[SQUEAKING][RUSTLING][CLICKING]
FRANK SCHILBACH: All right, so welcome.
This is lecture 21 of 14.13.
We're going to talk about poverty, as seen
through the lens of psychology.
What are we going to do?
I'm going to give you some broad overview.
We're going to particularly talk about this work on scarcity
by Mani et al., which is the idea that thinking--
our thoughts about poverty captures people's minds, which
in turn leaves less capacity in people's minds
to do other things.
And then we're going to talk a little bit
at the end, at least briefly, about other deprivations
that poverty entails.
Some of this is what I have done.
Some of this work by others.
So I want to start with a simple observation that
is sort of at the heart of a lot of this literature.
And the observation is that when you look around in the world
and look for evidence, and when you
work on poverty-related issues, you'll
see or observe quite a few seemingly suboptimal behaviors
among the poor.
This would be things like lack of investment or taking
advantage of high return investment opportunities.
This would be like investment in fertilizer or health
investments or machines or low savings,
in particular some things like precautionary savings,
like being ready for shocks, saving for the future,
for retirement, and so on.
At the same time, sort of high return
or high interest rate credit, people
take very high interest loans.
In part-- what I've shown you earlier in the class,
that's particularly prevalent among the poor.
There's some evidence of worse performance of parenting
among poor parents, including things like violence
against children and so on.
There is some evidence of lower productivity, punctuality,
lower medical adherence for drugs
that are sort of even very high stakes drugs that
are lifesaving.
There's some evidence of food and drug consumptions
in terms of healthy eating or excessive drug
use and the like.
All of those things tend to be correlated one way or the other
with different forms of income or poverty.
So now you might say, well that's interesting, but now
what explains these behaviors?
How do we think about this?
What [AUDIO OUT] plausible explanation kinds
of autocorrelations.
To be very clear, these are correlations, not
causal effects.
So education could explain quite a few of those things.
It could explain potentially productivity
and it could explain potentially parenting
and it could explain some form of financial investments.
It could also explain things like medical insurance.
For example, if you look at in some settings where
people have not sort of learned in school
any basics of medicine or biology and so on and sort of
and it's not obvious that you should take medicine
from a traditional doctor versus from some healer
in the village, because how would you know what's better
and what's worse.
And sort of presumably some of these things
you would learn in school.
So one broad explanatory factor is
sort of like, [INAUDIBLE] variables if you want,
and one of them is potentially education.
It's not about omitted variable.
This is about a treatment effect of poverty itself.
And I'm going to be more specific about that.
But essentially it's something about being in poverty itself
affects people's behaviors.
So it causes them--
some of these outcomes, some of these things
that we've seen here.
We'll talk about that in detail, but that's exactly right.
In some ways, people would say, even for--
if you take credit for example, or for some things,
you probably can't explain.
But for high return investment, you
would say, while there's uncertainty
and there's a good chance that there might be losses
at the end of the day, and if you're
really close to subsistence, you might not
want to invest in stocks, because if a bad shock happens,
that's really bad.
So I think some of that is right.
And punctuality, for example, could also
be in some way uncertainty.
It's like you try to take a bus to work
and the bus just comes every hour,
and then sometimes it comes a half an hour early
and sometimes it comes later.
And it's really hard to be actually punctual.
Could just be some people are not productive
and are just bad at doing stuff.
And therefore, they become poor and then
they end up being poor because of that.
So that's essentially, I think, that we
covered pretty much everything.
So one is it could be sort of environmental conditions, which
is transportation, it's really hard to get to work on time,
or have the community for two hours
and then you're really tired and that makes you less productive.
Things like predatory lending sort
of tricks you into lending.
There could some some things about institutional structures,
which is to say, I told you for example at MIT,
there's a default--
or at other places, there's defaults
for people to save money.
And there's a default to get health insurance.
And there's defaults for all sorts of good behaviors,
like for vaccinations and so on and so forth.
We are sort of essentially pushed by society,
by the environmental conditions that we
face into doing the right thing or whatever good behaviors,
whatever you want to call it.
And so the poor might just not have those things.
So for example, having a bank account
might be like if you paid daily or you can buy by trip.
The rickshaw drivers that I was showing you
earlier in the semester, they paid trip by trip
and then they'd pass by the liquor stores,
essentially daily, and have a bunch of cash on hand.
Well, that's much trickier to sort of resist sometimes, since
if you were particularly also prone to physical pain,
and then sort of to use alcohol as a way
to deal with your physical pain.
As opposed to somebody who paid monthly and half of the money
goes into the rent anyway and then other expenses and so on,
which is much easier to manage.
So that's kind of broadly I would summarize it
as environmental conditions.
Then there's selection and omitted variables,
which is, I think Joseph has mentioned education,
which is a very good one.
There's things like intelligence,
talent, effort, mistakes, and so on.
You might say, well, if you are more prone-- if you're
less productive, for example, if you're prone to making mistakes
and so on, well that sort of leads
to worse outcomes and that makes you end up being poor.
And that's really sort of in some sense, a right wing
kind of view, that people are--
they should do whatever they want to do
and if the end of being poor, it's sort of their fault,
and so on.
That's of course not what we're going to argue here.
What we're interested in-- or what
I'm trying to argue [AUDIO OUT] show you some evidence off this
that there's a treatment effect of poverty itself potentially.
Which is to say that being poor itself causes these behaviors.
And again, I'll show you the evidence in two ways.
One is by inducing thoughts about money,
essentially thinking about can you pay school fees,
can pay your rent, can you get groceries for your children,
are your children are going to be hungry tonight, and so on.
These are all kind of thoughts that invade
people's minds involuntarily.
And by doing so, they capture people's attention.
And then since attention overall is limited,
people have less attention available for other things.
That's sort of one broad theory.
And I'll focus on that mostly which
people refer to it under the name of scarcity.
And then there's a bunch of other aspects of poverty
as well that might be competing with people's
cognitive function, their attention, that tire them out.
They're just not sleeping well, be in pain, being exposed
to pollution, environmental pollution, noise pollution,
and so on, and so forth.
And so now what's the underlying idea here?
Well again, the underlying idea is that there
might be what's called--
people might want to call it behavioral poverty trap.
And the broad line of argument is
that poverty affects people's cognition, decision making,
or productivity.
These factors in turn then influence
people's future poverty, because if you're not productive
and you can't save money and so on,
you're going to be more poor in the future.
And if those things are going on,
there is essentially some form of a vicious cycle going on,
which makes it difficult, if not impossible,
for a person to become rich.
Now notice at the very least, that will lower mobility.
Sometimes if you're poor and you want to become richer,
you have got to deal with a bunch of bad stuff
that happens to you every day.
But [INAUDIBLE] mobility is low, [INAUDIBLE] might be actually
a trap.
It's just next to or actually impossible to become richer,
because all these forces are too strong to overcome for people.
So today I'm going to talk about two broad lines of research.
I'm going to focus mostly on the first one, which
is monetary concerns capture people's cognitive function.
I'm going to talk a little bit about other poverty-induced
deprivation of behaviors which might have sort
of similar effects overall.
So now I want to do a simple test with you.
So what I'd like you to do is to--
sorry, one second.
I'm trying to-- give me a sec.
I'd like you to--
hold on one second.
One second.
All right.
Ready?
Don't write anything down.
Just try to remember it and then try to recall it in a bit.
I'm going to start reading.
Bed, rest, dream, doze, snore, slumber, blanket, snooze, wake,
nap, awake, tired.
OK, now please write down as many words as you remember.
10 more seconds.
All right, so done.
So usually I would have people raise their hands, which
is a little tricky.
But I'm going to just read you the list of words
and you can nod to me--
I can see some of you, at least.
You can nod and tell me whether you
remember the words that I read.
OK, I'm going to start.
Bed, rest-- pretty good--
dream, doze, snore-- no?
Slumber, sleep, blanket, snooze, wake, nap, awake, tired.
So I know this is making everybody sleepy
and want to take a nap.
Me, too.
So here's the list of words that I asked you to remember.
Now one thing that's kind of nice
[INAUDIBLE] most people remembered quite a few things.
The majority, for example, remembers
bed and so on and so forth.
Now what's quite interesting about these words is
that while I remember--
I put all these names up here, which
is-- these are the words that I actually read.
Now one word that's actually missing in this list
here is sleep.
And so you sort of--
I snuck this in here on--
this is why I had to go back.
It turns out I actually didn't read the word sleep,
but quite a few of you were nodding happily
when I asked you about sleep.
And what's the reason why you remembered sleep?
So all of these words is like--
they all around sleep.
So it's really like sleep should have been there.
It's kind of the type of thing where
people would ask you, have you been to the parity last week,
where people just assume-- where essentially all of the friends
were there-- people just assume that you were there,
as well, because you're supposed to be there.
It's like sleep is supposed to be in this list,
but we didn't put it there.
And this is what is called false memory tests.
And there's quite a bit of work on actually false memories.
And people's minds essentially make up things.
In particular, stuff that's sort of--
or where you have all situations that you think
that should be the case.
You can do the same with man and other lists and so on.
And now psychologists have been doing studies
for the rich and the poor.
And so here's two lists.
One is about sort of money-related stuff.
And one is about sort of just anything that's related to,
I guess, man or gender in some ways.
And they looked at how many people
have certain false memory.
And what these studies show is essentially
that when you take this list for a man
and you do this with high income and low income people,
the fraction who remember a man wrongly is about 15% to 20%.
The fraction among the poor who remember money
is similarly high.
Among the rich, that's not the case.
Now why is that?
Well, it seems to be that for the poor, when you read lists
like groceries, expense, bill, gas, et
cetera, what they think about is essentially,
how I'm going to pay for this.
And they think about money.
When for the rich,
Instead, when you say groceries or whatever,
they think about what I'm going to buy for dinner
and what are the nice things I'm going to do.
And for them, this is really not top of mind.
So this is essentially at least one piece of evidence
that money captures the minds of the poor moreso
than for the rich.
Now, a second study is a study about the doctor's visit.
So this is a study where the participants were
asked about the following situation, which
is imagine that you have been feeling sick lately
and finally decided to go see a doctor about it.
The doctor explains that you have a serious condition that
requires immediate attention.
The good news, however, is you are virtually guaranteed
to make a full recovery.
The doctor writes several prescriptions.
You will also need to make several appointments.
What would be on your mind or how would you feel
about when you hear this news?
What are the three things that you think about it?
Or you can think about for a second what
is it that you would feel, and what are you thinking
about when you see this.
And what's particularly interesting
is how when you look at people's responses
some people say wife, son, co-worker.
Some people are scared, afraid, worried, relief, hope, joy,
so like emotions or just of relationships and other people.
Not exactly sure what the co-workers doing there
but anyway, but what's particularly interesting
is the fraction of people who say costs.
And as you can imagine, when you do this by low and high income
when you think about medical conditions for the rich,
this is much more about emotions about their health,
about their relationships, their loved ones, and so on.
And when the poor think about health or health expenditures
or health issues, they think very much
about health expenditures, and that is essentially
what's top of mind for them.
And so again, when you split the sample by low and high income
people, the poor have much higher proportions of money
really good thoughts as reported by these kinds of questions
compared to the rich.
The third study-- the last thing I'm going to show you
is the study that I showed you very
much at the beginning of the class, which was a study about
imagine you are about to purchase an iPad for $500.
The salesman says you can get the same iPad, exact same iPad
for $15 off.
Would you walk for 30 minutes in total for $15.
Would you go for the other store?
And similarly, you'd have to do the same thing
for an iPad case.
And so the result that we found in this class
and like the other studies have found
is that people are way more likely to report
that they would walk for the iPad than for the iPad itself.
And the explanation, of course, is
that people evaluate things in relative terms, right.
So if you think about the iPad case,
$15 is really high relative to like
$30 in the iPad cases of value, while for the iPad itself,
$15 compared to $500 is not very much.
Now that's some form of money illusion
or some form of community confusion or the like,
because at the end of the day you
should just be willing to walk for 30 minutes for either $15
or not.
That's not going to change depending on whether you
buy an iPad or an iPad case.
Now many studies have found the kind of patterns
including like in this class, but once you
do that with the poor, they're much less
likely if at all to engage in this kind of behavior, which
seems to suggest that the poor, in fact,
are less prone to this, kind of, labeling or, sort of,
like monetary sort of comparisions.
For them essentially $1 is $1 and they,
sort of, understand that, like, $15
is valuable regardless of what is surrounding comparisons
like.
And so if I have to summarize what I've just shown
you very quickly is that thoughts about money
tend to capture or take much more space in the poor's minds
instead of the first two studies that I showed you,
and second, the extra focus on money
has actually some positive consequences in some sense.
In some sense, you can say here this is an irrational decision
to say, yes, that you will go for the iPad case
compared to the iPad or some of this optimization going on.
So the poor are actually doing better or the less prone
to these kinds of errors compared to the rich.
I think that's a good thing for like potentially
better monetary decisions here.
So there's some positive consequences
for impacts based on that.
now, and this is where we're going to go, is,
well, are there also some negative effects potentially?
The reason being that if you have a certain amount
of attention available overall, or cognitive resources
available, if your brain is taken up
by essentially these thoughts about money,
then there will be less available resources
for other stuff.
Any questions on this so far?
OK, so then let's talk about the scarcity work specifically.
So scarcity is actually defined generally here
as not having enough of something.
This could be money, friends, hair, time, et cetera.
It's very general, actually.
And so the idea is just like if you
have something that you think you don't have enough.
Notice that the definition is pretty vague in the sense that
like it's not just saying like having low income,
but it's sort of thinking that you
don't have enough income, which could be also
like in relative terms and so on.
And then the hypothesis is that scarcity captured
people's mental cognitive capacity, their bandwidth,
as they call it.
This happens automatically and not intentionally.
That is to say, that it's not people choosing
to spend a lot of time on thinking about money,
but rather, money captures their minds,
and then they have trouble thinking about other things.
Think about this as like, it would
be like suppose you have like some fights
with a good friend of yours, or a partner or the like,
and then you have an important job interview.
It's really not productive to think
about the fight with your friend or family member
or partner or the like.
During the job interview, there's
nothing productive about doing that.
You should be focusing on the interview
and try to do your best.
But it might be that like essentially, these thoughts
invade your minds and you sort of get really
distracted unintentionally, and then
do worse in those kinds of--
And that's the idea here similarly here
as well, which is that essentially, there
might be some benefit of figuring out monetary problems
and figuring out how to pay the bills and so on and so forth.
But overall, these benefits might
be overwhelmed by taking over people's brain
that leaves less resources for other things, the decisions
or productivity that people have to do in life.
And so in particular, poverty now, so this
is a general introduction.
Poverty specifically makes monetary concerns top of mind,
so the poor might be acting more rational in some ways,
in some sense, in financial choices, which
is kind of what the evidence that I just showed you
in there, several studies that try to make that point.
But you know, scarcity might then deteriorate performance
at other cognitive tasks.
Now, here's sort of a PowerPoint version of that,
which, you know, people may think
about many things in life.
They might think about rent.
They might think about the kids doing well,
eating healthy, utilities, car payments, and so on.
But what does scarcity do?
It magnifies, essentially, people's
thoughts about rent, car payments and utility bills.
These are all monetary things that people think about a lot,
and thn it might sort of like drown out or like force
out other thoughts about other things, about eating healthy
or about taking care of the kids in other ways
than paying the bills, OK.
And so now, I'm going to show you
evidence of two studies that sort of support this point.
The first one, the paper is called
"Poverty impedes cognitive function."
That was the reading for today.
The first one is called the mall study.
So what does this mall study do?
It's kind of like a lab experiment,
but it's sort of in some sense like a field experiment.
So it's a major Jersey mall that asks shoppers or stops shoppers
with a median household income of roughly $70,000,
so sort of richer than the average American,
but with quite a bit of range of income overall.
So there's like very rich people and fairly poor people.
And then there's a sequence of three events, essentially,
which is, people are asked hypothetical questions
involving money.
Some are hard and some are easy.
And then people are asked to do cognitive tests,
a non-verbal test that sort of measures people's
fluid intelligence, which is Raven's Matrices, which
you might be familiar with.
They're sort of IQ type tests.
And some form of cognitive control,
which essentially is about like, are
you able to overwrite automatic responses when
doing cognitive tasks.
And then number three, then, is like people that answer
the hypothetical questions.
So what does this look like?
A hypothetical question is involving
money, which is the following.
Your car is having some trouble and requires x dollars
to be fixed.
You can pay in full, take a loan or take a chance
and forgo the service at the moment.
How would you go about making this decision?
And so then, people ask this question and they say,
well, you can think about this for a while.
And afterwards, I'm going to ask you
about the answer to that question.
And then there's a hard version and an easy version.
The idea is that the experiment wants to keep everything
the same for like across treatments,
and the idea is that $150 for the average American
is not that much money, so it's not
going to be a huge problem for most people,
at least in normal times of their lives.
But $1,500 is actually a lot of money for like a low income
person in the US, but perhaps not
that big of a deal for a rich person.
Like for a rich person, the $1,500 or $150 are both fine.
They're going to have some money in the bank account,
and they're going to deal with it somehow.
It's not a huge issue.
For the poor person, $150 is not great, but not a huge problem
or not a huge headache.
But $1,500 surely is really bad.
That's sort of the idea here, right.
Now what the study that finds is that-- and let
me walk you through these graphs.
Let's look on the left side.
On the right side is quite similar.
You'll see here always four bars.
The dark bars are how people are doing after the hard task,
and the lighter bars after the easy task.
Let's start with the light gray bars,
comparing the poor versus the rich.
And what you essentially see is the poor
and the rich are doing pretty much the same
after doing the easy task.
But to be clear, what's poor versus rich
is essentially being split by the median income.
So if you're above the median, you're called rich.
If you're below the median, you're
called poor for the purpose of this study.
Now, for the easy task here, this
is like the rich do essentially as well or as badly
as the poor do.
They get about 40% correct in these Raven's puzzles,
and the poor do essentially the same.
So there's no difference after the easy task.
Now, after the hard task, for the rich,
essentially it's the same.
If anything, they do a little bit better.
The difference is not statistically significant.
In contrast, you see like a clear drop in performance
among the poor, OK.
They do about like 12 percentage points worse.
This is really like a huge difference in how well people--
so this is for Raven's Matrices.
This is for what's called hearts and flowers
for cognitive control, which is essentially
how good are people at controlling their attention
or resources.
And what you see is essentially more or less
the same pattern, that for the easy task,
the rich and the poor do pretty much the same.
The hard task compared to the easy task
does nothing for the rich.
This is actually, the performance
is the same or slightly different
but not statistically significantly so.
For the poor, there is a large drop in performance
compared to the rich.
Any questions on that?
OK, So then I'm going to show you the second study that's
related to this.
So one thing you might sort of say,
well, we're going to show you, already, a study, so why
do we need another study when we already did one.
We showed you that like poverty and thinking about poverty
affects people's cognition, so why do we need more evidence. .
So effort is an interesting issue that--
so there's, in fact, this study has--
and I took this out of the slides because I had too many.
There's an incentivized version of this task.
And the authors do find that, even
once you incentivize these tasks,
we find the same patterns.
But even there, it's a bit sort of like a task that
is not a task that people do in their real life.
And in a way, which is actually not what the harvest study is
addressing, you might wonder.
Does this translate into real world choices and decisions
that actually have consequence for people's behaviors?
To be clear, these effects here, these differences
in cognitive performances, are very large.
This is like the order of magnitude something like 10 IQ
points, which is really huge.
So you might sort of argue that we think that IQ, et cetera,
matters a lot.
So in some sense, that's what Mullainathan and Shafir
would argue.
But, no, I agree with you.
In some sense, we would like to see does this
translate into real world choices
that we see in people's everyday lives.
Now, I think we talked about a few of those things.
So one is external validity concerns,
which is to say, look, we did this study in the mall, which
is a little bit of a funny thing to do.
And you hear about the scenario, which is kind of weird
and maybe tricks you out.
And maybe the poor are more freaked out
than the rich for some reason.
But really, if you think about paying back
your debt or any sort of school fees or just not having money,
that's a repeated exposure of something
that know in your real life.
For example, not having harvest versus harvest
is a thing that you experience every year or every twice
a year even.
And so you think some of these things
might sort of go away with repeat exposure.
And so we kind of would like to have a real world setting where
we have actually real world natural variation
or sort of experimental variation potentially as
opposed to the somewhat weird feature in some mall somebody
talks you up and asks you some questions, which people might
find funny and might not be representative for what people
do with their lives.
And then the second part is kind of how do
we interpret magnitudes, right?
So I showed up and said, look, these effects are really large.
After the hard task, the poor do worse than the rich.
But we have no idea how we should
scale this in terms of what does it actually mean
for actual effects of poverty.
Suppose I give somebody $1,000 or $10,000,
what does it do to people's performance?
It essentially, what this shows, is
that the poor are more sort of frazzled
by these financial questions.
But it gives you essentially-- and that
seems to be important because the magnitude is
large and these effects.
But there's no way to actually scale these effects
in some sense in thinking about what is this priming
intervention actually correspond to in the real world in terms
of dollars and how rich or poor people are.
So that's another sort of reason why you
might want to do another study.
OK.
So what is the other study?
As Lauren was already saying, it's
a study with 464 sugarcane farmers
in 54 villages in Tamil Nadu.
These are small scale farmers that
earn at least the majority of 60% of income from sugarcane.
So these are mostly sugarcane farmers.
And crucially for the study, the harvest
is staggered over a three to five
month period set by the sugar mills due to capacity
constraints.
So it's not some people harvest earlier than others
because they decide to do so maybe because they
need more cash.
But it's rather because of capacity constraints.
The sugar mill is essentially deciding who to harvests early
and who harvests late.
And so, now, what this study explored
is that the sugarcane harvest cycle takes about 18 months.
It's extremely long.
And as a result, farmers tend to be relatively poor pre-harvest.
Think of that this is like grad school and undergrad stipends.
If you have that money for the month
or the semester or the like, the beginning of the semester
is always amazing--
or month, for that matter, is always amazing.
You have lots of cash.
And you can do lots of nice things.
And then towards the end of the month or semester,
people tend to run out of cash, at least
when I was a grad student or student in general.
Similar things are true for food stamps
or other sort of cash programs.
There's quite a bit of evidence that shows,
at the beginning of the month, people
are doing a lot better than at the end, which
seems to suggest that people have trouble smoothing
their income over time, which presumably
has to do with some form of self-control or other problems.
But so for the purpose of this study,
farmers are relatively poor pre-harvest.
And that now allows the authors to look
at within person comparisons of people,
sometimes when they're poor and sometimes when they're rich,
at looking at the cognitive performance,
by looking at people pre and post harvest.
Now, first, you want to kind of see some evidence
that farmers' financial situation is actually
worse pre-harvest.
And so there's quite a few--
and you can focus on the first column here--
pieces of evidence.
People are more likely to have their belongings pawned.
They're more likely to have loans outstanding.
They also have more loans outstanding.
They're also more likely to say yes to the question or higher
scores to the question about their ability
to cope with ordinary bills in the past 15 days post-harvest.
And so all of these things sort of are saying, essentially,
before harvest, farmers are in a financially tricky situation.
And after harvest, that gets better because they get,
essentially, a bunch of cash from this harvest.
Because, essentially, it's a cash crop.
You sell your sugarcane, and then you get a bunch of money
that you can use over the next 18 months.
Now, then the authors find, again, using Raven's matrices
and some measures of cognitive control,
that people are doing a lot worse pre-harvest compared
to post-harvest.
In terms of Raven's matrices, this is accurate.
Essentially, people do better than getting
more Raven's matrices correct compared to the control group.
They also are doing better in terms of cognitive control.
Post-harvest response times go down,
which is a good thing here.
And post-harvest, also, people's errors
go down in these measures.
And there's a lot of detail related to that.
But in some sense, that doesn't matter much for you right now.
People, essentially, are doing better post-harvest
when they have more cash.
Now, what confounds can you think about?
What are potential problems with this result?
Actually, this is consistent with poverty
impeding cognitive function, but there
could be other things going on.
And what are these other things?
I think there's some good evidence--
or one good thing is that it would
have to be a very specific shock that has to do with harvest.
Because, essentially, the harvest period
was staggered over several months.
So it's not like, at some point, the weather
got worse or the weather got better.
Because some people actually harvest earlier than others,
and there's a pre-post comparison.
But there could be other stuff, time trends or something,
going on at least in some ways.
In a way, I think a confound or, in a way,
it's also just a different interpretation
perhaps in some ways in the sense of saying,
well, it's not just worries about the level of income.
But it's also worries about, essentially, risk or anxiety,
essentially.
And so that's slightly different,
but the anxiety could also sort of capture
people's minds in some ways.
Of course, then you would want to see something,
like maybe that's worse for the rich
compared to the poor or things like that.
But that's exactly right.
So there could be essentially labor costs
or any sort of other distractions related
to the harvest, which--
this is kind of related to what [INAUDIBLE] was saying,
which is the harvest itself might
have these kinds of effects.
OK, I think we mentioned most of the things
that I have on my list.
So there's first one is calorie consumption, which
is sort of the typical thing that development economists can
study a lot, which is to say, poor nutrition
might make people do worse.
It's bad for attention.
We talked a little bit about shopping on a hungry stomach,
but also think about doing tests or exams on an empty stomach
is probably not a good idea.
The author's have some evidence that the food expenditures are
pretty similar pre and post high harvest from some other sample.
Overall, malnutrition doesn't seem
to be a huge issue in this area.
Having said that, I think it's also
reasonable to think that pre and post harvest you should have,
actually, more money.
And then you've got to spend the money on something.
And presumably, some of that would go on food.
So the authors argue that nutrition is not a big issue.
Then there's sort of two broad issues, which
I think was Joseph and Katherine's comments, which
is about the uncertainty of the harvest size
and some issues related to labor effort.
And so, here, the authors have some evidence
from post-harvest pre-payment sample.
What does that mean?
This is a sample that these are people
who have harvested already, so they have already
exerted the labor effort.
And they also know already their approximate payment.
And-- sorry.
I was getting confused by this.
So these are people who have already done their harvest.
They have done all the work already.
They know already what the harvest size will be like.
But those people, essentially, are still
not doing better compared to the people who
have received their cash.
So that essentially is to say, even
once you have done all the effort and so on,
that doesn't seem to help in a sense of you're fully doing,
you're not exhausted from the work already.
You already have all your harvest there.
You already know how big your harvest is,
but you haven't really received the money yet.
And you know already what the harvest size is.
It can't really be about anxiety of the harvest size.
Yet if you compare those people to the people that
received the money, you saw few differences
between those people and the people
who have done already the harvest.
And so that argues that essentially it's
not about anxiety, per se, about the harvest size,
but rather about just having money
in your pocket versus not.
Let me see what the--
is this the correct graph?
I see.
So this is a little bit misleadingly labeled.
What this is supposed to say is this
is post-harvest and pre-harvest.
But what they mean by post-harvest and pre-harvest,
post-harvest is meant by you have
received the cash versus not.
But both of these are actually both post-harvest in the sense
that they have done already the work.
Anyway, sorry, that's a bit confusing.
But essentially, what they're trying to say
is essentially what really matters
is not the work around the harvest, per se,
or the uncertainty around the harvest.
It's really about receiving the cash versus not.
And then there's another problem,
which you haven't really brought up
which is the issue of learning effects, right?
When people do the task several times,
presumably when you do a test twice,
you're going to do better.
But to address this issue, they also have what's
called a hold-out sample that takes
the cognitive tests for the first time post-harvest.
So what I showed you before was proposed for both people
that have both of these tests.
There are some samples that's only done
the task once post-harvest.
And they don't perform worse than people
who do the task for the second time, which seems to say
it's not really about learning.
Having said that, that is essentially
only a small subsample.
Comparison really seems mostly underpowered.
And there are some concerns, surely, about still effects.
Any questions on these?
OK.
So this is a study from a few years ago.
So then what kind of follow up is there that sort
of considers further evidence?
So there's one very nice study by Carvalho et al.
in 2015 that looks at the same issue in the US.
And they looked at cognition and decision making of US
households around paydays.
And essentially, they find no cognitive effects whatsoever.
They also find no effects of decision
making as one would have expected.
It raises the question about what's going on here.
And [INAUDIBLE] what's going on.
So it could be that this is an external validity
issue in some sense.
In a sense, really what is needed here
is really extreme poverty and really
large differences in people's income or the amount of money
that they have available.
And when you look at US households, at least
the households that were considered in the Carvalho
study about payday, well, there's
differences in how much money they have,
cash on hand they have.
The difference is actually not that huge.
And so that might just be not sufficiently [INAUDIBLE]
around those paydays to be able to generate
those type of effects.
It could also be that these effects don't really
replicate in a sense of it's a replicability issue, which
could be a concern as well.
There's a nice study-- and this gets to the issue
that I think Joseph mentioned, which
is a study by Lichand and Mani looking at drought insurance.
And what they essentially argue is that,
when you [? provide ?] [? people with ?] insurance--
so usually insurance, or people would argue, is useful.
If a bad state happens in the world,
you can essentially get-- might get a payment, right?
If I get some health shock or if my harvest is bad or the like,
I get some money from the insurance company.
And that is good.
Because in the bad state, the marginal utility
is really high of receiving money.
And so if I am willing to pay for insurance right now,
in the future receiving-- so I'm willing to pay for insurance
now.
Because in the future, in a bad state of the world,
I value that money more than in a good state of the world.
So in a good state [INAUDIBLE] willing to pay for insurance.
Now, what Lichand and Mani are instead arguing is,
well, there's an additional value
of insurance, which essentially it's
helping reduce their anxiety and worries about money ex ante
in all states of the world.
That is to say, if I'm really worried about bad harvest
shocks or other stuff, health stocks happening
in the future, that might really frazzle me and really
sort of worry you all the time, which in turn might affect
people's cognitive performance.
Well, that's in all states of the world.
Even when you're doing well right now,
even if nothing bad ever happens,
you're going to do worse today because you're
worried about these things.
And sort of providing insurance, therefore,
might help people better even in good states of the world
or in all states of the world in addition
to sort of having the insurance value of helping people
in that state of the world.
Well, they have some evidence of it.
There is some mixed evidence overall.
But I think the idea of insurance
being helpful for the poor, for anybody, not just
because it helps in bad states, but it
helps people worry about bad states,
is a very nice one that hopefully
will be explored further.
Now, then another question that I think Jose was bringing up
is to say, well, there are these cognitive tasks.
Well, I showed you so far that there
are these tasks and Raven's matrices and cognitive control.
And sort of, arguably, IQ tests are important then and helpful.
And we think that's helpful and maps to something
useful for the world.
But it's a little bit hard to tell.
Does this actually matter for income?
Is this really important or not important?
And how much does it--
so in a paper with [INAUDIBLE] we
looked at this in a field setting
where the workers in Orissa and rural areas in India.
And what we did there is we hired people
for about two weeks to do a simple labor cast where they
were doing leaf plates, so essentially putting together
leafs into plates, which are sort of used in many settings,
by stitching them together using little wooden sticks.
And so people are hired for two weeks.
And then for the sample, we varied.
Some people were paid earlier, and some people
were paid later.
So everybody was paid exactly the same,
conditional on showing up and conditional on how much they
produced.
So their piece rates, how much they were paid, were the same.
And their attendance paid for showing up.
The only difference was that some people were paid earlier,
and some people were paid later.
So that allows us then look at how do people, the same people,
how would they perform when they're paid already
versus not, compared to another group that is essentially
only paid later.
And this is a period in the lean period
when people are extremely financially constrained.
So people are really short on cash.
And you can look, essentially, really
at the impact of transfers or cash
constraints in this setting.
What we find is a relatively clear evidence
that paying people early makes people a lot more productive.
And moreover, these effects are the largest
for the poorest workers.
So essentially, when you sort of divide the sample in two,
along the people who are richer and poorer to start with,
people who are particularly poor have the largest impacts
in the sample.
And this have sort of pretty large effects.
It's about 5% to 10% of the productivity,
which is doesn't sound that large in absolute terms.
But in relative terms or in terms
of when you double people's wages,
people's earnings go up only as much or not much more.
So really increasing people's productivity
is very, very hard in these settings.
And relatively minor interventions,
such as the one that we did, had pretty large effects
in the real world setting for people for whom this is really
their real jobs in their real life for about two weeks.
So suppose you hired somebody for a year.
Should you pay them daily, weekly, monthly, or what?
And so what I'm arguing or what our evidence shows,
that when you hire people for two weeks, paying people twice,
as in paying people once after a week and then the rest
at the end, makes workers more productive
than paying workers only at the very end.
And assuming, you know, depending on the interest
rate-- but that seems to be a thing the company should do.
But of course, if you hire people for a year,
then paying people weekly versus monthly or biweekly,
the comparison becomes quite different.
Because essentially, the control group, that's
paid after two weeks.
Now, after two weeks, of course, they
have a lot more money because they haven't spent it
compared to the treatment group who's paid earlier.
And I think there, essentially, we can't really speak to that.
In some sense, our design is not really set up to do this.
You would have to do at least another week or two
to measure how is the control group now doing
compared to the treatment group or do it repeatedly.
And there might also be some effects on over time,
repeatedly, some of these effects
might be going away because workers learn
and so on and so forth.
I think of this evidence much more as a proof of concept
that, A, providing cash or alleviating cash constraints
among workers, either through some low interest rate
loans or some early payments or some form of UBI or cash
transfers, unconditional or conditional cash transfers,
essentially improving workers financial situation
in some ways, can be productive for firms.
Now, how the firm then actually does that
we don't necessarily know.
And this is sort of too small, short,
of an experiment to show that.
But it's sort of proof of concept that, in a real world
setting with very high stakes for workers--
this is their real earnings-- there seem to be these effects.
So for firms, it might be, well, do
they have to, in fact, try to improve
their financial situation [INAUDIBLE]..
Or for governments, it might be valuable to think
about cash transfers as a way to do-- so usually,
when you think about cash transfers-- so let
me actually just talk about this for a second.
And then we can talk about other confounds of the study.
So usually, when you think about the public debate about cash
transfers and about sort of welfare programs for the poor,
often sort of the right-wing response is,
well, aren't the poor going to be lazy?
And they're not going to work.
And then what about effort and so on and so forth?
And they get used to the money.
And then don't work hard enough eventually.
Well, the evidence that we have here in our paper
seems to say, in fact, the opposite.
That is to say workers, when you alleviate
their financial constraints, when you give them cash,
they become more productive.
And they work harder than otherwise.
Granted, we don't have any labor supply response.
What I'm showing you here is essentially productivity, which
is how hard a worker's working or how much work a worker is
producing per hour worked.
But I think similar things could be true for cash transfers.
And there's some quite interesting evidence
on cash transfer programs.
So both cash transfer and, in particular,
what's called ultra-poor programs, which
are sort of these multi-faceted asset programs,
leads to large and sustained increases in asset, savings,
consumptions, et cetera.
That is to say, once you provide people with financial resources
when they're very poor, not only do they better
in the short run.
But in the case of the ultra-poor programs,
in the long run three to five years later,
people are doing better in terms of having more assets,
saving more, consuming more, and so on.
And that seems to say that there might be an issue going on
and some form of a poverty trap going on.
And somewhere of the underlying potential channels
might be things like scarcity, stress, mental health, and so
on.
We're going to talk a little bit about mental health and stress
in a second.
But essentially, if there are these types of effects going on
for the government or any other sort of public policy,
these kinds of programs, conditional cash transfers,
in addition to having the advantage of improving people's
well-being and having the high marginal utility of money when
they're very poor, it might also, in addition,
make people more productive as opposed
to a working less or the like.
So I think those two things, I think,
are sort of the takeaways.
If one wanted to understand optimal pay structures,
one would have to do longer run types of experiments,
as Natalie pointed out.
So essentially, the way we set this up is we
essentially pay people--
sorry.
This is my Slack making noise--
pay people to-- sorry, [INAUDIBLE]----
people through the employer.
Essentially, we said, OK, the employer is paying, now,
earlier versus later.
And naturally, then the worker might just [INAUDIBLE] happier
or doing better financially, but also like the employer better
and saying, look, you just paid me early.
I now trust you more that you're going
to be paying me in the future.
Maybe that's some form of gift giving
or reciprocity, again, sort of happy about things, [INAUDIBLE]
work harder to make the employer happy.
There are several things to get at this.
And the most important part, perhaps, you also
have that we announced essentially the structure
a few days before the actual payment is made.
That is to say, on day five, we announce and say, on the 8th,
you're going to be paid versus we don't announce it.
We say you're going to be paid only
later at the end of the study.
And so if you think this is about reciprocity or feelings
towards the employer, you would think that then workers
should then already be working harder
once they hear about when they get these kind of announcement
effects.
And it seems to be the case that there's
essentially no announcement effect whatsoever.
Workers only become productive pretty much precisely
once they receive their cash on hand,
which is very much consistent with what
I showed you earlier, the results from Mani et al.,
in their study.
It seems to really be the case that knowing that somebody will
be paid is really not helping workers or making workers
more productive both in the form of their relationship
or due to their relationship with the employer,
but also due to other effects, including perhaps their worries
or concerns that they might have about [INAUDIBLE]
So it seems to be that similarly from the Mani et al.
paper, when workers have done their harvest
and you have the harvest in front of you
and it's worth so many rupees, that
doesn't seem to increase their cognitive scores.
That's what I was showing you earlier.
Really what it seems to be is you have to be actually paid.
So once workers actually have the cash in hand, only
then their cognitive function goes up.
There seems to be something [INAUDIBLE]
about this [INAUDIBLE] example I have for you is suppose
you have to pay your bills.
Suppose you don't have enough money.
And then, on the first of the month,
you're going to be paid your stipend or whatever
as a student.
There's something distinctly different from having actually
been paid the money on your bank account
than having it in your possession
that is yours or being sent a check or whatever,
as opposed to knowing it's going to come in two days
and you have your outstanding credit card bills
even if you know that you can pay them.
That's, in some sense, from introspection,
the best example I have for you.
But it seems to be-- and you're right.
In some sense, there could have been
some effect of just telling workers you're going
to be paid early versus later.
But it doesn't seem to be the case.
This really seems to be the case of receiving
the money, having cash in hand, and then
being able to pay the money lender
or pay essentially some person that you owe
money, some money back, seems to be what's
quite important for generating those kinds of effects OK
so let's move on
I already talked about this.
Essentially, yeah, so there seems
to be these large effects of ultra
poor programs, which seem to say that there
might be some underlying behavioral or other poverty
trap going on.
And sort of we don't have the answer to that,
but one hypothesis is that some of the underlying psychological
issues might be responsible for that.
Now, what are other poverty induced deprivation?
So poverty entails a bunch of different deprivations
beyond money, including malnutrition, high levels
of stress, sleep deprivation.
People's sleeping conditions tend to be terrible.
Noise pollution, the poor are more disproportionately exposed
to noise.
There's environmental pollution, in particular air,
that the poor are much more exposed to.
Heat, the poor often don't have access
to heat and/or temperature more generally.
The poor are more exposed to high temperature
and don't have access to ACs often.
There is also some form of stigma and exclusion,
which might have certain cognitive and other effects.
There's some evidence of disproportionate substance
abuse.
I've shown you some evidence of increased excessive drinking.
And there's also quite a bit of evidence
of increased mental illness, especially among the poor.
So within any given location, the poor
are disproportionately affected by mental illness,
including things like depression and anxiety.
But there's a bunch of research in other settings
that shows that each of these factors affect either health
and/or cognitive function.
And so you might wonder how are these factors then affecting
people's decision making and choices.
And just to give you some example of this,
this is some work that we have done in Chennai.
So to give some sense of what this looks like,
the poor essentially tend to have very, very challenging
sleeping conditions.
There's dust, noise, mosquitoes.
People sleep in the same room.
People sleep outside in the middle of the street.
And it's hot.
There's people sleeping on the floor.
So essentially, any challenging sleeping conditions
that you can think of you can find it among the urban poor.
And so one question you might ask is,
well, then does this lack of good sleep affect
people's capacity to work and their decision making?
And so in our study, what we do is we
objectively measure sleep quantity and quality
in Chennai.
And we document severe sleep deprivation
and alarmingly low quality of sleep in is setting.
What do I mean by this?
People sleep on average about 6.5 hours per night.
And the quality of this sleep is low,
which one measurement of that is their fraction of time
that they sleep along the time that they spend in bed
is about 70%.
That's what's referred to as sleep efficiency.
Sleep efficiency is way higher in rich countries.
It's about 85% to 90%.
So if the rich spend an hour in bed, they spend about 55
or something minutes asleep.
If the poor do that, it's about 40 something minutes.
So essentially, there's lots of awakenings.
And as a consequence, in our sample,
people seem about 5 and 1/2 hours per night.
Now, then what we do is we have two interventions
to increase sleep and provide people
information, sleep devices, which is mattress, ear
plugs, eye shields, and so on.
And we increased sleep by quite a bit for about three weeks.
And in this experiment, we also have an intervention
of a nap intervention that offers people naps
at the office, which provides high quantity and high quality
of sleep in that setting.
Now, what we find then is, somewhat surprisingly,
that actually increasing people's sleep
does very little.
So people sleep about 20 to 30 minutes more every night
for three weeks.
And we measure the labor supply.
We hire them for about that time.
People are not doing better in any way in terms of people
not working more.
People are not more productive.
People are not doing better in cognitive tasks.
They're not happier and so on and so forth.
They also don't make different decisions.
And if anything, you know, they decrease their labor supply.
They actually work fewer hours.
Why is that?
Well, because people are spending so much more
time in bed, they have now less time available during the day.
And some of that time goes into working fewer hours.
Now, in contrast, the nap treatment
has pretty large effects on the productivity, attention,
well-being, patience, and so on.
So it's not sleep cannot affect people's outcomes in these
settings.
But rather, a night sleep, as it is
does not really do very much, at least the type of night's sleep
that people are getting.
And so what we then provide some evidence of that what's
really important here or the reason
why people's sleep does not do very much
in increasing their productivity or improving their outcomes
is because the quality of sleep is so low.
So let me sort of look at the sample
and look at people who sleep better and worse at baseline
at the beginning of the study.
People who sleep better at the beginning of the study,
they actually tend to have reasonably large effects
on their productivity.
In contrast, people who have bad sleep
to start with, for them, essentially increasing
their sleep does nothing and potentially makes things worse.
So what did we learn?
I do not want you to take away that sleeping does not
do anything.
MIT students are chronically undersleeping.
And you could be probably sleeping more, all of you,
or most of you.
Essentially, what we learn from this
is that, when people's sleep conditions are really terrible,
well, then increasing one's sleep actually
doesn't do very much.
The return on sleeping is just very, very low.
And so what we learn, in some ways,
that the poor, at least in this setting,
are actually doing as well as they could, in a sense of they
do the best they can.
And since sleep is so bad, is so terrible, people sleep really
badly, increasing their sleep does not do very much.
That's not to say, if you actually fix their sleeping
conditions, if you put everybody into a nice hotel
or a nice bedroom or give them a nice house
and help them sleep better, that wouldn't
have potentially large effects.
But the study that we conducted was not doing that.
The study that we conducted was essentially
saying, take your sleep conditions as given.
And look at what happens when you
increase people's sleep duration for given sleep quality.
And that doesn't do very much.
In contrast, as I showed you or told you,
naps seem to be quite effective in having a large number
or range of effects, which seems to say that sleep can
potentially matter quite a bit.
But what really is important is try to figure out how could we
perhaps increase people's sleep quality which might
have then important effects.
Sorry, that was a lot of information, more than
I perhaps intended.
Any questions on that?
OK, so then the last piece, which
I'm going to just sort of say a little bit about,
is a paper that we just finished on the relationship
between poverty and common mental disorders
as they're referred to, which is anxiety and depression.
And what we there sort of argue--
and it's a pretty short paper if you're interested.
I'll, in fact, put it on my website tonight.
We're looking at, essentially, the relationship
between poverty and these two conditions.
And what we do is, first, we show the causal effect
in both directions.
And so there's quite a bit of evidence that,
essentially, being poor is bad for people's mental health.
And these are causal studies.
So for example, providing people cash transfers
improves consistently their mental health.
So there's a causal effective from not having money
on people's mental health and anxiety and depression.
At the same time, there's a causal effect
of anxiety and depression on people's ability
to earn income and, thus, their poverty.
So for example, if you provide people with CBT
or some other forms of psychotherapy,
that reduces their depression.
And then, in turn, it increases their labor supply,
which in turn presumably increases their ability
to earn income.
So there's causal effects in both directions from poverty
to common mental disorders and from common mental disorders
to poverty.
And then what the paper does in a lot more detail is then
think about what are different mechanisms
for this causal relationship and what exactly, what evidence,
do they actually have of that.
And so on the side from poverty and from economic conditions
to mental health, there's a number
of different issues that could be quite important ranging
from stresses or just being exposed to lots of shocks
and, therefore, worries and uncertainty
to environmental conditions.
In particular, there's quite a bit
of emerging evidence of pollution
being bad for people's mental health,
so essentially pollution causing depression, for example.
There's some potential for physical health,
just being in bad health.
It might be bad for your mental health in part
because it causes physical pain and other illnesses.
There's some evidence of early life conditions
growing up in poverty tends to be
bad for people's mental health.
And there's some nice evidence of shocks
to mothers' and fathers' income might cause mental illness much
later in life for the children.
There's quite a bit of evidence of trauma, violence, and crime,
which the poor are disproportionately
exposed to, affecting people's mental health.
And finally, social status, shame, and isolation,
if you sort of stigmatize and isolate from society,
that might be bad for your mental health.
Particular, sort of relative comparisons
could be quite important.
And then at the same time, there are
effects in the other directions coming
from depression and anxiety.
So one profound way in which depression and anxiety affect
people's behavior is cognitive function, the way people think.
So in contrast to other things such as health,
depression and anxiety affect the way people think.
And then that might affect people's beliefs,
their confidence, overconfidence,
underconfidence, belief updating,
all the stuff that we talked about in the class as well
as their preferences, and time preferences, risk preferences,
social preferences, and so on.
It might affect their labor productivity, their labor
supply, how much people work, and how productive they are.
Of course, people might be very stigmatized and treated
badly because of mental illness, which in addition sort of then
makes people less likely to seek help potentially.
Because if you're then stigmatized,
you might not want to declare to your employer
or to anybody else that you're depressed.
People tend to have worse health conditions if they're depressed
or they suffer from mental illness or other health
conditions tend to get worse, health expenditures.
There's also some evidence of depression
affecting women's empowerment.
I think there's two potential channels here.
One is that women are, in fact, disproportionately affected
by depression, anxiety, and so on.
So the measured prevalence is about twice
as high and sort of to the extent that now,
if you improve people's mental health,
women will disproportionately benefit from that.
And then there's evidence that, once you
do that, women have higher bargaining
power in the household, more say about resources spent
and so on and so forth.
And then finally, potentially quite important
is effects on young people.
This ranges from primary and secondary school
age to college students and so on,
which is to say that a lot of mental health conditions
appear during adolescence.
And so those are often when very critical decisions are made
when it comes to education.
Do you drop out of school?
Do you go to college and so on and so forth?
It turns out there's actually quite not
a lot of causal evidence on this,
but it seems very plausible that this could be quite important.
And sort of taking these things together,
it seems to be that poverty, through various different
channels, including scarcity, which I showed you
at the beginning, but also including
all these other conditions might affect profoundly
the [INAUDIBLE] and how they make decisions
and how productive they are at work, which then could
reinforced poverty and make it harder
for people to become richer.
This is a lot of information.
So any questions?
I'm happy to discuss or answer any questions
that you would have.
I'm not expecting you to remember all of those things.
I was just more elaborating for anybody
who might be interested.
You can also read all of those things in the paper
that I'll add to the course website as well.
All right, so on Wednesday, we're
going to talk about happiness and mental health.
Please read the paper by Kahneman and Deaton.
Notice I just changed this in the syllabus.
So if you have an old version of the syllabus,
please make sure you read the new paper.
I think it was very short, so it shouldn't be tricky to read.
Essentially, it's looking at what kinds of things
predict whether people are happy or not.
And then on Monday, we're going to talk about policy
with behavioral agents.
Just as a reminder, we have a guest
at the end of class next time.
I hope the guests will come at 2:20.
I'm hoping for a lama to visit us,
but it could also be a goat.
We'll see how that goes.
Any questions or comments?
When it comes to depression and anxiety,
specifically I'm going to talk about it more generally.
So one of the things I'm working on, for example,
is looking at the impact of cognitive behavioral therapy
or other psychotherapies to improve people's mental health
and then look at the effects on people's beliefs, how
confident are they in themselves,
how they update their beliefs.
And remember, we have this stuff from [INAUDIBLE] and others
about asymmetric belief updating and is
that affected, for example, by people's mental health.
Moreover, we look at preferences,
which is precisely time preferences,
social preferences, risk preferences.
And once you improve people's depression,
does that affect people's time social and risk preference?
More broadly, there's quite a few people trying to do
studies-- and I'll run through this fairly quickly--
to look at these types of effects, which, for example,
there's some work around malnutrition that
shows, once you provide people with more calories,
there's some indications of less discounting, which is kind
of what you're alluding to.
There's some work on the relationship
between stress and discounting.
There's actually not much evidence or less evidence
than you would expect.
For sleep deprivation, for example, we find,
when people nap, they're less present biased compared
to when they haven't napped.
For example, for alcohol consumption,
I do find that people save more.
And it seems to be not driven by having more money.
So again, that seems to be consistent with people's time
preference in some way affected by these conditions.
Overall, there's quite a bit of evidence
so far on productivity.
So papers essentially show that, when you're disproportionately
exposed to heat, people are less productive.
People learn less.
When you're exposed to noise, people are less productive.
When people have less nutrition, they're
less productive and so on and so forth.
There's less evidence, so far, on decision making and sort
of preferences overall.
That's what people are currently working on,
but that's exactly the question.
Can we sort of explained potentially some of this stuff
that I was mentioning at the very beginning of the lecture?
Can we explain potentially certain behavioral biases
or certain deviations from the neoclassical model
by alleviating or addressing some of the psychological
[INAUDIBLE]?
We don't have a lot of evidence, but we hope
to have some more [INAUDIBLE].
But that's exactly what people are working on.