Search Results
Working Paper
Active decisions and pro-social behavior
In this paper, we propose a decision framework where people are individually asked to either actively consent to or dissent from some pro-social behavior. We hypothesize that confronting individuals with the choice of whether to engage in a specific pro-social behavior contributes to the formation of issue-specific altruistic preferences, while simultaneously involving a commitment. The hypothesis is tested in a large-scale field experiment on blood donations. We find that this ?active-decision? intervention substantially increases the actual donation behavior of people who had not fully ...
Working Paper
Financial literacy and subprime mortgage delinquency: evidence from a survey matched to administrative data
The exact cause of the massive defaults and foreclosures in the U.S. subprime mortgage market is still unclear. This paper investigates whether a particular aspect of borrowers' financial literacy?their numerical ability?may have played a role. We measure several aspects of financial literacy and cognitive ability in a survey of subprime mortgage borrowers who took out mortgages in 2006 or 2007 and match these measures to objective data on mortgage characteristics and repayment performance. We find a large and statistically significant negative correlation between numerical ability and ...
Conference Paper
The interaction of labor markets and inflation: analysis of micro data from the International Wage Flexibility Project
Inflation can ?grease? the wheels of economic adjustment in the labor market by relieving the constraint imposed by downward nominal wage rigidity, but not if there is also substantial downward real wage rigidity. At the same time, inflation can throw ?sand? in the wheels of economic adjustment by degrading the value of price signals. A number of recent studies suggest that wage rigidity is much more important for business cycles and monetary policy than previously believed (see Erceg, Henderson and Levin, 2000, Smets and Wouters, 2003, and Hall, 2005). Thus, our results on how wage rigidity ...
Discussion Paper
Reducing foreclosures
This paper takes a skeptical look at a leading argument about what is causing the foreclosure crisis and what should be done to stop it. We use an economic model to focus on two key decisions: the borrower?s choice to default on the mortgage and the lender?s choice on whether to renegotiate or ?modify? the loan. The theoretical model and econometric analysis illustrate that ?unaffordable? loans, defined as those with high mortgage payments relative to income at origination, are unlikely to be the main reason that borrowers decide to default. Rather, the typical problem appears to be a ...
Discussion Paper
Subprime facts: what (we think) we know about the subprime crisis and what we don’t
Using a variety of datasets, we document some basic facts about the current subprime crisis. Many of these facts are applicable to the crisis at a national level, while some illustrate problems relevant only to Massachusetts and New England. We conclude by discussing some outstanding questions about which the data, we believe, are not yet conclusive.
Working Paper
Reducing foreclosures: no easy answers
This paper takes a skeptical look at a leading argument about what is causing the foreclosure crisis and what should be done to stop it. We use an economic model to focus on two key decisions: the borrower's choice to default on a mortgage and the lender's subsequent choice whether to renegotiate or modify the loan. The theoretical model and econometric analysis illustrate that unaffordable loans, defined as those with high mortgage payments relative to income at origination, are unlikely to be the main reason that borrowers decide to default. In addition, this paper provides theoretical ...
Working Paper
The impact of group membership on cooperation and norm enforcement: evidence using random assignment to real social groups
Due to incomplete contracts, efficiency of an organization depends on willingness of individuals to take non-selfish actions, such as cooperating when there is no incentive to do so or punishing inefficient actions by others. Organizations also constitute a social boundary, or group. We investigate whether this social aspect of organizations has an important benefit? fostering unselfish cooperation and norm enforcement within the group?but also whether there is a dark side, in the form of hostility between groups. Our experiment provides the first evidence free from the confounding effect of ...
Report
How wages change: micro evidence from the international wage flexibility project
How do the complex institutions involved in wage setting affect wage changes? The International Wage Flexibility Project provides new microeconomic evidence on how wages change for continuing workers. We analyze individuals' earnings in thirty-one different data sets from sixteen countries, from which we obtain a total of 360 wage change distributions. We find a remarkable amount of variation in wage changes across workers. Wage changes have a notably non-normal distribution; they are tightly clustered around the median and also have many extreme values. Furthermore, nearly all countries show ...
Working Paper
How wages change: micro evidence from the International Wage Flexibility Project
How do the complex institutions involved in wage setting affect wage changes? The International Wage Flexibility Project provides new microeconomic evidence on how wages change for continuing workers. We analyze individuals? earnings in 31 different data sets from sixteen countries, from which we obtain a total of 360 wage change distributions. We find a remarkable amount of variation in wage changes across workers. Wage changes have a notably non-normal distribution; they are tightly clustered around the median and also have many extreme values. Furthermore, nearly all countries show ...
Working Paper
Blood donations and incentives: evidence from a field experiment
There is a longstanding concern that material incentives might undermine prosocial motivation, leading to a decrease in blood donations rather than an increase. This paper provides an empirical test of how material incentives affect blood donations in a large-scale field experiment spanning three months and involving more than 10,000 previous donors. We examine two types of incentive: a lottery ticket and a free cholesterol test. Lottery tickets significantly increase donations, in particular among less motivated donors. The cholesterol test leads to no discernable impact on usable blood ...