Essays in behavioral development economics

Abstract

This thesis consists of three essays on behavioral development economics that explores how different cultures, institutions, and social environments shape economic behavior and preferences of people.

In many countries, ethnic minorities have a persistent disadvantageous socioeconomic position. In the first essay, co-authored with Michael Vlassopoulos, we investigate whether aversion to competing against members of the ethnically dominant group could be a contributing factor to this predicament. We conducted a lab-in-the-field experiment in rural Bangladesh recruiting males from the ethnic majority (Bengali) and an underprivileged ethnic minority group (Santal) that is severely discriminated against. We randomly assign participants into groups with different ethnic composition and elicit a measure of their competitiveness. We find that when compelled to compete, there are no ethnic differences in performance and that both ethnic groups perform better in ethnically-mixed groups than in homogeneous groups. We also find that the ethnic composition of the group of competitors is an important determinant of competitive entry and its effect varies by ethnic group. Members of the ethnic minority group are less likely to compete in groups where they are a numerical minority than when all competitors are co-ethnic, whereas the reverse is true for members of the ethnic majority group. This difference is not explained by heterogeneity in performance, risk preferences, beliefs about relative ability or various socioeconomic characteristics of individuals or of their opponents. We conclude that differences in unmeasured markers of ethnicity, such as social power and status, must underpin these differences in preferences for interethnic competition.

In the second essay, to understand how long-term exposure to religious education is shaping economic behavior and preferences of students, I exploit a natural field setting in Bangladesh where I overlay a battery of controlled experiments to identify the causal effect of religious education on behavior and preferences of students, namely altruism, dishonesty, trust, cooperation, and risk aversion. I compare behavior in schools for orphans that differ in terms of intensity of religious education and lifestyle, restricts transmission of beliefs and preferences from parents to children, makes social learning by students limited after school enrolment and addresses issues concerning endogenous school choice. I find that (i) students receiving religious education are more altruistic and honest relative to students receiving secular education; (ii) these effects are driven by students who have spent 6 or more years in schooling; and (iii) religious education has no effect on risk preference, trust, trustworthiness, and cooperation of students. A series of robustness tests confirm that results are not driven by selection and that the relationship is causal.

In the third essay, co-authored with Michael Vlassopoulos, we carry out an experiment in Bangladesh to capture ethnic discrimination in the agricultural market. We organize a competition among rice farmers followed by a series of rice evaluation programs. To determine the winner, we recruit rice buyers from various marketplaces to assess rice quality and determine their willingness to pay for each rice sample collected from participants. To measure discrimination, we randomly assign ethnic majority and minority sounding names on each rice sample prior to evaluation to implicitly reveal the farmer's ethnic identity to the buyer. We find that buyers are willing to pay 2% less to ethnic minority farmers than what they are willing to pay to ethnic majority farmers, albeit not discriminating in terms of the quality of rice produced. We interpret this finding as being consistent with the taste-based model of discrimination. We also find that discrimination reported is driven exclusively by buyers from the villages whereas city buyers do not discriminate ethnic minority farmers. Further analyses suggest that lack of interethnic interaction might be an underlying source of prejudice. Finally, we show that ethnic minority farmers would benefit from selling rice to city buyers only, an initiative that would help avoid discrimination while also generate a week's additional income every year.

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ORCID for Michael Vlassopoulos: orcid.org/0000-0003-3683-1466

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