With tomorrow being Halloween, I thought it perfect timing to discuss a paper about death and zombies. Small firms are an important source of income for the poor in developing countries, and the target of many policy interventions designed to help them grow. But we don’t actually know much about their death, with no systematic evidence available as to the rate of small firm death, which firms are more likely to die, and why they die. Indeed firm death often ends up being hidden in the attrition numbers of much of our data, and out of 35 published RCTs on interventions for small firms in developing countries, only 13 either report a firm death rate or look at death as an outcome.
My new working paper (ungated version) (with Anna Luisa Paffhausen) aims to provide systematic evidence on small firm death in developing countries. We spent several years cleaning and putting together data on more than 14,000 small firms from 16 firm panel surveys in 12 countries, enabling estimation of the rate of firm death over horizons as short as 3 months and as long as 17 years. Detailed questions added to nine of these panel surveys also enable us to dig deeper into cause of death.
- job market series 2017
- NYTimes piece on when the revolution came for Amy Cuddy about how the replicability crisis came to psychology, but also about the issues surrounding online critiques: “subjectivity — had burrowed its way into the field’s methodology more deeply than had been recognized. Typically, when researchers analyzed data, they were free to make various decisions, based on their judgment, about what data to maintain: whether it was wise, for example, to include experimental subjects whose results were really unusual or whether to exclude them; to add subjects to the sample or exclude additional subjects because of some experimental glitch. More often than not, those decisions — always seemingly justified as a way of eliminating noise — conveniently strengthened the findings’ results….Everyone knew it was wrong, but they thought it was wrong the way it’s wrong to jaywalk,” Simmons recently wrote in a paper taking stock of the field. “We decided to write ‘False-Positive Psychology’ when simulations revealed it was wrong the way it’s wrong to rob a bank”
Rohini Pande is Mohammed Kamal Professor of Public Policy at the Harvard Kennedy School, where she also co-directs their Evidence for Policy Design (EPoD) program. She has described her research as examining the economic costs and benefits of informal and formal institutions in the developing world and the role of public policy in changing these.
1. You have worked on a range of different topics – including rural banking and microfinance, governance, environmental regulation, son preference, and housing – but almost exclusively in one country, India. When you think about your broad research agenda, how to you think about the tradeoffs involved in focusing deeply on one country, vs exploring these topics in different places?
Starting with my PhD work on political reservations in India, I have been fascinated by the why and how of public policy in democracies and, in particular, how the political and social context shapes the choice of policy. I have also found that viewing problems of economic development through a political lens that engages with questions of power creates links across questions and topics that might before have seemed disparate.
Once you adopt this perspective, the advantage of focussing on a single country becomes apparent. Over time, one begins to understand how power structures operate and which policy lessons are generalizable and which remain specific to a location. The Indian economist Jean Drèze, who very much inspired my career choice to become a development economist, told me that he has never been to Africa. “Once I got to India,” he said, “there was more than enough for me to do for a lifetime.” His most recent book – Sense and Solidarity – provides a strong rationale for an action-research agenda that is focussed on a single country.
In ancient Greek times, important decisions were never made without consulting the high priestess at the Oracle of Delphi. She would deliver wisdom from the gods, although this advice was sometimes vague or confusing, and was often misinterpreted by mortals. Today I bring word that the high priestess and priests (Athey, Abadie, Imbens and Wooldridge) have delivered new wisdom from the god of econometrics on the important decision of when should you cluster standard errors. This is definitely one of life’s most important questions, as any keen player of seminar bingo can surely attest. In case their paper is all greek to you (half of it literally is), I will attempt to summarize their recommendations, so that your standard errors may be heavenly.
- Another reason to justify random selection – Michael Schulson in Aeon “there are plenty of situations when random chance really is your best option. And those situations might be far more prevalent in our modern lives than we generally admit.” An interesting discussion drawing on anthropology of how different cultures have introduced randomness into decision-making, with the advantage being that it stops you using bad reasons for making decisions. “we might want to come to terms with the reality of our situation, which is that our lives are dominated by uncertainty, biases, subjective judgments and the vagaries of chance”
- Maitreesh Ghatak reviews Jean Dreze’s new book “Sense and Solidarity - Jholawala Economics for Everyone”. See also this twitter thread by Abhijeet Singh on whether Dreze is underappreciated in development economics.
Publications on country by GDP
Source: Das et al. 2013
Publications on different African nations
Source: My construction, with data from Das et al. 2013