Publications

2011
Chandra, Amitabh, Anupam B Jena, and Jonathan S Skinner. 2011. “The pragmatist's guide to comparative effectiveness research.” Journal of Economic Perspectives 25 (2): 27-46. Publisher's VersionAbstract

All developed countries have been struggling with a trend toward health care absorbing an ever-larger fraction of government and private budgets. Adopting any treatment that improves health outcomes, no matter what the cost, can worsen allocative inefficiency by paying dearly for small health gains. One potential solution is to rely more heavily on studies of the costs and effectiveness of new technologies in an effort to ensure that new spending is justified by a commensurate gain in consumer benefits. But not everyone is a fan of such studies and we discuss the merits of comparative effectiveness studies and its cousin, cost-effectiveness analysis. We argue that effectiveness research can generate some moderating effects on cost growth in healthcare if such research can be used to nudge patients away from less-effective therapies, whether through improved decision making or by encouraging beefed-up copayments for cost-ineffective procedures. More promising still for reducing growth is the use of a cost-effectiveness framework to better understand where the real savings lie—and the real savings may well lie in figuring out the complex interaction and fragmentation of healthcare systems.

Andrabi, Tahir, Jishnu Das, Asim Ijaz Khwaja, and Tristan Zajonc. 2011. “Do Value-Added Estimates Add Value? Accounting for Learning Dynamics.” American Economic Journal of Applied Economics 3 (3): 29-54. Publisher's VersionAbstract

This paper illustrates the central role of persistence in estimating and interpreting value-added models of learning. Using data from Pakistani public and private schools, we apply dynamic panel methods that address three key empirical challenges: imperfect persistence, unobserved heterogeneity, and measurement error. Our estimates suggest that only one-fifth to one-half of learning persists between grades and that private schools increase average achievement by 0.25 standard deviations each year. In contrast, value-added models that assume perfect persistence yield severely downward estimates of the private school effect. Models that ignore unobserved heterogeneity or measurement error produce biased estimates of persistence.

Pande, Rohini, Michael Greenstone, Aparna Krishnan, Nicholas Ryan, and Anant Sudarshan. 2011. “Improving Human Health through a Market Friendly Emissions Scheme.” Seminar Volume for International Seminar on Global Environment and Disaster Management: Law and Society Supreme Court of India, Ministry of Environment and Forest and Law Ministry). Publisher's Version
Pande, Rohini. 2011. “Can Informed Voters Enforce Better Governance? Experiments in Low Income Democracies.” Annual Review of Economics 3 (1): 215-237. Publisher's VersionAbstract

This article evaluates a body of recent work which uses field and natural experiments to answer this question. A common finding in the literature is that voter behavior is malleable and that in-formation about the political process and politician performance improves electoral accountability. Limited availability of information thus provides one explanation for the persistence of low quality politicians and the existence of identity politics and electoral malpractices in low-income democracies. Understanding how voters can gain access to credible sources of information and how politicians react to improved information about their performance are promising avenues for future research

Khwaja, Asim Ijaz, and Atif Mian. 2011. “Rent Seeking and Corruption in Financial Markets.” Annual Review of Economics 3 (1): 579-600. Publisher's VersionAbstract

We describe recent advances in the study of rent seeking and corruption in financial markets. We outline three areas of inquiry: (a) conceptualizing rent seeking, (b) identifying rent-provision channels and their general equilibrium impact, and (c) designing feasible remedial mechanisms. We provide suggestions for making further progress in these areas and review a variety of approaches taken in the recent literature.

khwaja_a_-_rent_seeking_corruption.pdf
Kwaja, Asim Ijaz, Tahir Andrabi, and Jishnu Das. 2011. “What Did You Do All Day? Maternal Education and Child Outcomes.” Journal of Human Resources 47 (4): 873-912. Publisher's VersionAbstract

Does maternal education have an impact on children’s educational outcomes even at the very low levels found in many developing countries? We use instrumental variables analysis to address this issue in Pakistan. We find that children of mothers with some education spend 72 more minutes per day on educational activities at home. Mothers with some education also spend more time helping their children with school work. In the subset that have test scores available, children whose mothers have some education have higher scores by 0.23–0.35 standard deviations. We do not find support for channels through which education affects bargaining power within the household.

Olken, Benjamin A, and Rohini Pande. 2011. “Corruption in Developing Countries.” Annual Review of Economics 4: 479-509. Publisher's VersionAbstract

Recent years have seen a remarkable expansion in economists’ ability to measure corruption. This, in turn, has led to a new generation of well-identified, microeconomic studies. We review the evidence on corruption in developing countries in light of these recent advances, focusing on three questions: how much corruption is there, what are the efficiency consequences of corruption, and what determines the level of corruption. We find robust evidence that corruption responds to standard economic incentive theory, but also that effects of anti-corruption policies often attenuate as officials find alternate strategies to pursue rents.

annual_review_of_economics_vol_4_pande_2011_-_hks.pdf
Singhal, Monica, Katherine Baicker, and Jeffery Clemens. 2011. “The Rise of the States: U.S. Fiscal Decentralization in the Postwar Period.” Journal of Public Economics 96 (11-12): 1079-1091. Publisher's VersionAbstract

One of the most dramatic changes in the fiscal federalism landscape during the postwar period has been the rapid growth in state budgets, which almost tripled as a share of GDP and doubled as a share of government spending between 1952 and 2006. We argue that the greater role of states cannot be easily explained by changes in Tiebout forces of fiscal competition, such as mobility and voting patterns, and are not accounted for by demographic or income trends. Rather, we demonstrate that much of the growth in state budgets has been driven by changes in intergovernmental interactions. Restricted federal grants to states have increased, and federal policy and legal constraints have also mandated or heavily incentivized state own-source spending, particularly in the areas of education, health and public welfare. These outside pressures moderate the forces of fiscal competition and must be taken into account when assessing the implications of observed revenue and spending patterns.

2010
Pande, Rohini, Lori Beaman, Esther Duflo, and Petia Topalova. 2010. “Political Reservation and Substantive Representation: Evidence from Indian Village Councils.” Washington D.C. and New Delhi: Brookings Institution Press and The National Council of Applied Econ, 7, 2010 edition.Abstract

Female presence in India’s state and national legislatures hovers at ten percent. Concerns that this limits the political voice available to women has led to the introduction and subsequent passage of a Reservation Bill in the Upper house of the Indian Parliament. The bill seeks to reserve 33% of India’s state and national legislature positions for women. If implemented 181 out of the 543 National legislators and 1,370 out of the 4,109 State legislators will be women.

Khwaja, Asim, Tahir R. Andrabi, and Jishnu Das. 2010. “Education Policy in Pakistan: A Framework for Reform.” IGC International Growth Centre – Pakistan, Policy Brief, December 2010. Publisher's VersionAbstract

This policy brief draws on research papers and reports from a large-scale longitudinal study through a grant from the World Bank’s South Asia Regions and Knowledge for Change Trust Funds. The study, titled “Learning and Educational Achievements in Punjab Schools” (LEAPS) analyses the education sector in Pakistan, its major challenges and policy options for moving forward. The data from the study is public and is available at www.leapsproject.org.

khwaja_a_-_education_policy_in_pakistan_12-12-2010_.pdf
Hanna, Rema. 2010. “U.S. Environmental Regulation and FDI: Evidence from a Panel of US-Based Multinational Firms.” American Economic Journal: Applied Economics 2 (3): 158-189. Publisher's VersionAbstract

This paper measures the response of US-based multinationals to the Clean Air Act Amendments (CAAA). Using a panel of firm-level data over the period 1966 – 1999, I estimate the effect of regulation on a multinational’s foreign production decisions. The CAAA induced substantial variation in the degree of regulation faced by firms, allowing for the estimation of econometric models that control for firm-specific characteristics and industrial trends. I find that the CAAA caused regulated multinational firms to increase their foreign assets by 5.3 percent and their foreign output by 9 percent. Heavily regulated firms did not disproportionately increase foreign investment in developing countries.

us_envl_reg_fdi_-_aer.pdf
Levy, Dan, and Jim Ohls. 2010. “Evaluation of Jamaica's PATH conditional cash transfer programme.” Journal of Development Effectiveness 2 (4): 421-441. Publisher's VersionAbstract

This paper summarises the findings of an evaluation of the Programme of Advancement through Health and Education (PATH), a conditional cash transfer programme implemented by the Government of Jamaica. The authors find that PATH was generally implemented as intended; exhibited better targeting to the poor than other similar social assistance programmes in Jamaica; and had positive and statistically significant impacts on school attendance and number of preventive healthcare visits for children. They find no evidence, however, that PATH was able to affect longer-term outcomes such as marks, grade progression, or healthcare status.

Hanna, Rema, and Paulina Olivia. 2010. “The Impact of Inspections on Plant-Level Air Emissions.” The B.E. Journal of Economic Analysis & Policy 10 (1): 1-33. Publisher's VersionAbstract

Each year, the United States conducts approximately 20,000 inspections of manufacturing plants under the Clean Air Act. This paper compiles a panel dataset on plant-level inspections, fines, and emissions to understand whether these inspections actually reduce air emissions. We find plants reduce air emissions by fifteen percent, on average, following an inspection under the Clean Air Act. Plants that belong to industries that typically have low abatement costs respond more strongly to an inspection than those who belong to industries with high abatement costs.

Chandra, Amitabh, Jonathan Gruber, and Robin McKnight. 2010. “Patient Cost Sharing in Low Income Populations.” American Economic Review 100 (2): 303-308. Publisher's VersionAbstract

Economic theory suggests that a natural tool to control medical costs is increased consumer cost sharing for medical care. While such cost sharing reduces “full insurance” (wherein patients are indifferent between falling sick or remaining healthy), a greater reliance on coinsurance and copayments can, in theory, stem patient and provider incentives to engage in moral hazard. These issues are particularly salient for low income populations who are at the center of current efforts to expand coverage (among the uninsured in 2008, 38 percent had incomes below the federal poverty line (FPL), and 52 percent had incomes between 100 and 299 percent of the FPL (Kaiser Commission on Medicaid and the Uninsured 2009)). As insurance is expanded to these groups, it is important to understand how they respond to greater levels of patient cost sharing. On the one hand, smarter plan design could help reduce the fiscal pressures associated with insurance expansion. But on the other, it is also possible that low income recipients are unable to cut back on utilization wisely and, consequently, experience hospitalization “offsets” as a result of greater levels of patient cost sharing. In particular, there remains a concern among many that higher cost sharing on primary care will lead to less effective use of primary care, worse health, and, consequently, higher downstream costs at hospitals (the so-called “offset effects”).

Mian, Atif, Asim Ijaz Khwaja, and Bilal Zia. 2010. “Dollars Dollars Everywhere, Nor Any Dime to Lend: Credit Limit Constraints on Financial Sector Absorptive Capacity.” The Review of Financial Studies 23 (12): 4281-4323. Publisher's VersionAbstract

We exploit an unexpected inflow of liquidity in an emerging market to study how capital is intermediated to firms. We find that backward-looking credit limit constraints imposed by banks make it difficult for firms to borrow, despite readily available bank liquidity, healthy aggregate demand, and a sharply falling cost of capital. The resulting aggregate failure to extend and retain capital in the economy suggests that agency costs that force banks to rely on sticky balance-sheet-based credit limits prevent emerging economies from effectively intermediating capital.

Hanna, Rema, Marianne Bertrand, and Sendhil Mullainathan. 2010. “Affirmative action in education: Evidence from engineering college admissions in India.” Journal of Public Economics 94 (1-2): 16-29. Publisher's VersionAbstract

This paper examines an affirmative action program for “lower-caste” groups in engineering colleges in India. We study both the targeting properties of the program, and its implications for labor market outcomes. We find that affirmative action successfully targets the financially disadvantaged: the upper-caste applicants that are displaced by affirmative action come from a richer economic background than the lower-caste applicants that are displacing them. Targeting by caste, however, may lead to the exclusion of other disadvantaged groups. For example, caste-based targeting reduces the overall number of females entering engineering colleges. We find that despite poor entrance exam scores, lower-caste entrants obtain a positive return to admission. Our estimates, however, also suggest that these gains may come at an absolute cost because the income losses experienced by displaced upper-caste applicants are larger than the income gains experienced by displacing lower-caste students. Limited sample sizes in our preferred econometric specifications, however, prevent us from drawing strong conclusions from these labor market findings.

Field, Erica, Seema Jayachandran, and Rohini Pande. 2010. “Do Traditional Institutions Constrain Female Entrepreneurship? A Field Experiment on Business Training in India.” American Economic Review 100 (2): 125-129. Publisher's Version
Cutler, David, Winnie Fung, Michael Kremer, Monica Singhal, and Tom Vogl. 2010. “Early-life Malaria Exposure and Adult Outcomes: Evidence from Malaria Eradication in India.” American Economic Journal: Applied Economics 2 (2): 72-94. Publisher's VersionAbstract

We examine the effects of exposure to malaria in early childhood on educational attainment and economic status in adulthood by exploiting geographic variation in malaria prevalence in India prior to a nationwide eradication program in the 1950s. We find that the program led to modest increases in household per capita consumption for prime age men, and the effects for men are larger than those for women in most specifications. We find no evidence of increased educational attainment for men and mixed evidence for women.

Pande, Rohini, Esther Duflo, Michael Greenstone, and Nicholas Ryan. 2010. “Towards an Emissions Trading Scheme for Air Pollutants in India.” Ministry of Environment and Forest, Government of India, 24.Abstract

Emissions trading schemes have great potential to lower pollution while minimizing compliance costs for firms in many areas now subject to traditional command-and-control regulation. This paper connects experience with emissions trading, from programs like the U.S. Acid Rain program, to lessons for implementation of a Trading Pilot Scheme in India. This experience suggests that four areas are especially important for successful implementation of an emissions trading scheme: setting the cap, allocating permits, monitoring and compliance. The introduction of emissions trading would position India as a clear leader in environmental regulation amongst emerging economies.

towardsanemissions.pdf
2009
Pande, Rohini, Esther Duflo, Petia Topalova, Raghab Chattopadhyay, and Lori Beaman. 2009. “Can Political Affirmative Action for Women Reduce Gender Bias?.” Vox, January 8, 2009, 1-4.

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