Bio
I am an Associate Professor (with tenure) at the Haas School of Business and the Department of Economics at UC Berkeley.
My research brings insights from psychology to bear on topics in economics, particularly topics relevant to developing countries. My current research agenda is centered on the economics of mental health in developing countries. Past projects include studying how improving sleep affects the economic outcomes of workers in India, how the endowment effect influences consumer demand for collateralized loans in Kenya, how research findings affect the beliefs and policy choices of mayors in Brazil, and how mixing rich and poor students in schools in India affects social preferences and behaviors.
Together with Frank Schilbach and Heather Schofield, I help run the Behavioral Development Lab in India. I am a Faculty Research Fellow at the National Bureau of Economic Research (NBER), and a faculty affiliate at the The Abdul Latif Jameel Poverty Action Lab (JPAL). From 2018 to 2020, I served as an Associate Editor at the Journal of Political Economy.
Curriculum Vitae (Updated May 2024)
Research Statement
Email: grao@berkeley.edu
Phone: +1-734-846-7754
Office: F653 (Haas), 507 Evans Hall (Economics)
Teaching
EWMBA 201A: Economics for Business Decision Making
Econ 219B: Applications of Psychology and Economics (second-year PhD class)
Information for (potential) advisees
Office Hours
To sign up for office hours with me, use this link:
https://calendly.com/raogautam
Office Hours are restricted to my current PhD or MBA students or research advisees. If you don’t fit that description, please email me for permission to sign up.
Publications
(with Stefano DellaVigna, John List and Ulrike Malmendier)
American Economic Review Papers and Proceedings, May 2013
Abstract (click to expand): Do men and women have different social preferences? Previous findings are contradictory. We provide a potential explanation using evidence from a field experiment. In a door-to-door solicitation, men and women are equally generous, but women become less generous when it becomes easy to avoid the solicitor. Our structural estimates of the social preference parameters suggest an explanation: women are more likely to be on the margin of giving, partly because of a less dispersed distribution of altruism. We find similar results for the willingness to complete an unpaid survey: women are more likely to be on the margin of participation.
Online Appendix
(with Stefano DellaVigna, John List and Ulrike Malmendier)
Review of Economic Studies, January 2017
Abstract (click to expand): Why do people vote? We design a field experiment to estimate a model of voting `because others will ask'. The expectation of being asked motivates turnout if individuals derive pride from telling others that they voted, or feel shame from admitting that they did not vote, provided that lying is costly. In a door-to-door survey about election turnout, we experimentally vary (i) the informational content and use of a flyer pre-announcing the survey, (ii) the duration and payment for the survey, and (iii) the incentives to lie about past voting. The experimental results indicate significant social image concerns. For the 2010 Congressional election, we estimate a value of voting ‘to tell others’ of about $15, contributing 2 percentage points to turnout. Lastly, we evaluate a get-out-the-vote intervention in which we tell potential voters that we will ask if they voted.
Online Appendix
Data and Code
(with Leonardo Bursztyn, Bruno Ferman, Stefano Fiorin and Martin Kanz)
Quarterly Journal of Economics, August 2018
Abstract (click to expand): This paper provides novel field-experimental evidence on status goods. We work with an Indonesian bank that markets platinum credit cards to high-income customers. In a first experiment, we show that demand for the platinum card greatly exceeds demand for a nondescript control product with identical benefits, suggesting demand for the pure status aspect of the card. Transaction data reveal that platinum cards are more likely to be used in social contexts, implying social image motivations. Combining price variation with information on the use of the card sheds light on the magnitude of the demand for social status. In a second experiment, we provide evidence of positional externalities from the consumption of these status goods. The final experiment shows that increasing self-esteem causally reduces demand for status goods. We infer that part of the demand for status is psychological in nature, and that social image is a substitute for self image.
Online Appendix
Data and Code
Pre-Registration
American Economic Review, March 2019
Abstract (click to expand): I exploit a natural experiment in Indian schools to study how being integrated with poor students affects the social behaviors and academic outcomes of rich students. Using administrative data, lab and field experiments to measure outcomes, I find that having poor classmates makes rich students (i) more prosocial, generous and egalitarian; and (ii) less likely to discriminate against poor students, and more willing to socialize with them. These effects are driven by personal interactions between rich and poor students. In contrast, I find mixed but overall modest impacts on rich students' academic achievement.
Online Appendix
(with Michael Kremer and Frank Schilbach)
Handbook of Behavioral Economics, Volume 2, 2019
Slides (pdf)
Slides (tex and bib files)
Slides (ppt)
(with Matthew Ridley, Frank Schilbach and Vikram Patel)
Science, December 2020
Abstract (click to expand): Why are people living in poverty disproportionately affected by mental illness? We review the interdisciplinary evidence of the bi-directional causal relationship between poverty and common mental illnesses -- depression and anxiety -- and the underlying mechanisms. Research shows that mental illness reduces employment and therefore income and that psychological interventions generate economic gains. Similarly, negative economic shocks cause mental illness, and anti-poverty programs such as cash transfers improve mental health. A crucial next step toward the design of effective policies is to better understand the mechanisms underlying these causal effects.
(with Jonas Hjort, Diana Moreira, and Juan Francisco Santini)
American Economic Review, May 2021
Abstract (click to expand): Can research findings change political leaders' beliefs and cause policy change? Collaborating with the National Confederation of Municipalities in Brazil, we work with 2,150 municipalities and their mayors. We use experiments to measure mayors' demand for research information and their response to learning research findings. In one experiment, we find that mayors and other municipal officials are personally willing to pay to learn the results of impact evaluations, and update their beliefs when informed of the findings. They value larger-sample studies more, while not distinguishing on average between studies conducted in rich and poor countries. In a second experiment, we find that informing mayors about research on a simple and effective policy (reminder letters for taxpayers) increases the probability that their municipality implements the policy by 10 percentage points. In sum, we provide direct evidence that policy-makers value research information, change their beliefs when presented with it, and that this can drive policy change. Information frictions may thus help explain failures to adopt effective policies.
(with Pedro Bessone, Frank Schilbach, Heather Schofield and Mattie Toma)
Quarterly Journal of Economics, August 2021
Abstract (click to expand): The urban poor in developing countries face challenging living environments, which may interfere with good sleep. Using actigraphy to measure sleep objectively, we find that low-income adults in Chennai, India sleep only 5.5 hours per night on average despite spending 8 hours in bed. Their sleep is highly interrupted, with sleep efficiency—sleep per time in bed—comparable to those with disorders such as sleep apnea or insomnia. A randomized three-week treatment providing information, encouragement, and improvements to home sleep environments increased sleep duration by 27 minutes per night by inducing more time in bed. Contrary to expert predictions and a large body of sleep research, increased nighttime sleep had no detectable effects on cognition, productivity, decision-making, or well-being, and led to small decreases in labor supply. In contrast, short afternoon naps at the workplace improved an overall index of outcomes by 0.12 standard deviations, with significant increases in productivity, psychological well-being, and cognition, but a decrease in work time.
Pre-Registration
(with Susan Redline, Frank Schilbach, Heather Schofield and Frank Schilbach)
This is a peer-reviewed policy forum article in Science
Science, October 2021
Abstract (click to expand): Recent progress in sleep science has greatly improved our understanding of the neurobiology of sleep and its importance for physical and mental functioning. Lab experiments have shown that insufficient sleep causes declines in cognitive and physiological function, and community studies have documented widespread sleep deprivation. Adults in the US sleep just 6.1 hours per night when objectively measured, well below the 7 to 9 hours recommended by experts. Evidence is emerging that sleep duration and quality are even lower in developing countries and among the poor in rich countries. This has led to predictions that increased sleep would have profound benefits for society, including increased productivity, academic performance, health, and safety. Why do people not sleep more, given these predicted benefits?
Published Version
(with Liang Bai, Benjamin Handel and Ted Miguel)
Review of Economics and Statistics, Dec 2021
Abstract (click to expand): Self-control problems constitute a potential explanation for the under-investment in preventive health in low-income countries. Behavioral economics offers a tool to solve such problems: commitment devices. We conduct a field experiment to evaluate the effectiveness of different types of theoretically-motivated commitment contracts in increasing preventive doctor visits by hypertensive patients in rural India. Despite achieving high take-up of such contracts in some treatment arms, we find no effects on actual doctor visits or individual health outcomes. A substantial number of individuals pay for commitment but fail to follow through on the doctor visit, losing money without experiencing health benefits. We develop and structurally estimate a pre-specified model of consumer behavior under present bias with varying levels of naivete. The results are consistent with a large share of individuals being partially naive about their own self-control problems: sophisticated enough to demand some commitment, but overly optimistic about whether a given level of commitment is sufficiently strong to be effective. The results suggest that commitment devices may in practice be welfare diminishing, at least in some contexts, and serve as a cautionary tale about their role in health care.
Pre-Registration: Including theoretical model and pre-analysis plan
(with Stefano DellaVigna, John List and Ulrike Malmendier)
Current Version: August 2021
American Economic Review, March 2022
Abstract (click to expand): We design three field experiments to estimate the nature and magnitude of workers’ social preferences towards their employers. The experiments vary the return to the employer and employer generosity towards workers (“gifts”). Including variation in pay rates—either piece rates or wage rates—allows us to estimate the elasticity of work outcomes and benchmark the workers' social preferences toward the employer. The first experiment measures productivity—units of output produced in a fixed amount of time. The second and third experiments measure the willingness to do extra work. We document that productivity is rather unresponsive to financial incentives, while the willingness to perform extra work is very responsive. In terms of social preferences, we document, first, that workers exert effort for their employer even in the absence of private incentives, but are insensitive to the return to the employer. This result is consistent with models of warm glow or social norms regarding work effort, but not pure altruism towards the employer. Second, while we do not detect any effect of the gifts in the productivity experiment, we find moderate positive impacts in the extra-work experiments. We show that this difference is partly explained by the disparate elasticities of productivity and extra work.
Pre-Registration: This includes a full pre-registration of the structural model
Working Papers
(with John Conlon, Malavika Mani, Matthew Ridley and Frank Schilbach)
Current Version: October 2022
Revised and Resubmitted, Econometrica
Abstract (click to expand): We provide evidence of a powerful barrier to social learning: people are much less sensitive to information others discover compared to equally-relevant information they discover themselves. In a series of incentivized lab experiments, we ask participants to guess the color composition of balls in an urn after drawing balls with replacement. Participants' guesses are substantially less sensitive to draws made by another player compared to draws made themselves. This result holds when others' signals must be learned through discussion, when they are perfectly communicated by the experimenter, and even when participants see their teammate drawing balls from the urn with their own eyes. We find a crucial role for taking some action to generate one's `own' information, and rule out distrust, confusion, errors in probabilistic thinking, up-front inattention and imperfect recall as channels.
Pre-Registration
(with Kevin Carney, Michael Kremer and Xinyue Lin)
Current Version: May 2022
Revise and Resubmit, Econometrica
Abstract (click to expand): Collateral requirements play an important role in credit markets. This paper shows that the endowment effect---the phenomenon where owing a good increases one's valuation of it---inhibits demand for loans which use a borrower's existing assets as collateral. Using a field experiment in Kenya, we show that borrowers instead strongly prefer loans collateralized using the new durable assets being financed by the loans themselves. They are willing to pay 9% per month higher interest for such Same-Asset Collateralized Loans (SACLs) despite the endowed and new assets being randomized, and thus similarly valued before ownership. Our findings imply that assets which are difficult to use as collateral---which cannot be financed by SACLs---will be invested in less, even if the borrower has other collateral. We argue that borrowers' preference for SACLs is driven by naivete: they initially perceive that they have little to lose when offered a SACL, but subsequently come to develop an attachment to the new asset, resulting in high repayment effort. Consistent with this, borrowers underestimate their future attachment to an asset before owning it, and SACLs do not have higher default rates despite having higher demand. We derive the conditions under which offering consumers SACLs increases or conversely decreases borrower welfare.
(with John Conlon, Malavika Mani, Matthew Ridley and Frank Schilbach)
New Version: October 2022
Abstract (click to expand): Do spouses pool useful information and learn from each other when they have incentives to do so? In an experiment with married couples in India, we vary whether individuals discover information themselves or must instead learn what their spouse discovered via a discussion. Women treat their own and their husband's information the same. In contrast, men respond half as much to information discovered by their wife, even when it is perfectly communicated. When paired with strangers, both men and women heavily discount their partner's information relative to their own. We thus provide evidence of a gender difference in social learning (only) in the household.
Pre-Registration
(with Bhargav Bhat, Jon de Quidt, Johannes Haushofer, Vikram Patel, Frank Schilbach and Pierre-Luc Vautrey)
Current Version: April 2022
Abstract (click to expand): We revisit two clinical trials that randomized depressed adults in India (n=775) to a brief course of psychotherapy or a control condition. Four to five years later, the treatment group had 11 percentage points less depression than the control group. The more effective intervention averted 9 months of depression on average over five years and cost only \$66. Therapy changed people's beliefs about themselves in three ways. First, it reduced their likelihood of seeing themselves as a failure or feeling bad about themselves. Second, when faced with a novel work opportunity, therapy reduced over-optimistic belief updating and thus reduced overconfidence. Third, it increased self-assessed levels of patience and altruism. Therapy did not increase levels of employment or consumption, possibly because of other constraints on employment in the largely female study sample.
Work in Progress
The Long-Run Impacts of Corporal Punishment in Schools
(with Maria Petrova and Brian Wheaton)
From Another Life
Interactions between Organizations and Networks in Common-Pool Resource Governance, with Arun Agrawal, Dan Brown, Rick Riolo and Derek Robinson, Environmental Science & Policy, Volume 25, January 2013, Pages 138–146
Preservation or degradation? Communal management and ecological change in a southeast Michigan forest, with Fred Nelson, Elisa Collins, Alain Frechette, Cynthia Koenig, Mosé Jones-Yellin, Brihannala Morgan, Gita Ramsay, and Claudia Rodriguez, Biodiversity and Conservation, October 2008, Volume 17, Issue 11, pp 2757-2772
Personal
Current reason I’m behind on everything
Fearless Sidekick - Kirby passed in Aug 2016
Website: I am grateful to Xinyue Lin for building my website. Please feel welcome to use and re-purpose the code for the website, which you can find at my GitHub repository.
