Behavioral development economics applies theories and ideas from psychology and behavioral economics to the study of questions in development economics. We begin by examining a central puzzle in development economics: the existence of high rates of return without correspondingly rapid growth (the “Euler equation puzzle”). We discuss the extent to which present bias and loss aversion can help resolve this puzzle. We next consider various topics in development, including preventive health, savings, insurance, technology adoption, labor markets, and firms. We discuss particular behavioral theories that can help explain some key facts in each literature and describe the existing empirical evidence. Behavioral topics covered include non-standard preferences (present bias, loss aversion, and social preferences), nonstandard beliefs (naivete and non-Bayesian learning) and non-standard decision-making (limited attention and memory, mental accounting, and default effects). We argue that firms in developing countries are more likely to deviate from profit maximization and that studying “behavioral firms” in developing countries is a promising new agenda for research. We also discuss a recent literature arguing that variation in social preferences is an important driver of development, may have deep historical roots, yet may also be responsive to policies. Finally, we describe the emerging literature on the psychology of poverty, which argues that living in poverty itself may causally affect cognitive function, decision-making, and productivity.

Behavioral development economics

Throughout history, many governments have introduced policies to unite diverse groups through a shared sense of national identity. However, intergroup relationships at the local level are often slow to develop and confounded by spatial sorting and segregation. We shed new light on the long-run process of nation building using one of history's largest resettlement programs. Between 1979 and 1988, the Transmigration program in Indonesia relocated two million voluntary migrants from the Inner Islands of Java and Bali to the Outer Islands, in an effort to integrate geographically segregated ethnic groups. Migrants could not choose their destinations, and the unprecedented scale of the program created hundreds of new communities with varying degrees of diversity. We exploit this policy-induced variation to identify how diversity shapes incentives to integrate more than a decade after resettlement. Using rich data on language use at home, marriage, and identity choices, we find stronger integration in diverse communities. To understand why changes in diversity did not lead to social anomie or conflict, we identify mechanisms that influence intergroup relationships, including residential segregation, cultural distance, and perceived economic and political competition from migrants. Overall, our findings contribute lessons for the design of resettlement policies and provide a unique lens into the intergenerational process of integration and nation building.

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Unity in Diversity? How Intergroup Contact Can Foster Nation Building

Editor in chief Miguel Encarnacao discusses recent changes to CGaA and the magazine's strategic orientation. He also introduces the magazine's newest editorial board member, Seungyong Lee of the Pohang University of Science and Technology.

http://ieeexplore.ieee.org/iel7/38/6777425/06777438.pdf

Core Values

The persistently high prevalence of girl-child marriage remains a public health and developmental concern in Nigeria. Despite global campaign against the practice and policy efforts by Nigerian government, the prevalence remains unabated. This study investigates the prevalence and the influence of ethnicity and religious affiliation on the girl-child marriage among female adolescents in Nigeria. Data of 7804 girls aged 15–19 years extracted from the 2013 Nigeria Demographic and Health Survey were used. Ethnic groups were classified into five: major Northern ethnic group (Hausa/Fulani); Northern ethnic minorities; two major Southern ethnic groups (Yoruba and Igbo), and Southern ethnic minorities. The prevalence of girl-child marriage was determined for the five ethnic groups and individually for each ethnic minority group. Relationships between ethnicity and religious affiliation on girl-child marriage were explored using Cox proportional hazard regression models, adjusting for residence, education and wealth quintile. Child marriage was higher for the Northern majority ethnic group of Hausa/Fulani (54.8%) compared to the two major Southern ethnic groups (3.0–3.6%) and aggregated Northern ethnic minorities (25.7%) and Southern minorities (5.9%). However, overall, the less known Northern ethnic minority groups of Kambari (74.9%) and Fulfude (73.8%) recorded the highest prevalence. Compared to the major Southern ethnic group of Yoruba, the adjusted hazard ratio (AHR) of child marriage was significantly higher for Northern ethnic minorities (AHR = 2.50; 95% C.I. = 1.59–3.95) and Northern major ethnicity (AHR = 3.67, 95% C.I. = 2.33–5.77). No significant difference was recorded among Southern ethnic groups. Girls affiliated to other religions (Muslim and traditionalist) had higher child-marriage risks compared to Christians (AHR = 2.10; 95% C.I. = 1.54–2.86). Ethnicity and religion have independent associations with girl-child marriage in Nigeria; interventions must address culturally-laden social norms that vary by ethnic groups as well as religious-related beliefs.

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Ethnicity, religious affiliation and girl-child marriage: a cross-sectional study of nationally representative sample of female adolescents in Nigeria.

An analysis of the imagery on postage stamps suggests that regimes in Burkina Faso and Sudan have pursued very different strategies in representing the nation. Sudan's stamps focus on the political center and dominant elite (current regime, Khartoum politicians, and Arab and Islamic identity) while Burkina Faso's stamps focus on society (artists, multiple ethnic groups, and development). Sudan's stamps build an image of the nation as being about the northern-dominated regime in Khartoum (whether military or parliamentary); Burkina Faso's stamps project an image of the nation as multi-ethnic and development-oriented.

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Official Representations of the Nation: Comparing the Postage Stamps of Sudan and Burkina Faso

Many e-government initiatives introduce technology to improve efficiency and avoid potential human bias. Electronic tax filing (e-filing) is an important example, as developing countries increasingly adopt online submission of tax declarations to replace in-person submission to tax officials. This paper examines the impact of e-filing on compliance costs, tax payments, and bribe payments using experimental variation and data from Tajikistan firms. Firms that e-file have lower compliance costs, spending five fewer hours each month on fulfilling tax obligations. There are no significant average effects of e-filing on tax or bribe payments, but significant heterogeneity exists across firms by their baseline likelihood of tax evasion. Among firms previously more likely to evade, e-filing doubles tax payments, likely by disrupting collusion with officials. Conversely, among firms less likely to have been evading, e-filing reduces tax payments, suggesting that officials had previously required them to pay more. These firms also pay fewer bribes, as e-filing reduces opportunity for extortion. In all, the results indicate that e-filing reduces compliance costs and makes the distribution of tax payments across firms arguably more equitable.

Technology, taxation, and corruption: evidence from the introduction of electronic tax filing

This paper examines how temporary migration to a different ethnic region affects national integration. It uses original survey data from individuals who were randomly exposed to different ethnic regions of Nigeria during their mandatory national service, the largest program of its kind in Africa. Comparing participants who served in a state where they are the ethnic majority to those who served in a state where they are not indicates two concurrent effects. First, interethnic exposure creates a stronger connection to the country as a whole: exposed participants have greater national pride and more positive attitudes about Nigeria, they are more knowledgeable about other parts of the country, and they are four times as likely to be living outside their ethnic region seven years later. Second, consistent with social identity theory, immersion in a different ethnic region highlights distinctions between groups and reinforces participants' connection to their ethnic group: exposed participants have more positive attitudes toward their own ethnic group, but not others, and are more likely to have all their closest friends from their ethnic group.

Does Exposure to Other Ethnic Regions Promote National Integration? : Evidence from Nigeria

Technology, Taxation, and Corruption: Evidence from the Introduction of Electronic Tax Filing


 Many African countries struggle to collect an adequate amount of tax revenue to support needed investments in public services. This paper examines how African countries may take advantage of recent advances in technology to improve tax administration. It provides an overview of the potential and challenges of different tax categories in Africa: consumption taxes, real estate taxes, trade taxes and income taxes. It then describes the ways in which technology solutions may be deployed to address these challenges by helping to identify the tax base, monitor compliance and facilitate compliance. Lastly, it provides insights from interviews with senior tax administrators across the continent on their practical experiences in adopting technology for taxation.

Oyebola Motunrayo Okunogbe

Papers

Technology, taxation, and corruption: evidence from the introduction of electronic tax filing

Does Exposure to Other Ethnic Regions Promote National Integration? : Evidence from Nigeria

Technology, Taxation, and Corruption: Evidence from the Introduction of Electronic Tax Filing

Increasing Tax Collection in African Countries: The Role of Information Technology