Weekly links April 23: RCT pointillism, the evaluation winners curse, subsidizing farmers to use machines, phone surveys and income expectations, and more…

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·       Federal Reserve of Minneapolis interview with Esther Duflo: she offers her thoughts on the growth and inequality relationship and why there isn’t a trade-off, on whether there will be sovereign defaults after COVID-19, and why doing RCTs is like a Seurat painting.

·       The 2021 Clark Medal was awarded to Isaiah Andrews. A Fine Theorem does its usual excellent job in summarizing some of Isaiah’s research contributions and putting them in a broader context of applied econometric work. The Economist also covers the award, noting as one example a piece of his recent work that is likely to be of particular interest to our readers - the winners curse that arises when choosing the policy that performs best in a horse race of different treatments in an impact evaluation - estimation error leads us to over-predict the benefits of our chosen policy and to misstate our uncertainty about its effectiveness. : “Mr Andrews, with others, also explored what is called the winner’s curse when it comes to choosing between policies: the policy that performs best in a trial may owe its top rank to chance, and will later be doomed to disappoint. To illustrate this the researchers turn to a trial that assesses the most effective ways of encouraging people to donate to charity, by combining requests for specific donations with promises to match the initial contribution. The researchers find that if the charity chooses the method that does best in a trial, it will always overestimate its donations. They suggest ways to make a more realistic estimate that takes account of the role of chance.”

·       Lukas Hensel on measuring income expectations using phone surveys on the Oxford Mind & Behaviour group website.

·       On VoxDev, Sandra Rozo and Juan Vargas summarize their work on how the arrival of Venezuelan migrants changed voting behavior in Colombia.

·       Slides and videos from past talks in the online causal inference seminar.

·       The Economics that really Matters blog at Cornell has a post by Julieta Caunedo on reducing frictions in the market for agricultural mechanization in India “In partnership with one of the biggest providers of rental agricultural equipment in India, we conducted a randomized control trial to increase access to rental markets for mechanization covering 7,100 farmers across nearly 200 villages in the state of Karnataka… Farmers could rent any equipment available at a custom hiring center, including tractors, rotavators, and cultivators…. treatment farmers are 30 percentage points more likely than control farmers to rent agricultural equipment from the custom hiring centers. Treatment farmers increase mechanization of the their fields by an additional hour relative to control farmers, and cash transfers have no significant effect on these responses. …. We find that mechanization lowers labor demand across all farming processes, and that the magnitude of the labor saved is larger in processes not being mechanized. Mechanization lowers family labor engaged in worker supervision, consistently with output standardization. The impact of mechanization on farmers’ managerial time is a novel channel for the transformative role of capital intensification on labor-intensive activities. Importantly, we show that family workers take on non-agricultural opportunities in response to the subsidy.”

Authors

David McKenzie

Lead Economist, Development Research Group, World Bank

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