1. Income, Poverty and Volatility: The big news of the week in the US was the release of the US Census Bureau’s report on income, showing strong gains across the board (but best for lower income groups) and the largest drop in the poverty rate since 1999. As always, the story is more complicated than the headline statistics. Annual income measures hide year-to-year and month-to-month volatility. And volatility seems to be rising. That means that even though the poverty rate is falling based on annual income, the number of households that spend part of a year in poverty or bounce in and out of poverty from year to year may be increasing.
Aspen EPIC has a wealth of new materials on the topic of volatility including videos, interviews and blog posts.
2. Measurement: Also prominent in US news was the announcement that Wells Fargo, one of the country’s largest banks, had fired 5300 employees and paid a $185 million fine for creating millions of accounts without customer consent (to hit management metrics). Matt Levine has the most useful reporting on the issues and the problem of measurement, calling it an “evil genie...it grants your wishes, but it takes them just a bit too literally." Case in point, Indian banks have apparently been doing essentially the same thing as Wells Fargo, depositing 1 rupee into dormant accounts, so they don't appear dormant. I won’t miss the opportunity to plug Dan Rozas’ work on the large gap between savings accounts and savings account usage in microfinance banks around the world, not just in India.
Week of August 8, 2016
1. Night of the Living FinLit: I'm increasingly using the persistence of financial literacy programs as a proxy for the "evidence-based" movement. Here's a story about a new $5 million investment in FinLit for low-income youth in Chicago, where apparently half the curricula is devoted to day-trading stocks. Most remarkable is that the story spends its time wringing its hands about the irony of financial services firms funding FinLit, rather than the fact that it doesn't work in any meaningful sense. If the evidence-based movement can't kill FinLit as we know it what hope is there for other policy domains?
2. Priming Zombies: No the zombies aren't doing the priming, nor are they being primed. Here's a new review of studies of the effect of "eyes" on influencing social behavior--it's one of the "neato" findings in the priming literature that became so popular in the last decade. Like recent replications of other priming interventions, the widely reported effects don't stand up. How long will priming hold on as a zombie idea?
Week of August 1, 2016
1. Cash Transfers, Conditions and Fathers: Akresh, de Walque and Kazianga compare the effects of conditional and unconditional cash transfers, and whether they are given to mothers or fathers in 75 villages in southern Burkina Faso. They find conditions matter and that, if anything, children and households benefit more when the father is the recipient. I'm trying really, really hard to fight confirmation bias, and losing.
2. Financial Inclusion and Digital Financial Services: The Bookings Institute has published it's second annual review of progress on financial inclusion and access, with a particular focus on digital financial services. It covers 26 countries reviewing availability, use and the policy/regulatory environment. Kenya and Colombia top the list; Egypt and Ethiopia are bottom.
3. Medicine, Economics, Data and Evidence: The grass is not greener on either side of the fence. A few weeks ago we had Croke, et al's critique of meta-analysis in health research. On the other hand (see what I did there?): "In comparison to medical studies, most economics studies examined do not report important details on study design necessary to assess risk of bias." Meanwhile the medical community is arguing over how and when data from clinical trials should be shared. Larry Husten summarizes the arguments, but be sure to scroll to the end for a discussion of the difficulties of setting up a market for data and whether anyone "owns" the data. I feel like some economists might have something to say about that, perhaps starting with Coase and Ostrom. Though will the market for data end up being a Market for Lemons? And will economists put their data where their mouth is?
Week of July 25, 2016
1. Financial Institution Behavior, Part I: Xavi Gine and Rafe Mazer pull together audit studies of banks conducted in Ghana, Mexico and Peru. You will be shocked, shocked to discover gambling--I mean, failure to disclose true product costs or best-fit and cheapest products--in these establishments.
2. Financial Institution Behavior, Part II: The recovery in home prices in the United States since the housing bubble has left one part of the market untouched: homes with values below $100,000. Banks won't originate loans for mortgages of this size because the fees they can charge are capped below profitable levels, so owners can't refinance or sell. There is a non-profit turned hedge fund that's taking on this market though.
3. Financial Institution Behavior, Part III: OK, so they're not financial institutions, but debt collectors are part of the financial infrastructure. And they've behaved so badly--harassing debtors, pursuing people who don't actually owe the debt, etc.--that they generate more complaints to the CFPB than even payday lenders or frauds. So the CFPB is drafting new rules to govern debt collection.
Week of July 18, 2016
1. Why not What: Chris Blattman posts notes from a recent talk he gave at DfID arguing that focusing too much on "what works?" is a mistake. Via Ryan Briggs on Twitter, here's Angus Deaton's 2010 paper making much the same argument.
2. Why not What, Part II: A new paper from Buera, Kaboski and Shin looks at a host of "well-identified evaluations of the impacts of micro-financial interventions" including the microcredit evaluations, the targeting the ultrapoor programs, and cash grants to try to understand why the results are what they are.
3. American Financial Security (or lack thereof): Americans confidence is their ability to afford retirement is creeping up again, but it's not clear why. A new HSBC study finds that 64% of respondents over age 70 are financially supporting others. Andrew Yarrow writes about "the 45%" who are paid less than $15/hour, are "asset poor" and do not have access to employer-sponsored retirement-savings (note that these are not all the same people).
Week of July 11, 2016
1. Meta-Analysis of Worms: When the dust settled in last year's #wormwars it was clear that a core issue was methodological and interpretive differences between epidemiologists and economists (see Humphrey's section 5). A new meta-analysis of deworming impact studies from Croke, Hicks, Hsu, Kremer and Miguel takes that issue head-on: it's as much an argument about how to evaluate evidence as it is an argument about the evidence on deworming in particular, concluding with, "Under-powered meta-analyses are common in health research..."
2. Police Shootings: Another raging methodological debate on an issue of even greater emotional resonance broke out this week: are African-Americans more likely to be shot by police than whites? Roland Fryer has a new working paper that answers, "No [in some cities, though they are more likely to be physically accosted during a stop]." The initial critical reactions focused primarily on the fact that this is a working paper and not enough emphasis in reporting on the paper was given to the limited context (e.g. only a limited number of cities) of the results. The larger methodological issue though is about how to treat the data in the first place. Michelle Phelps looks at how bias in who gets stopped by police can substantially bias outcomes and puts the findings in context of other research. Radley Balko looks at how the source of the data--police reports--makes it questionable whether the data can be trusted at all.
Week of June 27, 2016
1. LOL Nothing Replicates: Jason Collins looks back over Kahneman's Thinking Fast and Slow post-repligate, finding some distinctly uncomfortable language ("You have no choice but to accept that the major conclusions of these [priming] studies are true"). Meanwhile a new paper in PNAS suggests that fMRI studies have 70% false positive rates.
2. Migration: There's a lot of work to be done understanding intra-household bargaining in the context of migration. A new paper tries to estimate the returns to internal migration in South Africa by looking at the effects on the migrant as well as on the households from which the migrant departs and which the migrant joins. A southern New Zealand town is trying to recruit internal migrants because it has too many jobs. Perhaps they could expand the Tongan lottery. And the New York Times magazine has a long piece on Canada's refugee sponsorship program where you can find this unexpected but lovely statement: "I can't provide refugees fast enough for all the Canadians who want to sponsor them."
3. The Future of Microfinance: Next Billion has a terrific collection of posts on last year's sale of six microfinance banks by Opportunity International to MyBucks, a for-profit fintech firm. Dan Rozas and Gabriela Garcia provide an overview, Chuck Waterfield expresses skepticism that the transaction is good for customers and Vicki Escarra, Opportunity International Global CEO, responds. Anybody else miss the old days when this type of back and forth was common?
Week of June 20, 2016
1. Financial Health: How should a financial services company assess its customers' financial health? Three financial services organizations, HelloWallet, Wells Fargo, and Solutions for Progress, have developed tools and metrics to measure the financial health of their customers. NextBillion
2. Housing Segregation: Housing instability as a repercussion of income volatility has been well documented, but what about the cycle and segregation of poverty in specific neighborhoods? Matthew Desmond's Evicted: Poverty and Profit in the American City and Mitchell Dunier's Ghetto: The Invention of a Place, the History of an Idea take a look at the history and complexity of living in concentrated poverty. The Atlantic Magazine - June 2016 Edition
3. Grit in Developing Countries: Is grit a useful predictor of success in developing economies? Roving Bandit
Week of June 13, 2016
1. State of Economics Laureates: Video from the World Bank's "State of Economics, State of the World" conference is now available. Here's Ken Arrow on equilibrium and welfare, Amartya Sen on social choice, and Joe Stiglitz on information economics. And here's Clark laureate Esther Duflo on the influence RCTs are having on the world. Bonus: blog post from David McKenzie based on his comments on Duflo's presentation examining whether RCTs have taken over development economics. Oh, and the rest of the talks are here.
2. Mobile Money: An in-depth discussion of why little progress has been made on merchant acceptance of mobile money/digital payments and what to do about it. And here's a pretty thorough debunking of the long-lived "fishermen use mobile phones to get market prices" story that helped jumpstart enthusiasm for mobile phones as a poverty-fighting tool.
3. The Way We Bank Now (in the US): Starbucks is a bank (or a prepaid card company) that happens to serve coffee. Meanwhile, the actual banks are earning more from overdraft fees again. The preference for storing money with Starbucks is starting to make more sense.
Week of June 6, 2016
1. Marshmallows: I'm very confused by marshmallows, or at least marshmallow tests. Did you know about the massive attrition in the original work? The fuzzy proposed mechanisms? It's executive control! Trainable mental tricks! Actually it's a measure of trust! No, poor children who choose immediate rewards are calmer and more rational! Did I mention that willpower depletion doesn't replicate (and that physiological measure of calm rationality is suspect)? If the marshmallow test doesn't tell us much, at least there's Grit to rely on. Sigh...
2. The Housing Boom: I'm also newly confused about what was happening in the housing boom. A new working paper from Foote, Loewenstein and Willen shows that low-income borrower mortgage debt didn't increase relative to high-income borrower mortgage debt. Reading that paper I learned thatBhutta earlier found that new home buyers weren't much of a factor during the boom.
3. Consumer Debt: A lot of people are confused about consumer debt, not just housing debt, in the United States. Here's a Slate piece about how to get out of debt which won't tell you anything new if you've ever heard of present bias. Here's a Slate piece from the week before blowing large holes in the "present biased overspending" theory of consumer debt. And remember that link from last week about how behavioral tricks to increase saving still don't yield any increase in poor households ability to save for the long term? One sure fire way to reduce debt is to forgive it--but you might want to acknowledge the source of the idea.
