem with the proposed incremental approach to Medicaid-for-All by allowing people between 50 and 62 to buy in to the system. I'm usually a great fan of incremental, but that specific proposal seems likely to accelerate the transfers from young-to-old in many ways worse than we can imagine.

5. Evidence-Based Policy: Yes, it's a dark day. So I'm going to revel in it and continue that theme of well-intentioned not working out so well, in this case from the old scale problem. One of the staples of "evidence-based" interventions in the last decade or so has been home visitation for new mothers/infants. An evaluation of a scaled-up version of the program found "no statistically significant effect on the evaluations focal outcomes" and no significant heterogeneity of effects (e.g. no larger or smaller effects for ex-ante determined high-risk or low-risk families). Chile scaled up cognitive behavior therapy in schools to deal with disruptive kids. It made things mostly worse. Pittsburgh scaled up a "restorative justice" program in an attempt to deal with discriminatory discipline practices for disruptive students (African-American kids get suspended from school much more often than white kids). Some people are saying it made things worse, but I look at the results table and see "no effect" given the number of outcomes.
Andrew Gelman features an old Michael Crichton piece on why media depictions of research are so wrong with some actually, it seems to me, good advice on what to do about it. If anyone ends up creating the proposed organization to do rapid response to spurious reporting of research, hire me. I want to do that. I suppose in some small way, that is what the faiV does. So, I guess, sponsor the faiV?
And here's a report from the William Grant Foundation on "Reframing Evidence-Based Policy to Align with the Evidence" which seems a useful thing to do if you've clicked on the three links above.

This isn't new, but it's fun. Merriam Webster has a site where you can put in any year and see words that first appeared in that year. This is a snippet of my birth year. Source:  Merriam Webster Time Traveler

This isn't new, but it's fun. Merriam Webster has a site where you can put in any year and see words that first appeared in that year. This is a snippet of my birth year. Source: Merriam Webster Time Traveler

Week of February 4, 2019

The Global Con Edition

1. MicroDigitalHouseholdFinance: 
I've had to cram what I usually break out into 2 categories into this first item. First, last week I featured a story about Kenyan MFIs being driven "to [an] early grave"and asked if any one had some additional knowledge of that situation. Thanks to David Ferrand (of FSDAfrica) and Alexandra Wall (of CEGA's Digital Credit Observatory), I'm reasonably confident that story is reasonably accurate (I do try to be good Bayesian). Meanwhile, with a broader perspective, Gregor Dorfleitner sent me a link to his recently published research looking at adoption of digital infrastructure by nearly 1000 MFIs globally. It's generally a more hopeful picture of evolution over disintermediation than what is happening in Kenya. 
This week, coincidentally I had two conversations about household finances that revolved around individuals' willingness to hide their income from others in the household and that affects outcomes for good or ill. And then, up pops Fred Wherry and colleagues with a new paper on exactly on the mechanics intrahousehold bargaining around borrowing and lending based on research in California. I'm very impressed they avoided "Neither a borrower nor a lender be..." and I do kind of love "Awkwardness, Obfuscation and Negative Reciprocity." And in other new paper news, the titans of financial choice architecture, have a new paper on how use implicit defaults to spur people to make active choices--which seems a better form of nudging than much of what I see. 

2. Banking (and Money Transfer Operators): I frequently talk about how financial system regulators in the developing world need to look to the US for a peek into their future. This week I learned that Australia is also a useful cautionary tale. Pretty much the entire banking sector in Australia is facing the prospect of criminal prosecutions after a wide ranging royal commission report that details rampant "fee for no service" practices were widespread.
Meanwhile there are some big changes happening in the global money transfer space, related to Chinese operators attempts to expand globally, and the Trump administrations general antipathy to such moves. Last year, Ant Financial tried to buy MoneyGram before regulators put a stop to the transaction. MoneyGram is now essentially moribund, having lost 83% of it's market value since then, and trying to sell itself to anyone who might have some cash. Ant Financial has moved on to a UK company, WorldFirst, which this week announced it was shutting down it's US operation so that American regulators have no say in the deal. Neither of those stories sound like the prospects for cutting the costs of global remittances are improving.
  
3. Global Inequality: Last week I purposely skipped over the ridiculous annual OxFam global wealth inequality brouhaha. Perhaps I should stick to my guns, but given the number of people I saw engaging with this Guardian piece from Jason Hickel, that somehow argues that global poverty hasn't been decreasing, and life was great in the 1820s, well...Here's pushback from Martin Ravallion. Here's Max Roser, who was a particular target in the Hickel op-ed.
Turning to doing something about global inequality rather than fantasies about the pastoral idylls of the 1820s, there's been a remarkable flourishing of pieces about tax avoidance by the wealthy. Here's the op-ed from the NYT that inspired the name of this week's edition on the Trump tax cuts enabling corporate tax dodging. Here's a new paper in the AER finding that globalization since 1994 has led to the labor income tax burden of the middle class rising, while that on the top 1 percent fell. Here's a new brief from Danny Yagan at SIEPR on how high earning wealthy entrepreneurs dodge taxes on labor income of about $1 trillion per year. And using data from Gabriel Zucman, here's a piece from the Washington Post on the new club of wealth inequality, with charter members China, Russia and the US

4. Philanthropy and Social Enterprise: There's a good bit to catch up on here. Back in the fall, I featured several entries in an on-going discussion involving Rob Reich (the political scientist, not the economist), Phil BuchananAnand Ghiridharadasand Ben Soskis on the role of philanthropy in the US (each of those links is to their books/sites). Phil has a newish post trying to take stock of the various critiques and defenses.
Last summer, I took note of Just Capital, a newish organization trying to create an index of socially-responsible firms using criteria less laughable than most of the SRI indexes. Just Capital has partnered with Forbes Magazine to create a list of the US's 100 most "just" companies with the criteria determined by surveying (what I presume is a convenience sample) readers.
On the topic of philanthropy worth critiquing and just companies, the Pennsylvania Attorney General is suing one of the largest non-profits in the state, the University of Pittsburgh Medical Center, for being neither philanthropic nor just. And here's someVox reporting on the equally unphilanthropic and unjust Zuckerberg San Francisco General Hospital, with the added twist of the City of San Francisco playing the "man behind the curtain." The Vox critique has already had an effect; I'll be cheering for the PA Attorney General. As a side note, one of the problems I have with the concept of "financial health" is it makes an analogy to the only industry that is more of a mess of conflicting incentives and hidden bad behavior than the finance services industry.
Dramatically changing the topic, GiveWell has announced some changes to it's research focus, and as a consequence, is hiring. Full disclosure: I'm Vice-Chairman of GiveWell's board. I think it's likely that faiV readers know some people who might be interested in those jobs. So click and check them out.
Finally, this week Guidestar and the Foundation Center announced that they are merging. I'm not sure whether to think of this as evidence of maturing philanthropic infrastructure or further evidence of a market failure in data on philanthropy. Regardless, I have a lot of respect for Jacob Harold and Brad Smith, the respective CEOs of the two organizations for taking a step that many in the non-profit world avoid. 

5. Methods: Behold, the first ever "listicle" in the faiV. What should experimental economists do more of? These 12 things, according to John List. And here's a review of how field experiments have improved our understanding of labor markets (List again). Though I have to ask, is this use of "natural field experiments" standard outside of development economics or is it a Nature thing? One of the things that experimental economists should perhaps hesitate before doing more of are list experiments--that according to a new paper from Pascaline Dupas and co-authors(and do read the comments).

I had decided to make the graphic/video of the week a bit more fun and less on-topic. But then  Kieran Healy created something both fun and on-topic . The best of both worlds. Source:  Kieran Healy . 

I had decided to make the graphic/video of the week a bit more fun and less on-topic. But then Kieran Healy created something both fun and on-topic. The best of both worlds. Source: Kieran Healy

Week of January 21, 2019

1. MicroDigitalFinance: Many of you will be familiar with the story of microcredit's rise and sort-of fall, and it's current state of--I don't know, existential angst? But if not, the story is ably told in a new Vox piece by Stephanie Wykstra, with some comments from Jonathan and I included. Not too long after that, the Campbell Collaborative and 3ie issued a "systematic review of reviews" of the impact of financial inclusion, led by Maren Duvendack. I have to say it's kind of weird. The one sentence conclusion is "Financial inclusion interventions have very small and inconsistent impacts." Which apart from appending an "s" to the perfectly plural "impact", I don't disagree with. But this format is a review of reviews which imposes some weird constraints. Ultimately only 11 of 32 identified studies were included, and only one of those was from an economics journal, two are earlier Campbell or 3ie publications, two are specifically only about women's empowerment, and three are about strangely specific topics like HIV prevention. So I'm left really uncertain what to think of it.
Of course, the hot topic isn't generic microfinance but digital finance. The Partnership for Finance in a Digital Africa has an updated "evidence gap map" of research on the impact of digital finance featuring 55 studies (which is more than I have had the time to delve into so I can't compare it to the Campbell/3ie inclusion set). There's a summary of the findings at Next Billion.
Finally, here's an interesting story about Econet, the Zimbabwean mobile money provider--interesting in that it is really about the evolution of mobile money providers from following M-Pesa to following Tencent.
  
2. US Inequality: A big part of the story of understanding US inequality specifically, and inequality in developed countries in general, is understanding what has happened to wages of low-skill workers. The NYTimes has a piece on how cities have shifted from being the "land of opportunity" for such workers to a trap, based on work that David Autor presented in his Ely Lecture at the AEAs (by the way, AEA, it's still a good time to rename the Ely Lecture!).
One policy option for addressing stagnant wages for low-skill workers is to raise the minimum wage. Cengiz, Dube, Lindner and Zipperer continue their long-running work on the effects of 138 minimum wage changes between 1979 and 2016. They find increased earnings and essentially no effect on number of low-wage jobs
That's encouraging. Less encouraging is a new paper from Rodrik and di Tella finding that people are really, really happy to support protectionist policies, regardless of their politics, as a policy response to trade shocks.

3. Our Algorithmic Overlords: Speaking of people's attitudes, there's a big new report on Americans' attitudes on artificial intelligence from something called the Future of Humanity Institute, which as a name is somewhat creepy in my opinion. Maybe I've seen/read too much dystopian fiction. Anyway, they find that Facebook is the least trusted institution when it comes to AI development (no surprise) and the US military is tied for most trusted (big surprise, apparently these people haven't seen/read the same dystopian fiction I have). Also of interest, the median respondent thinks there's a 50% chance that robots will be able to fully replace human beings in less than 10 years. And just because, here's a Night Before Christmas style poem about the future of AI.
Meanwhile, MIT Technology Review "analyzed 16,625" AI papers to predict directions of future research. As someone interested in the future of humanity who doesn't trust either Facebook or the US military to develop AI, I'm encouraged to see cyclical patterns of research consistent with over-confidence.
One of the questions about the development of AI and machine-learning is how it will integrate into existing procedures. Flint, MI is a particularly fascinating case study on those challenges--and they are large. In a community with every incentive possible (they are literally being poisoned by their water and have extreme budget constraints) except politics to adopt the most efficient approach, the machine-learning approach was abandoned. I guess that should make me re-think my attitude toward phrases like "The Future of Humanity."

4. Methods and Evidence-Based Policy: Back in the fall I featured a paper about the effect of political connections on business success because I was so impressed by the method: Abhit Bhandari set up an actual company in Senegal and had his salespeople vary their pitches to signal political connections. Turns out Bhandari is not alone. David McKenzie has a new post at Development Impact on the apparently hot new trend in experimental development economics: setting up your own firm so you can run experiments on it. If you thought the barriers to running and publishing an experiment were high before...
Eva Vivalt has a new paper on specification searching and significance inflation in impact evaluations (see, you don't need to add an "s" to impact!). She finds less bias in economics and health papers than what's been found in political science and sociology. She also finds significance inflation in RCTs is lower than other methods and has fallen over time.
Here's an article from Gelman, Goel and Ho on what statistics can't tell us about affirmative action at Harvard. I'm a sucker for experts writing about the limits of their field.
I mentioned new research earlier punching some gaps into existing evidence bases. Here we go. Money priming, like other forms of priming, doesn't actually have a meaningful effect on behavior. The charts in this one are particularly striking. And an at-scale implementation of CBT for disruptive kids in Chilean schools radically backfired.
And because I have no other place better to put it, but wanted to include it, here's Ray Fisman and Michael Luca on how free pens are killing so many people in the US that average lifespans are falling. And on a related note, ugh, ugh, ugh. There are some things that need to be re-named more urgently than the Ely Lecture.

5. Global Development: When you can write about industrial policy and subsistence agriculture in the same item, you have to take advantage. Thanks VoxDev! Dani Rodrick has an overview on the resurgent economics of industrial policy, which is a very helpful refresher if you've looked at David's post on setting up your own firm to run experiments and are thinking it may be time to change your topics of interest. But VoxDev also has a summary of work reviewing what's been learned about improving agricultural extension services from the Agricultural Technology Adoption Initiative. Which is a very helpful overview if you, like me, have long-standing plans to look at what we can learn from research on subsistence farming to design programs for subsistence retail.
But there's still a long way to go, because even after all this time studying small-scale agriculture we still don't know a lot. Like how much of the difference in productivity from farm-to-farm is real or just mismeasurement. That paper should also be of interest to anyone thinking about studying firms, by setting up their own or otherwise, or in industrial policy.

Apropos of nothing, I found this chart, and  the related blog post  looking at data from lots of different drugs, on the frequency of use of marijuana quite interesting.

Apropos of nothing, I found this chart, and the related blog post looking at data from lots of different drugs, on the frequency of use of marijuana quite interesting.

Week of November 26, 2018

1. faiVYourJMP: Let's start there with a paper from Ryan Edwards on palm oil plantation expansion in Indonesia. That he finds trade-offs certainly shouldn't be surprising, much less astounding, but it is surprising how well he documents how the growth of export-led agriculture reduces poverty and increases consumption--including the specific channels by which that happens--and the connection to deforestation. Specifically, "each percentage point of poverty reduction corresponds to a 1.5-3 percentage point loss of forest area." Put another way, it's astounding to be able to see the price of poverty reduction outside of a carefully designed cash-based experiment.
And let me give a shout out to the Development Impact Blog team at the World Bank who were the inspiration to do this. Their crop of "Blog your JMP" posts is growing by the day and includes many entries worthy of your attention.
 
2. MicroDigitalFinance: Here's an astounding story about predatory lending and debt collection in New York (and from there, across the US). And I don't care how cynical you are, this is stunning because it's perfectly legal--so legal that there are registered investment companies gathering capital in public markets to do more of it.
That story then led me, via Rebecca Spang, to a book that came out at the beginning of this year that I'm embarrassed that I didn't know about, City of Debtors: A Century of Fringe Finance by Anne Fleming. It tells the story of small dollar credit in New York City and the attempts to regulate it and protect consumers, with lots of unintended consequences along the way. Although I've only begun to read it, what's astounding is how easily, if you changed the names of places and people, you could convince someone this was a book about modern microfinance. There's one chapter that could easily be pasted into Portfolios of the Poor with no one the wiser. Fleming is a law professor, and so she doesn't make the connection to the economics literature, past or present (at least that I've seen so far), which is frustrating but also assuages my guilt at being unaware of the book. Anyway, if you care about financial services for low-income households, regulation and/or consumer protection, you need to pick up this book.
It would be easy to make a snide and cliche comment about those who cannot learn from history, but is too much to ask to learn from present in other places? Here's a story about "neo-banks" in the US attempting to remake the banking industry, while confronting the hard reality that even without a physical presence, the margins on transactional accounts are razor thin. But, like Fleming's book, it's easy to read this as a story about how banks and MFIs are struggling to cope with the threat of digital financial services being provided by telecom firms which are built on a high-volume, low-margin business model.
That is a major theme of the e-MFPs new report on trends in microfinance/financial inclusion, released this week. It's the output of a survey of providers, funders, consultants and researchers on where the industry is headed. I was encouraged to read that other major challenges noted include "client protection, privacy...and preventing an erosion of the social focus of financial inclusion...in the face of new entrants." I'm betting those aren't on the list of very many people in the fintech/neobank space in the US.
Finally here's a story from September that somehow slipped by me: Kiva is working with the government of Sierra Leone to use blockchain to create a national ID/credit bureau. I'm still trying to wrap my head around this one but it definitely seems like the kind of thing that would benefit from and generate lots of opportunities to learn from other places. If any of the faiV readers at Kiva want to share more, please call me.

3. MicroSmallMediumFirms: I'm often frustrated that I don't get to spend more time thinking about firms--those of you who know me know I've been wanting to start a project on "subsistence retail" for years. Hope springs eternal--maybe next year is the year I get to do that.
But in the meantime, here's a job market paper from Gabriel Tourek featured on Development Impact that finds an astounding reaction to a tax cut in Rwanda: the firms pay more even though they owe less. What's going on? The firms don't know their annual revenues so they don't know how much tax they owe, so they anchor on prior year tax payments. And that's even more true of the least able/least profitable, which isn't surprising but is depressing.
Relatedly, here's Chris Woodruff talking for 2 minutes about research on firms at VoxDev, including the difference between studying large firms and small firms.
And, new in AER, here's Jensen and Miller delving into that great puzzle of small firms: why don't they grow? Really, though, given what we know about small firms around the world the astounding thing is that any of them do grow. Anyway, Jensen and Miller use a natural experiment that affects boat builders in Kerala and find that consumers tend to buy local, which limits the ability of productive small firms to grow their market beyond their "neighborhood." When consumers can learn about non-local providers, competition makes things better for everyone (except the low-quality/low-productivity builders).

4. Philanthropy: This was the week of Giving Tuesday, which has become a global phenomenon. And as with any global phenomenon, there is good and bad. The good wouldn't be that astounding, so let's start at the other end. Here's a fundraising consultancy providing advice on how to use behavioral biases to trick people into giving more. You may not find that terribly surprising, but I found it amazingly cynical. This isn't about a nudge toward a positive outcome, it's guidance on how to mislead people to induce them to overspend their budgets. And if that's not cynical enough to surprise you, here's Lucy Bernholz on the first Giving Tuesday astroturfing she's seen--a charity created by a PR firm to raise money to hire the PR firm.
Giving Tuesday's growth also inspired a lot of debate on Twitter about critiques of the day itself and of philanthropy in general. Here's a thread that includes a collection of links to my longstanding Giving Tuesday skepticism and some thoughts from Ben Soskis, a historian of philanthropy and Asha Curran, one of Giving Tuesday's leaders. That thread bleeds into a couple of other threads. Here's one posted by Rob Reich, whose book Just Giving I highlighted last week, on the need to think critically about philanthropy. That then created this thread including Rob, Phil Buchanan from CEP, Felix Salmon, Asha, Ben and I and connecting back to the earlier conversation. Perhaps the message here is that we should all be astounded that Twitter continues to hold its place in the discussion of ideas.
This week also included the release of GiveWell's Top Charities list--note, that I'm the vice-chairperson of GiveWell's board--which continues to focus on deworming and bednets as the most effective use of marginal giving. There is one change to the list which is surprising, in a surprising way. Last year, Evidence Action's "No Lean Season" program to encourage seasonal migration in Bangladesh was a recommended charity. Results of the on-going RCT of the program showed the scale-up wasn't working, which Evidence Action shared with GiveWell and publicly. Both agreed that it should no longer be a recommended charity until Evidence Action can implement changes and document that the results are closer to what the initial impact evaluation found. Here's GiveWell's post about it, here's Evidence Action's post, and here's Dylan Mathews at Vox on how astounding this is.

5. Our Algorithmic Overlords: It would be tough to find anything surprising about the behavior of tech companies after the revelations highlighted in the last faiV. But you may be surprised which company said this: "We already know and have data on our customers...they trust us...We know what people make...we know where they work...We know if they’re married. We know how long they’ve lived in their house...We’ve never ever been challenged on how we use that." No I'm not going to tell you here, you have to click, but make sure you guess before you do.
In related news, electric vehicles in China made by Tesla, Volkswagen, GM, Ford, BMW, Nissan and more are sending real time data to the government about their usage patterns and precise location.

Ever struggle to understand what is  happening to data with a particular statistical method? Me too. Nick  Huntington-Klein has created a fantastic new resource to help  conceptualize what various statistical methods are doing rather than how  to do them. It's astounding work, and astounding that it didn't already  exist. The world needs more of this. You can see the  full page of animations and explanations here . Source:  Nick Huntington-Klein

Ever struggle to understand what is happening to data with a particular statistical method? Me too. Nick Huntington-Klein has created a fantastic new resource to help conceptualize what various statistical methods are doing rather than how to do them. It's astounding work, and astounding that it didn't already exist. The world needs more of this. You can see the full page of animations and explanations here. Source: Nick Huntington-Klein

Week of November 12, 2018

1. Our Algorithmic Overlords: Since it hasn't featured for a few weeks, I'm going to lead with our old friends this week. If you're in development circles, you know about Aadhaar. And if you're a reader of the faiV you know about China's intrusive citizen monitoring and control (let's dispense with calling it a "social credit score"--this apologia for what's happening is frightening in its own right). But did you know that Venezuela is on the forefront of assigning every citizen an ID and tracking their behavior, including their votes (maybe)? Here's a Twitter thread with some additional details from the reporter of that piece. Guess who's providing the technology? 
The frightening frontier in the US is from private technology companies, well, let's be honest, the frightening frontier is Facebook. Here's a New York Times investigation of the company's conduct that is jaw-dropping, over and over again. Where is Teddy Roosevelt when you need him? For now, we've got Kara Swisher's thoughts on cleaning up the "toxic smoke".
Tying the domestic and global back together, here's Susan Liautaud of CGD on how the perspective on the ethics of automation and AI may look different in developing countries

2. Development Finance and Banking: Sticking with CGD, here's the polymath of development, Charles Kenny, on reforming the World Bank's Private Sector Window to comply with, y'know, the World Bank's guidance on appropriate design for private sector subsidies.
The big question for development finance (and social finance of all sorts) is whether it is crowding-in or crowding-out private sector investment, or neither. Here's Paddy Carter on the "Elusive Quest for Additionality" (have to love a shout-out to old school Bill Easterly) in summary form and in full length paper form (with van de Sijpe and Calel).
Let's say that there is additionality and DFIs are increasing capital flows to developing countries. The next big question is, what impact does that have? Here's Judith Tyson and Thorsten Beck on how those capital flows are affecting domestic financial system development. They conclude that the capital flows are too pro-cyclical and not doing enough to boost domestic capital markets.
There is a specific kind of capital flow that is actively undermining financial development specifically and development in general: regulations on anti-money-laundering and anti-terrorist-financing (regulations are a form of capital right?). Here's a brief from the Humanitarian Policy Group at ODI on how bad it's gotten in humanitarian relief. And just a reminder that this is a pervasive problem. No really,it's a pervasive problem.
Speaking of financial system development, here's an interesting post on what is happening in Ghana's banking sector--well, what's happening is consolidation, the post explains why and what's next. And here's a perspective on the liquidity crunch for Indian NBFCs

3. MicroDigitalFinance: It feels like we might be hitting an inflection point on mobile money services, the point where it's no longer possible to talk about it without prominently noting the negatives. CGAP has a new report on digital credit in Kenya and Tanzania, which leads them to the conclusion that "It's Time to Slow Digital Credit's Growth in East Africa." Late payment and default rates are enough to make any MFI executive faint. One particularly interesting tidbit: loans taken in the morning are much more likely to be repaid than loans taken at night. That's not really surprising but it's amazing to have that level of insight. Of particular concern is that many borrowers don't understand the terms of the loans they are taking. All the progress made on consumer protection for MFIs doesn't matter much if the market shifts to getting credit elsewhere. 
This week Graham Wright of MicroSave gave one of the keynotes at European Microfinance Week on a similar theme. You can see a shortened text version of Graham's talk at Next Billion or video here (though that's a Facebook link so, given the above, I understand if you don't want to click it).
His framing is that digital financial services are an existential threat to microfinance because of the ability of digital service providers to peel off the best customers and leave the hardest to serve to the MFIs. You'll have to work very hard to convince me that is not what is coming, and even harder that that doesn't have lots of negative consequences. It's consistent with what happened with the growth of for-profit MFIs--while the for-profits serve more customers, the non-profits are more likely to serve women, poorer clients, and rural areas. But more importantly, it's also the story of historical development of consumer financial services in high income countries, particularly the United States: pro-poor institutions find innovative ways to expand the market, but struggle because they are serving the most expensive, riskiest clients and eventually other institutions take the most profitable parts of the new markets that have been established. David Roodman's chapter on the lost history of microfinance in Due Diligence is useful on this and I'll have more on this in some of those writing projects I've mentioned.
Graham also mentions the growing possibility of digital financial services creating a new, harder form of exclusion, specifically for rural customers on the wrong side of the digital divide. Elsewhere he's also made the point that digital blacklisting could create rigid barriers to those defaulting on their quick and easy but not well understood digital loans. Again, if you're at all skeptical, take a look at the United States--it's an underappreciated cautionary tale for where many countries are headed. Here's a quick example of hardening digital exclusion in the US
Here's where you'll typically hear the argument about how FinTech can deliver all sorts of useful money management tools to those who need them most. Sure, in theory. Here's a new report from the Global Financial Literacy Excellence Center (and I'm as shocked as you are that I'm linking to something there; that feeling when someone you normally disagree vehemently with writes something that confirms your priors in a different domain) on mobile payments use and financial behaviors in the US. Annamaria Lusardi's summary in the WSJ is here. Mobile payments users are more likely to carry balances on their credit cards and make minimum payments. They're more likely to overdraw their bank accounts and to withdraw from retirement accounts. The same skepticism you should now have for Big Tech needs to be the default setting for FinTech and digital financial services as well. 

4. Evidence-Based Policy: Your clicks demanded it, so here's more evidence-based policy links. But first, you have to take a look at this job market paper producing some evidence that's policy relevant. Abhit Bhandari wanted to study how political connections affect economic behavior of firms--so he started a company in Senegal (for real!) and then randomized what his salespeople said to customers, in order to signal (or not signal) political connections. Bhandari has displaced Chris Blattman's randomizing factory job offers and Dina Pomeranz's randomizing tax enforcement in my pantheon of amazing experiments.
OK, back to tips for connecting research to real-world impact. Last week we had eight tips on policy relevance from Oxfam. This week you've got four tips on making evidence synthesis more useful from a variety of folks in the UK government (though I have to say, the UK doesn't seem like the best place to be sourcing evidence-based policy advice at the moment does it?) and the editor-in-chief of Nature. Or perhaps you'd prefer to think about six pathways for evidence to influence policy from J-PAL? To explain how the pathways work they also have 17 case studies that you can delve into

5. Philanthropy: My friend Rob Reich's (not that Rob Reich) new book on the dangers that large-scale philanthropy (alternatively, massive wealth inequality) poses to democracy and what to do about it, Just Giving, is now out. Here's an extended essay drawn from the book. You can hear Rob discuss the book on TinySpark here. 
While thinking about Rob's arguments, I finally read Tyler Cowen's description of Emergent Ventures. It's a very useful pairing; Tyler's description of how some of the pathologies of big philanthropy emerge from "commonsense," unobjectionable choices about how to organize institutional philanthropy and his alternative approach mesh quite well with Rob's vision of a better future for philanthropy. Should I apply for an Emergent Ventures grant to support faiVLive and my (ever forthcoming) next book about big data/machine learning and economics?
Of course, sometimes democratized philanthropy can yield pretty unpleasant outcomes. Remember a few months ago when I linked to a scandal where a couple apparently pocketed $400K from a GoFundMe campaign for a homeless veteran? It turns out that the whole thing was a scam from the beginning, the "homeless vet" had been in on it the whole time, and none of the story was true. 

I feel the need for a little lightness. So here's an amazing image from a Japanese history of the United States for children from 1861. That's John Adams directing the fusillade of the incredibly strong Ben Franklin, who apparently can aim better when he can hold the cannon himself. The other images of the book are equally amazing, so  check them out . Via  Nick Kapur .

I feel the need for a little lightness. So here's an amazing image from a Japanese history of the United States for children from 1861. That's John Adams directing the fusillade of the incredibly strong Ben Franklin, who apparently can aim better when he can hold the cannon himself. The other images of the book are equally amazing, so check them out. Via Nick Kapur.

Week of September 17, 2018

1. MicroDigitalFinance: A few weeks ago I wrote that small-dollar short-term loans have always been the bane of the banking industry. We're getting a new test of that. US Bank is launching an alternative to payday loans: loans are between $100 and $1000 and repaid over three months. Interest rates are well below payday lending rates, but still around 70% APR--interestingly on US Bank's page about the loan they very clearly say: "Simple Loan is a a high-cost loan and other options may be available." All of that is good news. But the loans are only available to people with a credit rating (even if it's bad), who have had bank accounts with US Bank for 6 months and direct deposit for 3 months. It will be fascinating to watch take-up, repayment rates, and outcomes--those are where banks have always struggled in this market. Here's Pew's Nick Bourke's take on the US Bank move and the potential for others, with some more regulatory action, to follow suit.
I occasionally remark on insurance being the most amazing invention of all time. It's astounding that it works at all, even in the most developed, trusting and well-regulated markets (see this attempt by one of the US's oldest life insurance providers to collapse the market); it's not surprising that it's a struggle to make it work elsewhere, in the places where households face more risk and would most benefit from access to insurance. So I'm always interested in new work on insurance innovation. Here's a new paper on a lab-in-the-field insurance experiment in Burkina Faso. The basic insight is that many potential purchasers struggle with the certain cost of an insurance premium versus the uncertain payoff. It turns out that framing the premium around an uncertain rebate if there is no payout--which makes both premium and benefit uncertain--increases take-up, especially among those that value certainty most. Yes, you probably need to read that sentence again (and then click on the link to see that even that obtuse sentence is marginally clearer than the abstract). If we want to delve into the details of insurance contract construction, there's also a new paper that delves into how liquidity constraints--a huge factor that hasn't generally gotten enough attention--affect the perceived value of insurance contracts, and how to adjust the contracts accordingly.
And finally, William Faulkner's dictum that "The past is never dead. It's not even past." applies to fintech. A new paper finds that common law countries in sub-Saharan Africa have greater penetration of Internet, telecom and electricity infrastructure, and thus much greater adoption of mobile money and FinTech. That's consistent with history of banking literature that finds common law countries do better on financial system development, financial inclusion and SME lending. 
For the record, I've clarified in my own mind the difference between the MicroDigitalFinance and Household Finance categories. The former provides perspective on providers, the latter on consumers. I reserve the right to break that typology as necessary or when it suits me.  

2. Household Finance: I suppose another way to distinguish between the two categories is that MicroDigitalFinance features bad news only most of the time, while Household Finance is just all bad news. At least that's the way it feels when I come across depressing studies like this: Extending the term of auto loans (e.g. from 60 months to 72 months as has become increasingly common during this low-quality credit boom) leads to consumers taking loans at a) higher interest rates, and b) paying more for the vehicle. Liquidity constraints mean consumers pay much more attention to the monthly payment and get screwed.
It's not just auto loans where liquidity constraints lead to people making sub-optimal choices (yes, I'm thinking a lot about managing liquidity lately). For instance, when people move from traditional health insurance to high-deductible plans they suddenly reduce spending on health care--but not in the ways you want. People don't learn to price shop, even after two years, and they don't reduce spending only on optional or low-value services. And here's the JP Morgan Chase Institute study that shows how much liquidity constraints or their removal affect health care spending using a different approach.
Now if you are a loyal faiV reader, I know you're not thinking, "We need financial literacy training!" But just in case, here's some more bad news: "peer-to-peer communication transmits financial decision-making skills most effectively when peers are equally uninformed, rather than when an informed decision maker teaches an uninformed peer." Or this: "provision of effective financial education to one member of a pair...does not lead to additional improvements in the quality of the untreated partner's decisions." 
If you're thinking, "That hasn't ruined my Friday yet, Tim, give me more," don't worry. How about "Twenty-four million homeowners think it's acceptable to tap into home equity to cover everyday payments." Granted, that's from one of those ridiculous bankrate.com surveys that should be taken with several kilos of salt, but still. 

3. Our Algorithmic Overlords: Here's a quick story about an egregiously bad algorithm the State of Idaho was using to determine how much assistance Medicaid recipients should receive. You can probably already guess--bad data, bad software, bad implementation. But it took a lot of work, and a lawsuit, to figure that out. 
Stories like that emphasize that before handing over decisions to our algorithmic overlords we should want those algorithms to be understandable and fair. Here's a new paper from Jon Kleinberg and Sendhil Mullainathan developing a model that shows you have to pick between simple and equitable. You can't have both.
And here's the "Anatomy of an AI System" that in some ways is a visual proof of the Kleinberg and Mullainathan paper. It's also one of the coolest visualizations I've seen in a while--both in scope and because it isn't reductionist about AI. It takes into account all of the surrounding processes as well. You won't regret clicking on this, unless you have something else really important to do.

4. Global Development: So many things to include this week. Let's start with the biggest: Asher, Novosad and Rafkin have assembled an incredible dataset on incomes in India that allows them to measure intergenerational mobility in a country of more than a billion people, down to the level of 5600 rural districts and 2300 cities and towns. One key finding: increasing mobility among scheduled castes is offset by decreasing mobility among Muslims.
At a necessarily smaller scale, but still big in terms of scope and time, Casey, Glennerster, Miguel and Voors have a long-term follow up on the results of a large scale experiment on Community Driven Development in Sierra Leone, finding that CDD doesn't break down traditional autocratic governance mechanisms enough to allow full exploitation of human capital, which as I understand it was part of the motivation for CDD, and there are easier and cheaper ways to to do so. Of note, they also look at the "prior beliefs of experts on likely impacts"--which, given the "Everything Is Obvious" responses research like this often generates, is pretty cool. Here's Rachel's Twitter thread summary.
Another of the arguments I've heard both for and against CDD-style programs is side-stepping difficult targeting questions--just let the community decide who needs help. Rema Hanna and Ben Olken have a new paper on targeting, specifically on the relative welfare gains of universal basic income versus means-testing. They find means-testing wins using data from Indonesia and Peru, despite some issues; and they discuss adding community-targeting to means-testing.
Meanwhile, here's a piece by Josh Blumenstock that tries to deflate some of the excitement around using high-tech means of targeting, like satellite maps, social networks and call records. In summary, data without theory is useless, and so is data + theory without anthro/soc (or at least anthro/soc informed economics).

5. Methods and Evidence-Based Policy : That's a good lead-in to methods. Let's start with some quick hits. Brian Wansink, whose scandals I've covered in this item in the past, has resigned from Cornell. Noah Smith has a column on the replication crisis in Economics though it's about a very different kind of replication crisis than the one Wansink faced. Now that I type that, it occurs to me that it was in fact easy to replicate Wansink--just making up numbers that matched his would apparently be both a literal and conceptual replication. And here's a new paper on improving diff-in-diff methods to account for effects changing over time.
The idea of evidence-based policy sort of requires that there is evidence of something working. But y'know, nothing does. Encouraging women to get mammograms? Those most likely to respond are those least likely to need one, and because of false positives, the net welfare effect is negative. The health effect of better trade and transport links in the United States in the early 19th century? So negative that it made it people shorter (I mean, as a whole, not specific people). What else? Oh, those gains we all know of like improved water and sanitation, and food safety standards during the early 20th century...no effect on total or infant mortality. That last one reminds me of an old LantRant about assessing whether development interventions matter based on whether they were important in the history (or present) of developed countries. Shall we scratch food safety and urban sanitation off that list? 
I suppose we can hope that these results won't replicate, like the examples that Noah Smith cites. But on the other hand, it's already too late. Once a result is published, no one (or at least no doctors) changes their mind, or changes their behavior.
Wow, this has been bleak. So here's one hopeful note on something that did work. Women's suffrage caused large gains (via demand for more spending on education) in educational attainment of poorer/disadvantaged children, and long-term earnings gains. So go out this weekend and help a woman register to vote (and then go back and make sure she has everything she needs to follow through and vote on election day).

I would have had the Anatomy of an AI visualization here, but it's way too big, and  Justin Sandefur  created this really great example of how simple choices in the visual representation of data can radically change the way we interpret it. The two charts are of the same data, on the left from the World Bank and on the right from The Economist. Via  Justin Sandefur .

I would have had the Anatomy of an AI visualization here, but it's way too big, and Justin Sandefur created this really great example of how simple choices in the visual representation of data can radically change the way we interpret it. The two charts are of the same data, on the left from the World Bank and on the right from The Economist. Via Justin Sandefur.

Week of August 20, 2018

Editor's Note: I'm back on faiV duty. Many thanks to Alexander Berger, Jeffrey Bloem, John Thompson, and Rebecca Rouse for filling in. If you would be interested in being a guest editor of the faiV at some point, feel free to reach out.
This week, I'm casting my eye back over the many things I've been reading over the last few months. Don't worry, I'm not going to try to cover all of those in one faiV, though there will be, perhaps a bit less commentary than usual.--Tim Ogden


1. Financial Inclusion and Digital Finance: The last time I was writing the faiV, various takes on the Global Findex data were being featured prominently. So it only seems fitting to come back to that as I return. Greta Bull of CGAP has a two-part blog, part I and part II, reacting to Beth Rhyne's and Sonja Kelly's take (may I take a moment to smile at the inclusion that sentence reveals?) on the Hype vs. Reality of inclusion. Bull argues that the Findex data shows greater progress on inclusion than Rhyne and Kelly see. For what it's worth I lean to toward Bull in this debate. It would be surprising, given the incredibly rapid progress in access, if the access-use gap wasn't growing, especially in countries with relatively low levels or recent gains in access as network effects won't kick in for awhile.  
There is another concern beyond the use/access gap--does use of the available accounts make people better off. Here's a new paper from Kast and Pomeranz showing that providing free savings accounts in Chile led to lower debt burdens (and some additional evidence on rotten kin). On the other hand here's an open letter from Anup Signh to Kenyan Central Bank governor Patrick Njoroge making the case for urgent regulatory action on digital credit to protect borrowers. On the third hand (hat tip to Brad DeLong) mobile money seems to have saved lives (note no counterfactuals there, but it seems plausible) during Ebola outbreaks in Liberia and Sierra Leone during Ebola outbreaks by ensuring that response workers got paid.  
Of course, benefit depends not just on use, but on who is using the services. Microsave found that 80% of the "addressable LMI market" in India was not being served by fintechs, and, with CIIE's Bharat Inclusion Initiative, has launched a "Financial Inclusion Lab" to help Indian fintech's address that market.   

2. Our Algorithmic Overlords: If you've gotten out of the habit of reading the faiV, what better way to grab your attention back than sexbots! Here's Marina Adshade, an economist at UBC, with a thoroughly economic argument about how sexbots could make marriage better (by changing how it works and what it does). And here's Gabriel Rossman, a sociologist at UCLA, making the counterargument. Apparently he reads Justin Fox.
On a much more prosaic, and more urgent, front, there have been a raft of stories on the increasingly alarming situation in Northwest China where the tech-driven panopticon seems to be racing ahead in the service of persecution of Muslims and ethnic minorities. Here is the NYTimes "inside China's Dystopian Dreams". Here's Reuters on the "surveillance state spread[ing] quietly." MIT Technology Review asks, "who needs democracy when you have data?" And here's Foreign Affairs on the "coming competition between digital authoritarianism and liberal democracy." If I have a bone to pick it's the lack of attention to the possibility of "authoritarian democracy" that comes along with a surveillance state and AI overlords.

3. Global Development: If sexbots don't get your attention, what about hyperselectivity of migrants? I think, quite a while ago, I linked to Hicks, et al. on the systematic differences between those who migrate from rural to urban Kenya, and those who stay on the farm, finding that urban productivity is a factor of the traits of the workers who migrate. But if not, now they are in VoxDev with a great summary of the work. It's particularly interesting to read in conjunction with this new paper on the hyper-selectivity of migrants to the US--the fact that migrants to the US are both more likely to have a college degree than their compatriots, and than the US native-born population. That hyper-selectivity plays a role in second generation outcomes, but has mixed results for economic mobility of Asian, African and Latino migrants.
What to do for those who don't migrate? I really like this new paper from Beaman et al. on using Network Theory-Based targeting to determine how to deliver agricultural training. Why? Well, because I find technology adoption a particularly interesting set of questions, but mostly because they "identify methods to realize these gains at low cost to policymakers."

4. Philanthropy: There's an old saw that two data points are anecdotes, but three are a trend. It's mostly applied to journalism, but I originally heard it at my first job doing market research on the IT industry. Regardless of it's source, it definitely indicates there is a trend to looking much harder and more skeptically extreme wealth-driven philanthropy (or social investment, or impact investment, etc.). Anand Giridharadas expands a talk he gave at Aspen into a full length book called Winners Take All: The Elite Charade of Changing the World. Rob Reich, a political scientist at Stanford (who I have the temerity to call friend), has Just Giving: Why Philanthropy is Failing Democracy and How It Can Do Better, and David Callahan, founder of Inside Philanthropy, has The Givers: Wealth, Power, and Philanthropy in a New Gilded Age. None of them sound much like Philanthrocapitalism or Giving. I'm excited by all three, and I think you should buy and read them, but let's be realistic. You're much more likely to read this review of the three from Elizabeth Kolbert. The most interesting review--from a meta-perspective--though is this review in SSIR ofWinners Take All from Mark Kramer, clearly one of the targets of Giridharadas's book. Well done SSIR. 

5. US Inequality: Continuing on that theme, it's not just the billionaire philanthropists who are undermining American society and democracy, according to Matthew Stewart. If you're a US-based reader of this newsletter you are likely part of the problem. If you prefer the academic version of an argument like this, here's a new paper from Schneider, Hastings and LaBriola on income inequality and the growing, and amplifying, gap in parental investments in children. They also read Justin Fox (and enough with the cryptic link, that's a piece about sociologists engaging with the public more like economists, including making their papers open access.) Or if you prefer the academic version in summary form, here's Schneider's tweet thread. And since it's back-to-school time, here's the most depressing back-to-school news I can imagine: School districts in my area are hiring private detectives to follow kids and make sure they aren't crossing district lines in order to go to a good school. No arguing with Stewart's thesis allowed while this is how wealthy school districts are spending their money.

It's not just the US that has concerns about the influence of extreme wealth and inequality. Here's a 3 minute book preview of James Crabtree's book,  The Billionaire Raj .

It's not just the US that has concerns about the influence of extreme wealth and inequality. Here's a 3 minute book preview of James Crabtree's book, The Billionaire Raj.

Week of July 16, 2018

A Very Rouse-ing Edition

Editor's Note: As mentioned in the last faiV, I'm taking some time away from weekly newsletter writing to work on some other writing projects. This week's edition is guest-edited by Rebecca Rouse, director of IPA's Financial Inclusion Program, which partners with researchers, FSPs and governments to design and test financial products and consumer protection policies.--Tim Ogden

1. Women's Empowerment: Our friends at JPAL released their long-anticipated Practical Guide to Measuring Women’s and Girls’ Empowerment in Impact Evaluations. It comes with a set of questionnaires and examples of non-survey tools that can be more effective at capturing the useful and reliable data. This new study from the U.S. Census Bureau is timely, showing that when a woman earns more than her husband they both tend to exaggerate the husband’s earnings and diminish the wife’s on their Census responses. Gender norms still shape survey responses, no matter where you are. Seems like a good time to revisit IPA’s discussions on mixed methods approaches to women’s empowerment measurement with Nicola Jones and with Sarah Baird from last year. Finally, the US House passed the Women’s Entrepreneurship and Economic Empowerment Act of 2018 this week. The bill seeks to improve USAID’s work on women’s access to finance, and is notable first because of its attention to some (not all) non-financial gender-norms constraints that impact women’s prosperity, and also because it calls for improvements to outcome measurement methods.  


2. Migration: The first ever Global Compact for Migration was approved by all 193 member states of the UN last week except for the United States (Hungary is now saying it won’t sign the final document), and one of its 23 high-level objectives is to “promote faster, safer and cheaper transfer of remittances and foster financial inclusion of migrants.” A lot of the language in here sounds like the same old story on remittances, and I am skeptical of the laser-sharp focus on reducing prices (it calls to eliminate remittance corridors with costs higher than 5% by 2030), promoting financial education, and investing in consumer product comparison tools that aren’t based on evidence. Dean Yang’s 2016 study on financial education for Filipino migrants failed to find any positive impact on financial product take-up or usage, for example.

3. Remittances: What about looking to the behavioral econ world to enhance the positive effects of remittances? Behavioral nudges that can leverage digital finance look promising – Harvard Business Review had a nice piece last month on Blumenstock, Callen, and Ghani’s test of mobile money defaults to save in Afghanistan. This experiment is exciting because it shows that, with the right tools, successful interventions from the developed world, like Thaler and Benartzi’s Save More Tomorrow, can achieve similar results in other contexts.  Linking remittance transfers to digital finance in the receiving country can create additional opportunities to enhance impact beyond savings, for example using data for credit scoring. Here’s an op-ed from Rafe Mazer and FSD Africa on the opportunities and risks surrounding data sharing models in emerging markets.

4. Nudges: Abraham, Filiz-Ozbay, Ozbay, and Turner have a new working paper on the impact of income-based student loan repayment plans on employment decisions in the United States. They find that limiting the repayment plan options that borrowers are offered can lead them to pursue riskier careers and thereby raise their expected incomes in the long run. By only offering income-based repayment plans, which protects them from defaults by linking payment amounts to earned income, students were unburdened from fears of regret and of making the wrong choice. And lastly, Bernheim and Taubinsky summarize the use of behavioral economics in public policy, including an entire section on policies that target personal saving. 

5. Mobile Money: Finally, from Kenya, some experimental evidence on the impact of mobile money on school enrollment in a new working paper by Billy Jack and James Habyarimana at Georgetown. Parents who received a mobile money savings wallet via M-PESA, regardless of whether it incorporated a commitment mechanism or not, increased savings by three to four times, and were 5-6 percentage points more likely to enroll their children in high school. It’s interesting that the commitment savings option wasn’t more or less impactful than just the offer of any mobile wallet, and you can read a new interview with the authors discussing the results on the IPA blog. 


Thanks for the chance to take over the faiV this week! - Rebecca

From a new report by the Urban Institute: “By 2020, the federal government is projected to spend more on interest payments on the debt than on children." Source:  Urban Institute

From a new report by the Urban Institute: “By 2020, the federal government is projected to spend more on interest payments on the debt than on children." Source: Urban Institute

Week of June 18, 2018

The Do U Care Edition

1. Migration: If you don't get the "edition" reference, I think I envy you. But I care, and in the absence of other specific ways to oppose cruelty and barbarism, I'll spend some time here sharing some useful information about migration. Such as the fact that the US has become a "low-migration" country. I think this is as significant a change to the nature of the country as the closing of the frontier, especially since so many people don't seem to realize how much migration, whether within the US or to the US from other countries, has dropped.
On to that other crucial fact about migration: it's very very good for the people migrating and doesn't harm the people who are already there. Here's the newly officially published in AER paper by Clemens, Lewis and Postel studying the effect of the end of the Bracero program which led to 1/2 a million Mexican workers leaving the country, without any detectable benefits for native workers (employers simply invested in labor-replacing technology it appears). Here's a new NBER paper on the forced migration of Poles after World War II finding that migrants invested more in human capital for three generations. That's consistent with other work that shows long-term positive, sustained effects for people who move, even those who don't have full choice. Here's a story about how migrants fleeing the US to Canada are finding employment and thriving.
If you're interested in the big picture on global migration, the 2018 OECD International Migration Outlook is out.


2. Banking: I talk a lot about the overlaps between US and global financial inclusion issues--from household finance to consumer protection to business models to regulation. So I think both of these next two items are relevant well-beyond the countries they are focused on.
First, here's New America with a new report on how local and community banks systematically charge people-of-color more for their accounts (here's the OpEd version), which doesn't exactly encourage these historically excluded populations to join the banking mainstream. Oh, and the consumer protection regulatory system is being undermined in more ways than you might realize. Not only is there direct deregulation, but recently the Supreme Court ruled that the way the SEC carries out many of its "trials" for investment fraud are unconstitutional--and the CFPB is too. Here's Arjan Schutte writing about being fired from the CFPB's consumer advisory board which, y'know, at least he's not being unconstitutional now.
On the other hand, in India, the RBI is working to turn urban cooperative banks into "small finance banks." This piece explains a bit about the history of Indian urban cooperative banks and the regulatory issues involved--it's not all good. It's worth reading for anyone thinking about productive ways forward for more inclusive banking systems.

3. Digital Finance: In most of the countries where digital financial services have made inroads among poor households, agents are playing a big role. But those agents are often basically the same folks we see running microenterprises that we can't figure out how to improve. And that probably means that their growth is being limited by the quality of services offered and decisions made by those agents. Here's a paper from Acimovic, Parker, Drake and Balasubramanian who attempt to help mobile money agents in Tanzania (way to go including the country in the paper title guys!) improve their business practices. Specifically not be plagued so much by "stock-outs" that mean they can't serve customers either trying to deposit or withdraw cash ("stock" can be either mobile money or cash depending on the transaction). They find what I would term the "heavy paternalism" approach works best--showing up in person to train and then giving specific direction via text each day. It reminds me a lot of the "mind the change" paper of a few years ago, and the Kenyan enterpreneur mentor paper from last year. Overall it seems that an important dimension for improving microenterprise profitability is inventory management.
Another big piece of the digital financial services equation is designing services that are helpful to the customers you are trying to serve and that they actually want. That's a new report from ProsperityNow focused on low-income US consumers, but you already know that I think such things are globally relevant.

4. Methods etc.: Here's an idea for experiment design: don't substantially and repeatedly mislead people for decades about your experimental design. Forget everything you think you know about the Stanford Prison Experiment, a staple in pop culture and social psychology, because almost everything published about it is an inaccurate representation of what actually happened. Given the horrors happening around us, it's hard to get too riled up about this but it really is stunning reading as a famous researcher repeatedly denies specific accusations until evidence from the archives of the experiment force him to acknowledge what really happened. 
On a more positive note, here's a clever little interactive game to explain concepts of "network science" or more simply, how social connections influence perceptions and behavior, or more complicatedly, how to think in a bit more structured way about spillovers from treatments that have an informational component. 
And here's David Evans sharing a provocative statement from Karthik Muralidharan at the RISE Conference--paraphrased, when working on a large scale experiments run by governments you might be better off not doing a baseline survey--and various reactions, which lead to a very good discussion. 

5. Consumer Behavior/Social Enterprise: So this one makes most sense in light of what is coming after, but bear with me. What happens when you get parents involved in improving teaching practices in Ghanaian preschools? Bad, bad stuff. Well at least counterproductive stuff.
So keep that in mind as we move finally to an interesting experiment on how much influence customers can have on corporate behavior (via Ray Fisman). A key part of the social enterprise movement is the idea that just behavior will resonate with customers and lead to, if not higher sales, than at least loyal customers. But it turns out customers have a hard time remembering who the good and bad actors are when it comes time to make purchases. So while there may be some loyal customers out there, it's going to be hard to get the mass consumer to get on board with shifting corporate behavior via their spending. Which ultimately is a pretty good argument for Just Capital's approach of building an index that socially-conscious consumers of stocks at least can get what they want without having to remember any of the details. 

I'm always a sucker for Twitter threads with interesting data, and twists and turns. This one is about the  curious case of rising opioid deaths in the US in states that did or did not expand Medicaid . 

I'm always a sucker for Twitter threads with interesting data, and twists and turns. This one is about the curious case of rising opioid deaths in the US in states that did or did not expand Medicaid

Week of June 11, 2018

1. Household Finance: If you'll bear with me I'm going to write about household finance mostly with links to pieces about corporate finance. Corporate finance matters a lot, and it deserves the attention and resources invested in it (Channeling Willie Sutton: why do you write papers about corporate finance? Because that's where the money is). After several hundred years of lots and lots of resources and attention we've pretty much got this thing licked right? Well, maybe not the biggest questions but at least the basic questions like accounting and financial reporting, right? Right?
Here's Warren Buffet complaining about Generally Accepted Accounting (GAAP) rules being applied to his company. And here's an argument from several business school professors that GAAP rules aren't meaningful given changes in the economy--with the enticing tidbit that in many companies having a CPA, in other words having deep familiarity with the rules of corporate finance and accounting, is a disqualification for a senior-level job in the finance department. And here's Buffet again, this time with Jamie Dimon, arguing that quarterly financial reporting is broken.
Lest you think that this is some emerging consensus, here's Felix Salmon arguing they are wrong. Here's Matt Levine arguing they're wrong. And here (via Justin Fox, which we'll return to later) is a whole book about GAAP rules being wrong for entirely different reasons
So all of this is interesting (OK, maybe not) but what does it have to do with household finance? We haven't even begun investing the kind of resources necessary to really understand household finance, but we act like we have all the important questions licked. Or at least that households should be able to, with a little financial literacy training perhaps, be able to get a grasp on their finances and make consistently sound decisions. The fact is, for the most part, we just don't know what we're talking about when we talk about household finance. Or loss aversion


2. Digital Finance: In another brief diversion to start off an item, an astute reader pointed out that the way I had been writing about Findex made it seem like the Findex team did not have it's own report on the findings. They do, so click on it.
One read of the both the Global Findex team's report and the CFI report highlighted last week is that the promise of digital finance is largely unfulfilled. But there's still a lot of excitement over the promise in places like Egypt apparently. I found this piece particularly remarkable because I stumbled on it right after reading through the Findex analyses, and all I could think was "I don't think that data means what you think it means." Oh, and the note that moving to digital finance would allow the government to closely inspect everyone's spending habits, wheeee!
There's a different sort of excitement over digital finance in Uganda apparently where the parliament has approved taxing mobile money and social media(?!?). Apparently there was some concern that such taxes would be regressive, but some MPs objected that people shouldn't be exempted from paying taxes just because they were poor. Clearly those people don't read CGD/Vox.
In other CGD news related to digital finance, here's a piece about using blockchain in development projects--or perhaps more on point, *not* using the blockchain for development projects. There's a terrific decision tree graphic in the piece that is worth the click on its own, even though I disagree substantially with one part of it.

3. Firms, Productivity and Labor: Earlier this week I attended two days of the Innovation Growth Lab conference put on by Nesta. A number of interesting papers and research proposals were presented--the session I found most interesting was on the global productivity slowdown. The conclusion I came away with--though this wasn't what any of the papers were about--is that the big policy problem is insufficient labor mobility. And by that I don't mean geographic mobility (though I do think more of that would be great) but more firm-to-firm labor mobility. 
But while I was sitting in the research meeting discussing a) whether its possible to boost productivity of small firms, and b) whether the adoption of Toyota Way principles could be an effective proxy for increasing experimentation in firms, this new paper from Tanzania popped up in my Twitter feed via David Evans. It's an experiment introducing Toyota-style problem-solving training for small garment firms--three years after training they find significantly higher profits (though no short-run gains). I can't imagine a paper designed to more efficiently challenge my priors--which are/were a) Toyota has developed an incredibly productive system for sustaining and improving performance, b) it is incredibly hard to improve performance of small businesses.
I mentioned returning to Justin Fox's piece earlier--the column is about how firms behave from a theoretical and empirical perspective, especially how well Friedman's perspective is holding up. It's definitely worth one of your precious Bloomberg-pay-wall-exception clicks (though you may want to open it in an incognito tab anyway). The column will make one more appearance before we're through.

4. Our Algorithmic Overlords: In the interests of time I'm going to hit you with several links and very little commentary. The NY Times Magazine has a feature on differing perspectives on the future of AI among the titans of Silicon Valley. I feel like some very close analog of this piece was done last year but I don't have an AI assistant handy to find it for me.
Here are two new NBER papers on the impact of AI and policy: from Jason Furman and Robert Seamans and from Ajay Agrawal, Josh Gans and Avi Goldfarb.
And two stories about surveillance--of crowds looking for violent behavior, and of Chinese school students looking for boredom.

5. Social Investing: Finally, this week a new Exchange Traded Fund focused on "just" corporations launched--it's a collaboration between hedge fund billionaire Paul Tudor Jones II and Goldman Sachs, exactly who you would expect to be arbiters of socially-positive corporate behavior (if only they could have had an actor portraying Milton Friedman at the launch event!). But the methodology for the index is actually quite interesting and the basis for the rankings are remarkably transparent. There are a number of interesting perspectives to read on it. Here's a positive take. A neutral one. And a skeptical one. (And that's why you want to save your Bloomberg clicks)

Here's the last return to that Justin Fox piece because he features one of the greatest faiV-style videos ever: the Stockholm School of Economics choir signing an original composition based on Friedman's view of firm's social responsibilities.

Week of May 21, 2018

1. Banking: Coinbase, a cryptocurrency trading platform, is doing something strange: acting a lot like a traditional bank by emphasizing its stability and trustworthiness. As Matt Levine points out (save that link, it's going to come up again later),  this is the central paradox of cryptocurrencies--they supposedly do away with the need for trust, but most everyone needs a trusted intermediary to keep hold of their cryptocurrency and protect them against fraud. Y'know the sort of things that banks or governments do (or enable and enforce with regulation). You've probably heard the mantra that cryptocurrencies aren't that important but blockchain is. The Coinbase approach, which is apparently successful, puts the lie to that notion. Why do you need an expensive and inefficient distributed ledger when you can have a cheap and efficient one provided by a trusted intermediary, like Coinbase? 
Trusted intermediaries are really important and the reason why it's worth caring about financial sector deepening. Rather than being distracted by cryptocurrencies, and their inevitable march toward realizing the need for trusted intermediaries, a more fruitful line of thinking is paying attention to what trusted intermediaries are emerging and how they affect consumers, transactions and the flow of money. This was a big part of the story of MFIs success, and one which I think remains underappreciated. Telecoms providing mobile money platforms is a really interesting case, of course. So are the commerce platforms that are rapidly becoming (or already are) payment platforms: Amazon, Google, Facebook, Tencent and Alibaba. And so stories like this about Amazon and this Planet Money story about Tencent and Alibaba (it's called "A Series of Mysterious Packages," how can you resist?) may not seem like they are about banking, but they are about banking.
Beyond the obvious, the reason that the emergence of non-bank but sort-of-like-a-bank trusted intermediaries is that they change the structure of the market. Here's a new paper from de Quidt, Fetzer and Ghatak on market structure and borrower welfare in microfinance, arguing that competition can yield borrower outcomes that match non-profit lending. I'm not yet convinced. And yet, the NY Times Upshot new "Marx Ratio" determines that banks are socialist collectives (that's the Matt Levine link again, I really really wish I could link to specific parts of his posts).
Speaking of market structure, here's a story about American Samoa creating the first public bank in the United States since the turn of last century. Why? I suppose you could say the lack of competition was hurting borrower welfare.

2. Digital Finance: Here's a paper on how using social pressure to encourage positive health behaviors that every MFI that uses groups in any way should read, whether they are doing anything digital or not. There's a U-shape to the curve: the most influential people in changing behavior are those that are neither too close nor too distant in the social graph.
MicroSave has a new piece that gets helpfully specific on the opportunities for using digital finance to close the inclusion gap in six Asian countries (Bangladesh, China, Malaysia, Myanmar, Nepal and Vietnam). There are also country specific reports for most of the countries. Here's something similar from the IFC on Africa. And here's something similar from IIF with a focus on data rather than delivery.
Here is Felix Salmon's interview of the last remaining founder of Simple, one of the first digital banks in the United States, as he prepares to exit. It's mostly a discussion of why it's so hard to be a good bank, while complying with regulations designed to ensure that banks remain trusted intermediaries. Here's a recent announcement from Simple about their Emergency Savings tool which promises to help people figure out the right amount of emergency savings. I'm really curious about how they are really doing that, but the company hasn't responded to my questions.  

3. Our Algorithmic Overlords: Boy there's a lot of stuff built up here so I'm just going to list it out. Here's Erik Brynjolfsson interviewing Danny Kahnemann about algorithmic decision-making and AI. I bet you can guess whether Kahnemann is more worried about bias among humans or algorithms. Here's an article about Judea Pearl's (an important contributor to the development of AI systems) new book, which criticizes the current state of AI development for reasons that will make economists everywhere stand and cheer: AI systems don't understand cause and effect. Of course, per Kahnemann, that's a criticism that could probably be leveled more devastatingly at humans than at machines. Here's Gary Marcus and Ernest Davis writing about how underwhelmed we should be about Google Duplex and that AI is harder than you think. But again, it's plausible to say that AI is harder than you think because human beings are so bad at thinking.

4. Storytelling: Time for a little--I promise--rant from me. Here's a useful piece from SSIR on how to tell stories about complex issues. It's important to tell stories about complex issues and the piece has some good tips. But it includes this line, "no one has ever taken action because of a great graph or data point" which is so demonstrably false that it makes me want to bang my head against a wall until it's bloody. Millions of people--researchers, economists, analysts, engineers, medical professionals, even manufacturing line workers--are taking action every day based on a graph or data point. The statement--the whole paragraph really which suggests that it's common to talk about complex issues with data rather than stories--illustrates exactly what's wrong with storytelling. Stories help us suspend disbelief and critical thinking, and give rise to all the biases that Kahnemann is worried about.

5. Data: So let's talk about some data, eh? Here's Mary Kay Gugerty and Dean Karlan on collecting and using data rather than stories. The new Survey of Household Economic Decision Making from the Fed is out and is required reading for anyone who cares about the state of household finances in the United States. A "good" news headline that got some attention: 40% of Americans can't cover a $400 emergency expense. If you're wondering why that's good news, in 2013 it was 50%. I really can't imagine it's actually true, but I have to wonder if the widespread media coverage of the finding has led to a lot of financial counselors and households setting $400 as the emergency savings target. If you're interested in the data that Jonathan found most interesting, click here, here, here and here.  
As I mentioned a few weeks ago, the new Global Findex is also out. Here's Kaushik Basu on the value of Findex data. If you see other pieces putting Findex data to good use, be sure to let me know.

Via  Arianna Legovini , [ready for some  Drunk World Bank -worthy convolutions?] the World Bank's Research Group's DIME group's i2i (which is a trust fund of monies from several European aid agencies) has a report on it's work, "Science for Impact: Better Evidence for Better Decisions." I think the graphic is very cool, and interestingly, aligns quite well with short-term poverty spells in the US. I wonder if anyone will take action based on it? There are lots of stories in the report too, just in case. Source:  World Bank

Via Arianna Legovini, [ready for some Drunk World Bank-worthy convolutions?] the World Bank's Research Group's DIME group's i2i (which is a trust fund of monies from several European aid agencies) has a report on it's work, "Science for Impact: Better Evidence for Better Decisions." I think the graphic is very cool, and interestingly, aligns quite well with short-term poverty spells in the US. I wonder if anyone will take action based on it? There are lots of stories in the report too, just in case. Source: World Bank

Week of April 9, 2018

Editor's Note: I'm very disappointed that no one commented on my clever pun in last week's editor's note. Given the beautiful weather outside, that's my only explanation for my perhaps snarkier-than-recently tone this week. --Tim Ogden

1. Global Development: Hey, does anybody remember the Millennium Villages Project? It seems an age ago in terms of development fads, now that we're all focused on cash grants and graduation programs, and according to some papers would fall into the "long-run" category. Andrew Gelman has a post about a new retrospective evaluation of the program (that he participated in), including a link to an evaluation of the evaluation. The results are surprisingly good, given what I expect most people's priors were at this point. Though I suppose the TUP evaluations should perhaps have shifted those priors in a positive direction. I guess I'm kind of surprised that the results don't seem to have gotten the attention I would have predicted. Of course, I don't think anyone has argued that the MVP should be a model for other programs since Nina Munk's book, so maybe I shouldn't be so surprised.
Lant Pritchett has a list of six other things in development that people aren't paying (enough) attention to, mostly variations on the continuing large gap between even the lower part of the income distribution in rich countries and the upper part of the distribution in poor countries.
Lant's first point is about the huge gains from moving. Here's a piece from a few weeks ago about the lack of geographic mobility, specifically rural to urban migration, in the United States where the overall tone is exasperation at these benighted people who stay in small towns (and ruin things for everyone else; it's an interview with Robert Wuthnow about his new book). It caught my eye because I can't imagine something like this being written about rural people in developing countries (without touching off a lot of blowback). But perhaps we should see more stuff like this about all forms of poor-to-rich geographic mobility. Speaking of those rural people, here's a new paper from Marc Bellemare about one of the dynamics that may be keeping the poorest people in rural areas (at least in Madagascar)--the intensification of income from agriculture.


2. Jobs: Last week I linked to the recent study of scheduling practices at The Gap that found that encouraging managers to set more stable schedules for retail employees led to higher productivity and sales for the firm. The exact mechanism for increased sales isn't completely clear, but it appears that managers shifted hours to more experienced workers, who unsurprisingly were more productive. While the study is encouraging overall--stable schedules are better for (most) workers and for employers--it also has a dark tinge. To see why, consider this Atlantic article about the future of jobs at Walmart (which, to its great credit, was well ahead of The Gap in experimenting with more stable schedules for its hourly workers, and other efforts to stabilize workers income). The macro trend is toward fewer jobs, at least in terms of how we used to define that term, for less-skilled and less-experienced employees, and declining job quality for those people. That's been happening at many companies (think of outsourcing of janitorial, security and similar jobs) for a long time. It seems an awful lot like what I understand has happened in European labor markets which are more regulated--stable jobs are limited, more workers, particularly the young pushed into contingent labor contracts with limited benefits, stability or security. From a distance this is fascinating: similar outcomes from radically different processes. But from a policy perspective it's frightening. In the economic development world, we've been talking for a long time about how to move more people into formal employment, like in developed economies. Meanwhile the developed economies are making great progress moving people into informal employment, like in developing countries. Maybe I should have called this item Global Undevelopment.
And to play to the academic part of my readership for a moment, here's a piece about how every effort to create better incentives in academic jobs makes things worse. I remain baffled at the general assumption in economics that managers know what they are doing, given the management they experience on a daily basis. While I can't vouch for the management abilities at the Open Philanthropy Project, chances are if you're a reader of the faiV you, or someone you know might be interested in these job openings.

3. MicroDigitalFinance: Is a neologism a step too far? Probably. But check out CFI's fellows program research agenda. There's a whole lot of "microdigital" there. Interestingly, to me at least, is that you could copy and paste these questions into a research agenda for the US financial services marketplace and no one would bat an eye, especially the ones about the changing nature of work.
A brief interruption for a public service announcement: If you're going to be in Uganda, for God's sake, DO NOT LOSE YOUR SIM CARD. Matt Levine has a line about fintech re-learning all the lessons of modern finance, painfully and in public. Seems that could apply equally well to a lot of actors in the financial inclusion space, but relearning the lessons of the need for explicitly pro-poor services, institutions and regulations. Take for instance this post from CGAP about pricing transparency for digital services. Who knew that digital finance providers might not be very upfront about their pricing without regulation?
There is still innovation and research happening in "traditional/nondigital" microfinance, thankfully. Here's a new paper from Burke, Bergquist and Miguel on lending to Kenyan farmers to enable them to buy low and sell high, rather than the inverse which is the status quo ex ante. The most interesting part is not that it does help farmers profitability but that they can track general equilibrium effects on prices of both inputs and outputs--and there are effects. It's another piece of evidence that microcredit can have positive general equilibrium effects that are missed in individual-focused impact evaluations (cf. Breza and Kinnan).

4. Our Algorithmic Overlords: With ongoing questions about how automation, AI, tightening labor markets, and shifting skills will affect employment, I suppose we can take some heart in this "against the run of play" piece claiming that progress in AI research has hit a wall. Maybe we have more time for structural adjustment than we thought. Of course, that may give more time for big tech companies to lobby for privacy laws that look tough but actually enable much of their ongoing gathering and use of data outside public view. And here's Lucy Bernholz on the need for civil society organizations to quickly come to terms with "the burden of data." I guess Lucy would be encouraged about CFI's research agenda, above. And I got through that without mentioning the Zuckerberg hearings. Oops.

5. US Poverty and Inequality: You may have already seen that Matthew Desmond and colleagues have "kicked on" from their work on evictions in Milwaukee and built a database of eviction records that covers a good portion of the US. Here's the NYTimes coverage of evictions in Richmond.
Here's a new report on the racial wealth gap and small business, that while useful continues my frustration at focusing on the idea that starting small businesses will directly address the wealth gap. Business ownership only increases wealth if there are buyers of those businesses at some point in the future. Given the pre-existing wealth gap, and the businesses that minorities are able to start, who is going to put a residual value on those businesses high enough to affect wealth? Perhaps we should consider the lessons of the global microfinance movement in building wealth through small business financing?
In case you were wondering, here's a new paper on immigrants and entrepreneurship in the US. First-generation immigrants create about 25% of the new businesses in the US, but this is as high as 40% in some regions. But, of course, those firms create fewer jobs and those jobs aren't as good as jobs in native-owned firms. In other words, they may be very good for boosting incomes (though in general there is no wage premium for entrepreneurs versus their likely earnings from employment) but likely not for building wealth.

Kieran Healy has a couple of blog posts in recent weeks looking at various ways to represent time series data,  using birth data in the US  and in other countries. In addition to my general interest in data viz, this caught my eye because, well, did you know how much birth rates varied from month-to-month? After contemplating whether there were some basic biologic facts I was unaware of, and soliciting help from a L&D nurse friend, I discovered that birth seasonality is a thing, is consistent across time, culture and geography, and  there is still lots of debate over what factors account for it . And I also discovered that  I have the most common birthday in the US (at least among people born 20 to 40 years after me) . You can see more of  Kieran's visualizations of the baby boom here , and some  cool animated population pyramids (with discussion and code) here .

Kieran Healy has a couple of blog posts in recent weeks looking at various ways to represent time series data, using birth data in the US and in other countries. In addition to my general interest in data viz, this caught my eye because, well, did you know how much birth rates varied from month-to-month? After contemplating whether there were some basic biologic facts I was unaware of, and soliciting help from a L&D nurse friend, I discovered that birth seasonality is a thing, is consistent across time, culture and geography, and there is still lots of debate over what factors account for it. And I also discovered that I have the most common birthday in the US (at least among people born 20 to 40 years after me).
You can see more of Kieran's visualizations of the baby boom here, and some cool animated population pyramids (with discussion and code) here.

Week of April 2, 2018

April Showers on Parade Edition

Editor's Note: Joan Robinson once said, "The purpose of studying economics is not to acquire ready-made answers to economic questions, but to learn how to avoid being deceived by economists." I often feel like the more modern description would be, the purpose of studying economics is not to acquire ready-made answers, but to learn how to rain on as many parades as possible. Or maybe that's just my natural disposition. Anyway, the recurring theme this week is the reining in of optimistic expectations.  --Tim Ogden

1. Global Development: To start us off, how about some rain on the "rising Kenyan middle class" parade? The core point--that gains from rising incomes that don't translate into durable assets can rapidly be erased, a perspective that should sound familiar to anyone with a passing knowledge of anti-poverty policy in the US. 
But the real parade in global development in recent years has been on the value of delivering cash to poor households. This is a train that's been picking up steam for a long while. I would date the current push back to the first studies of Progresa/Opportunidades, the Mexican conditional cash transfer program. Momentum has steadily built around both the positive impact of cash transfers--that recipients don't waste the money, that they use the money productively--and dropping conditions. That momentum was built on many studies, but probably the two most well known in international circles are Blattman, Fiala and Martinez on cash transfers in Uganda, and Haushofer and Shapiro/GiveDirectly in Kenya. Both showed significant gains by recipients of unconditional cash.
Both of those papers were about relatively short-term effects. Both studies included longer-term follow-ups. And you know what's coming: the large positive effects seem to have disappeared in the medium term. Berk Ozler of the World Bank is currently playing the role of Deng (it's the closest I could get geographically) with two lengthy blog posts. The first, keying off comments from Chris Blattman in the recent Conversations with Tyler, but really delving into the recently released update to the Haushofer and Shapiro/GiveDirectly update is the important one for non-specialists. The second is very useful for understanding the specific details of interpretation. The posts also kicked off a number of useful Twitter conversations (here, here, here, here and here, though that's just a sample; just scroll through Chris's and Berk's timelines for more). Berk's first post also takes on the role that academics have played in stoking that momentum and is worth a close read.
I think it's also important to think through what is happening with cash transfers in light of not only other studies of cash (like this one finding positive effects on the personality of Cherokee Native American kids whose families receive cash that was just officially published) but also other interventions. Deworming is one example--one big source of the controversy over the effects of deworming is that there isn't a medium-term biological effect to explain the long-term economic effects. The Moving to Opportunity study is another--no short-term or medium-term gains, only long-term ones. And I have to note that the Native American paper is a frustrating example of Berk's critique of the role academics can play in raising expectations too high--the paper's title and abstract simply reference a large positive effect of cash transfers with no indication of when (now? 10 years ago? 30 years ago?), where or who the participants are, or even the size or mechanism of the transfers.


2. Social Investment and Philanthropy: In one of those Twitter conversations sparked by Berk's posts, Chris gave Berk the endearing nickname "naysaying grumpy pants" (it's a compliment, honest!). This week I had my own "grumpy pants" moment tied to the release of Henry Timms' just published book New Power. Henry is the main force behind Giving Tuesday--and apparently I am the designated Scrooge on that topic, going back to a few posts I wrote for Stanford Social Innovation Review years ago. In the Chronicle of Philanthropy's long profile of Henry and the new book, I get to say things like, "I can't imagine a more useless number than the amount of money given on Giving Tuesday." Without context, that may sound like hard-hearted parade-raining. And I suppose I am parade-raining on the way that Giving Tuesday is mostly being talked about--as a wildly successful movement based on the amount of money given tied to Giving Tuesday campaigns. But what we really should care about is whether Giving Tuesday is leading to people becoming more generous, not whether their donations happen in response to a specific campaign. I'll write some more about Henry's book and New Power in the coming weeks.
In other social investment parade raining, I've been known to get riled about about the social investment rhetoric about "no trade-offs" and "double bottom lines." Here's a new paper from Karlan, Osman and Zinman that explores the trade-offs of a double bottom line in detail. It finds negative consequences for both social and financial performance. Now that's some first-class parade-raining.

3. Methods: I suppose you could call this recent work on whether regression discontinuity designs are reliable--and finds that they are--to be raining on the parades of other methdological approaches. But for good measure, here's Andrew Gelman, well-known parade-raining statistician, with some notably restrained and subtle raining on everyone's parade in response to the RDD paper. My summary: lots of methods are reliable if you do them right, but you're probably not doing them right.
But tying back to the first item and Berk's discussion of the role of academics in miss-setting expectations, here are two useful pieces from outside economics that are worth thinking about if we think of methods as not just the way a study is done or the analysis conducted but the way the results are communicated (and obviously I think that's the right way to think about methods). First, how the continuing enthusiasm for vitamins came to be. Second, Slate Star Codex takes on adult neurogenesis in humans which is particularly fascinating because it's an example of how commonly held beliefs were overturned by new research, and then more new research overturned the new beliefs. Seems particularly relevant to the conversations about cash transfers, no?

4. Microfinance and Digital Finance: Here are two related pieces raining on crypto-parades, which admittedly isn't that hard these days. But neither is about the crazy part of the crypto world. They are raining on some of the fundamental ideas that are used to justify the ultimate value of crytocurrencies. First, here's a story about Ripple and it's struggles with banks who like the idea of a simplified payments infrastructure but don't see any need for a cryptocurrency to be part of that. Second, here's a story about how crypto trades are actually happening--with a trusted intermediary using Skype, because you know having a trusted intermediary is a useful thing in markets.
In other non-parade-raining news, Walmart is getting into the global remittances game, by partnering with MoneyGram(!?!). I suppose that will rain on lots of other global remittance providers parade. And here's a story about why, after all this time, remittances are still so costly and none of the efforts to bring down the cost have worked. Of course, that was before Walmart got involved.
Finally, it's not often I get to feature some US-based microfinance stuff. Here's a new paper from Aspen FIELD on pricing in US microfinance and why it makes sense for lenders to raise interest rates (Note: I played an role advisory role developing the paper). I think a lot of people in international microfinance will sympathize.

5. US Poverty and Inequality: The role of health care costs in driving bankruptcies got a lot of attention a few years ago and was a big part of the push for the ACA. Since the ACA passage though, there hasn't been a meaningful change in bankruptcy rates even though there was a big increase in the number of people insured. Now there's a reassessment of the data on bankruptcy and health care costs that radically revises down the number of bankruptcies that can be attributed to health care costs directly resulting in papers in the New England Journal of Medicine and in AER. Here's a summary of the work, but the very short version is the culprit is loss of income from poor health more than the costs of health care.
And because it's spring temporarily this afternoon, I feel compelled to leave on some good news--or at least my version of good news. The Gap engaged in a rigorous randomized study (!) to determine if their scheduling practices--which as in most US retail leads to erratic and volatile schedules for retail workers--were helpful to the bottom line. The answer is no. Volatile schedules are bad for workers and bad for business (summary; full report). Hey, did I just suggest there was no trade-off to treating workers better?

Week of March 19, 2018

The Wheel of Morality Edition

Editor's Note: The reference this week is to the classic bit on the cartoon Animaniacs. The connection is in the first item.--Tim Ogden

1. Household Finance, Debt Specifically: This week I had the chance to talk about the moral dimensions of debt with Fred Wherry, as part of Aspen EPIC's focus on consumer debt in the US (and there are more conversations about debt before and after in that video). One of the things that doesn't get mentioned in the video is that the ancestor of mine who was rescued from debtor's prison later became the official Collector for Jersey City. It's a topic that fascinates me because attitudes toward debt vary so widely across time, culture, context and individual. It often seems like perspectives on debt are pulled from the Wheel of Morality. Just the selective use of the words "credit" and "debt" could be fodder for 100,000 words or more, much less the tension between the lack of access to credit coinciding with troubling debt burdens in many contexts.
To get up to speed on the current situation with consumer debt in the United States, you couldn't ask for a better overview than Aspen EPIC's just published primer. Well, you could ask for one, but given the gaps in the underlying data, you wouldn't get it. And to push some more moral buttons, here's a profile of one of the most influential figures in consumer debt today: Dave Ramsey. If you don't know who that is, you really do need to read the profile.


2. Microfinance and Digital Finance: I suppose I'm sending a message by increasingly conflating these two categories. This piece from NextBillion on the need for Indian MFIs to digitize at least gives me an excuse this week. But while I figure out what message I'm sending (or at least intending to send), here are a couple of recent pieces about digital accounts helping people save more. First, a paper from the job market that I missed about M-Pesa boosting savings among those whose alternatives were most costly. And a new paper about an experiment with female entrepreneurs in Tanzania finding digital savings accounts boosted savings rates. My priors aren't shifted much by these, but they are shifted some.  
To maintain some strategic ambiguity, here's a new paper that fights the digital invasion--there's nothing less digital than grain storage. Providing farmers with a way to communally store grain at harvest has high take-up and as a result were able to sell grain later at a higher price. An intervention to allow individual cash savings for inputs was less successful, though possibly because there wasn't much margin to improve on.

3. Methods and Economics: It took a lot of willpower (though apparently not ego-depleting) not to put this item first, but I worry that my excitement over things like this is not normative for the faiV readership. But for those of you in this niche, here's a new comment from Guido Imbens on the Cartwright and Deaton critique of RCTs (and if you prefer a simpler version, here's my interview of Deaton for Experimental Conversations which gives an overview of most of the issues). To give you a flavor of Imbens perspective: "Nothwithstanding the limitations of experimentation in answering some questions, and the difficulties in implementation, these developments have greatly improved the credibility of empirical work in economics compared to the standards prior to the mid-eighties, and I view this as a major achievement by these researchers."
Imbens places RCTs within "the credibility revolution" in empirical economics (which of course is the crux of the debate--how much do RCTs improve credibility?). The credibility revolution, in turn, has played a big role in the growth of empirical economics compared to theory and econometrics. Here's Sylvain Chabe-Ferret with an overview of "the empirical revolution in Economics", some thoughts on the path forward and a treasure trove of links. I have to note here, for those not so enmeshed in the details, that while Deaton is a critic of RCTs, he is a part of the credibility/empirical revolutions through his careful and detailed work with surveys.
Finally, here's something form the Royal Economic Society with the headline "Tweeting Economists Are Less Effective Communicators Than Scientists". I haven't read it yet but how could I not link it when it has such an exquisite combination of direct and implied slights on economists?

4. US Inequality, Immobility and Instability: I'm assuming that any of you with an interest have already seen the new results on mobility and the central problem of immobility for African-American men from Chetty, et. al. so well illustrated by the NYT's piece. Hidden in Chetty's shadow are a couple of other pieces on this topic that deserve attention. Inspired by Chetty et al's earlier work on variation in mobility geographically, here's Davis and Mazumder on racial differences within geographies, finding that low mobility in the Southeast is driven by whites; African-Americans in the Southeast have higher mobility than those in the Northeast and Midwest. And here's Guyot, Reeves and Winship with a different approach to the question of African-American male immobility and marriage rates, which confirms the latest Chetty et. al. results.
Our work in the US Financial Diaries ties helps shine a light on short-term instability as a factor in immobility. There are a couple new pieces in that domain. Alieza Durana looks at instability in the suburbs and how it contributes to general feelings of insecurity. And Molly Kinder and Kristin Sharp look at the prospects for improving stability by changing the workforce (or at least how and what people are trained to do.)
Finally, the St. Louis Fed Center for Household Financial Stability (tm) has an upcoming symposium on whether college is still worth it, given the disparate returns to education. My synthesis of some of the recent work: college is most expensive for people with the lowest rates of return to enrollment. That'll have an impact on mobility, for sure.

5. Our Algorithmic Overlords: Last week I talked about how AI seems to be just as interested in gaming manager's incentive schemes as humans. Here's a piece about computers liking spurious correlations just as much as human story-telling brains, it's just that they are much faster at finding the spurious correlations.
I could hardly avoid a mention of the current kerfuffle over the Facebook/Cambridge Analytica revelations. Asif Audowla sent me this link which helps tell the story if you've been buried under a rock. I use the word kerfuffle purposely: I'm still really unsure what to think about all of this, with the pieces I see about fake news proliferating without the need for psychographic targeting, about how hard it is to influence people, and about partisan bias in the reaction to the story. So, I leave this one to you dear readers to tell me what to think. To help you along in that process, here's a piece from New Inquiry that's quite on topic: Privacy for Whom? 

Following on those studies of US mobility, this chart depicts the mobility, or lack thereof, of the white and African-American men and women. It's worth thinking hard about the similarities and differences here. To help you do that,  check out this thread from Arindrajit Dube  which puts the chart below in context. 

Following on those studies of US mobility, this chart depicts the mobility, or lack thereof, of the white and African-American men and women. It's worth thinking hard about the similarities and differences here. To help you do that, check out this thread from Arindrajit Dube which puts the chart below in context. 

Week of March 12, 2018

Editor's Note: I keep telling myself that I'm going to start fighting back against the tyranny of the new, but it never seems to happen. But this week I'm taking a small step by pulling stuff I've been accumulating for the last month that hasn't made it into the faiV. Plus some new stuff of course. Get ready for a link heavy faiV. And in case any of you are wondering what I look like, I'll be interviewing Fred Wherry about the sociology of debt in the United States on Tuesday, the 20th. Register to watch the live stream here.--Tim Ogden

1. Microfinance and Digital Finance: Apparently the "farmer suicide over indebtedness" hype train is kicking up again in India. That's not to imply that farmer suicides are not a serious issue. But Shamika Ravi delves into the data and points out that indebtedness doesn't seem to be the driver of suicides and so attacking lenders or forgiving debts isn't going to fix the problem. Certainly poverty and indebtedness add huge cognitive burdens to people that affect their perceptions and decisions in negative ways, including despair. Here's a new video about poverty's mental tax--there's nothing new here, but a useful and simple explanation of the concepts.
Last year (or the year before) I noted Google's decision to play a role in safeguarding people in desperate straits from negative financial decisions: the company banned ads from online payday lenders, in effect becoming a de facto financial regulator. This week, Google announced another regulatory action. Beginning in June it will ban ads for initial coin offerings (if you don't know what those are, congratulate yourself). While I'm all for the decision, it's strange for Google to conclude that these ads are so dangerous to the public that they should be banned, but not for three more months. Cryptocurrency fraudsters, get a move on! Meanwhile, the need for Google and Apple (and presumably Facebook, Amazon, Alibaba and every other tech platform) to step up their financial regulation game is becoming clearer. In an obviously self-promotional, but still concerning survey web security firm Avast found that 58% of users thought a real banking app was fraudulent, while 36% thought a fraudulent app was real. I don't really buy the numbers, but my takeaway is: people have no idea how to identify digital financial fraud. I wish that seemed more concerning to people in the digital finance world.


2. Our Algorithmic Overlords: I've had a couple of conversations with folks after my review of Automating Inequality, and had the chance to chat quickly with Virginia Eubanks after seeing her speak at the Aspen Summit on Inequality and Opportunity. My views have shifted a bit: in her talk Eubanks emphasized the importance of keeping the focus on who is making decisions, and that the danger that automation can make it much harder to see who (as opposed to how) has discretion and authority. A big part of my concern about the book was that it put too much emphasis on the technology and not the people behind it. Perhaps I was reading my own concerns into the text. I also had a Twitter chat with Lucy Bernholz who should be on your list of people to follow about it. She made a point that has stuck with me: automation, at least as it's being implemented, prioritizes efficiency over rights and care, and that's particularly wrong when it comes to public services.
I closed the review by saying that "the problem is the people"; elsewhere I've joked that "AI is people!" Well at least I thought I was joking. But then I saw this new paper about computational evolution--an application of AI that seeks to have the machine experiment with different solutions to a problem and evolve. And it turns out that while AI may not be people, it behaves just like people do. The paper is full of anecdotes of machines learning to win by gaming the system (and being lazy): for instance, by overloading opponents' memory and making them crash, or deleting the answer key to a test in order to get a perfect score. I think the latter was the plot of 17 teen movie comedies in the '80s. Reading the paper is rewarding but if you just want some anecdotes to impress your friends at the bar tonight, here's a twitter thread summary. It's funny, but honestly I found it far scarier than that video of the robot opening a door from last month. Apparently our hope against the robots is not the rules that we can write, because they will be really good at gaming them, but that the machines are just as lazy as we are.
To round out today's scare links, here's a news item about a cyberattack against a chemical plant apparently attempting to cause an explosion; and here's a useful essay on our privacy dystopia.

3. US Poverty and Inequality: Definitely just trying to catch up here on things that have been building up. Here's a new paper on studying income volatility using PSID data, with a review of prior work and finding that male earnings volatility is up sharply since the Great Recession. There's been a bunch of worthwhile things on US labor force participation in the last few weeks. First here's Abraham and Kearney with "a review of the evidence" on declining participation. Here's a comparison of the UK and US considering why US has fallen behind in participation from Tedeschi. And here's a story from this week about how falling unemployment is affecting hiring and participation.
Returning to the theme of volatility, here's a short video from Mathematica Policy Research on how income volatility affects low-income families. Jonathan is following up on the US Financial Diaries research into income volatility and looking at how it disproportionately affects African-American households, and interacts with the racial wealth gap. But it turns out that even though African-American households are disproportionately income, asset and stability poor, they are even more disproportionately depicted as poor in media

4. Social Investment and Philanthropy: I mentioned above that you should be following Lucy Bernholz. Via Lucy, here's a report on the massive challenge of digital security for civil society organizations. I'll take a moment to editorialize--funders are way way behind in recognizing how big a change digitization is when it comes to their own and nonprofits operations. It's not just security, though that's likely the first place that a crisis will strike. But beyond that, it's crazy that major foundations do not have CIOs on their boards of directors, and that grant applications don't include a technology infrastructure review. The ability to use technology is already a major factor in nonprofits ability to have an impact (either directly by how they deliver services or indirectly in how they can track their activities and improve), while most funders are still viewing IT as an overhead cost to be minimized. That has to change. 
In other worrying trends in philanthropy that aren't getting enough attention--the explosive growth of Donor Advised Funds continues. Recently information about Goldman Sachs' DAF leaked--which is significant because part of the reason DAFs are popular is because they shield information about who donors are. Which makes it particularly interesting that Steve Ballmer and Laurene Powell Jobs, and others among the list of wealthiest people in the world are using Goldman's DAF, because the justification for DAFs is allowing those not wealthy enough to fund their own foundations to gain some of the benefits. Sounds like a gaming of the rules that an AI would be proud of.

5. Methods and Statistics: I feel like I couldn't show my face around here anymore if I didn't link to the world's largest field (literally) experiment. It was in China of course. I feel like this instance satisfies all of the objections raised by Deaton or Pritchett or Rozenzweig, but I'm sure I've missed something. By the way, anybody else have a feeling that relatively soon people are going to be questioning the importance of any study that wasn't done in China or India? 
So you better jump on the chance to read about how to measure time series share of GDP in the United States (and how hard it is to say anything about manufacturing's changing role in the economy). After all it only affects about 350 million people, not enough to really care about. 
Meanwhile, Andrew Gelman of all people makes the case for optimism about statistical inference and replication. I'm not sure of whether to interpret the kerfuffle over Doleac and Mukherjee's paper on moral hazard and naloxone access as bolstering or undermining Gelman's point. I'm going to choose to be optimistic for now though, against my nature.
And finally, here's a visual, interactive "textbook" on probability that has some really cool stuff. But I don't think what it's doing is going to help the problem of people not understanding causal inference.

Figuring out how to do the right thing is hard. This table is from  a Danish government study  of climate change impact of various methods of carrying stuff. Apparently if you properly use, re-use and dispose of a standard plastic bag, it has much less climate impact than reusable cotton bags. If I'm interpreting it correctly, it means that you'd have to use an organic cotton bag something like 20,000 times before net climate impact was the same as the plastic bag's. Of course, that all depends on whether the plastic bag is properly used and disposed of. I bet neither estimate incorporates virtue compensation. 

Figuring out how to do the right thing is hard. This table is from a Danish government study of climate change impact of various methods of carrying stuff. Apparently if you properly use, re-use and dispose of a standard plastic bag, it has much less climate impact than reusable cotton bags. If I'm interpreting it correctly, it means that you'd have to use an organic cotton bag something like 20,000 times before net climate impact was the same as the plastic bag's. Of course, that all depends on whether the plastic bag is properly used and disposed of. I bet neither estimate incorporates virtue compensation.