Published on Development Impact

Weekly links April 21: Kenyan homebrew and agricultural production, labor regulation and innovation, habit time, and more…

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·       Kenyan homebrew is pretty strong! “average levels of alcohol consumption are very high among men in the sample. One reason for this is the average local serving size: from the data collected, the average purchased drink was 300 milliliters, was 34% alcohol, and cost less than 1 USD! (For reference, a 12oz can of beer is 355 milliliters, and contains around 5% alcohol.)” On the econthatmatters blog, David Murphy summarizes an RCT aimed at using peer effects and intrahousehold ties to decrease alcohol consumption. Not only does the program reduce alcohol consumption, but it increases agricultural production – which the author attributes in part to reduced spending on alcohol being reallocated to fertilizer purchases.

·       Dave Evans on the CGD blog discusses how he decides whether a tweet, email, blog post, or full paper is the best way of writing up answers to some policy question posed – his answer is it depends on how narrow or broad interest the policy question is, how much originality there is in what he has to say, and the time frame.

·       In a CATO Institute research brief, Philippe Aghion, Antonin Bergeaud, and John Van Reenen summarize their work on the impacts of labor regulation on firm innovation in France, using the fact that the cost of these regulations increases discontinuously at 50 workers. “As expected, there is a sharp fall in the fraction of innovative firms just below the 50‐​employee threshold, an “innovation valley” that suggests a chilling effect of the regulation on the desire to grow. Moreover, the share of firms with a given number of employees grows more slowly above the threshold, consistent with a greater tax on growth….we analyze how firms of various sizes respond differently to sudden demand increases, measured by changes in the growth of markets for exported products. We first show that these positive demand increases significantly raise innovative activity. We then examine differences in firm responsiveness to these demand increases depending on firm size prior to the demand increase. We find a sharp reduction in firms’ innovation response to the demand increase for firms with size just below the 50‐​employee threshold. Consistent with intuition and our model, firms appear reluctant to take advantage of market growth through innovating if they will then be subject to a wave of labor regulation.”

·       How long does it take to form a habit? Caltech press release summary of a recent PNAS paper uses machine learning with large datasets on going to the gym (average 6 months to form a habit) and getting health care workers to wash their hands (a few weeks to form a habit).

·       On VoxEU, Dustmann and co-authors summarize their work in China on how different risk attitudes within a household and the possibility of risk diversification affect the migration decision and who in the household migrates. “We find indeed that individuals from more risk-averse households are more likely to migrate, conditional on their own risk attitude…We find that, for the same average risk aversion, households with more dispersed risk preferences are more likely to send migrants…These findings, therefore, suggest that the distribution of risk attitudes within the household plays an important role in the household’s decision to send a migrant. Households with a high demand for risk diversification and with sufficiently risk-tolerant individuals prepared to migrate are more likely to have a migrant member.”

·       Submissions are due May 1 for the Advances in Field Experiments conference that will take place at the University of Chicago on September 21-22. While I am sure you are all worried about this clashing with the Rugby World Cup, there are only two pool games occurring on these days and neither involves New Zealand, so you are ok.

·       Call for papers for a conference in memory of Martin Ravallion: Georgetown University and the World Bank are pleased to announce a conference: “New Directions in the Fight Against Poverty: Honoring Martin Ravallion’s Legacy”. The conference will take place on October 21-22, 2023, on Georgetown University’s campus in Washington DC, and will bring together experts from around the world to present and discuss the latest research on poverty measurement and the policies we need to fight poverty in today’s world. Submissions due May 26.


David McKenzie

Lead Economist, Development Research Group, World Bank

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