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(2022) Khan, Fatima JamalThesisThis thesis consists of three self-contained essays in development economics. A key theme common to all essays is the examination of various issues pertaining to economic development in less-developed countries from a microeconomic perspective. In the thesis, I explore methods of increasing human capital and the impact of negative economic shocks on mental health as well as behavioural preferences, focusing on adults and children alike. This is done with a view to highlight policies that can be implemented to improve outcomes for those living in low-income settings where access to resources is scarce and public safety nets are lacking. In the first essay, I assess the impact of a classroom-based positive psychology intervention on improving academic performance by conducting a Randomised Control Trial (RCT) with 899 school-aged children (10-14) years across 29 schools in Pakistan. I find limited evidence that the RCT had an impact on improving well-being measures. I find some evidence of improvement in the sense of agency in the short term, with those in the treatment group scoring 0.34 SD higher than those in the control group. There is also some evidence of improvement in the Mathematics, English and Urdu scores in the medium-long term; being in the treatment group is associated with 0.48 SD higher Mathematics scores, 0.32 SD higher English scores and 0.43 SD higher Urdu scores, and these results are statistically significant. I also find evidence that parental investment preferences modify the impacts of the intervention. Overall, the results suggest that young children require a support structure to succeed in their academic endeavours and while classroom-based interventions can improve learning outcomes to a certain extent, they need to be accompanied with the right support at home. In the second co-authored essay, we combine data collected just prior to the unfolding of COVID-19 with follow-up data from July 2020 to document the adverse economic effects of the pandemic and resulting impact on parental and child mental well-being in rural and semi-urban Pakistan. We find that 22% of the households in our sample are affected by job loss, with monthly income down 39% on average. Our difference-in-difference results show that job loss is associated with a 0.88 standard deviation (SD) reduction in adult mental health score (K10), a 0.43 SD reduction in a ‘Hope’ index of children’s aspirations, agency and future pathways, and a 0.39 SD increase in children’s depression symptoms. In addition, we observe higher levels of parental stress and anger reported by children, as well as an increase in reported prevalence of domestic violence. Overall, we document that the pandemic has disproportionately and negatively affected the economic and mental well-being of the most vulnerable households in our sample. In the third co-authored essay, we investigate the possibility that females and males had a distinct path in the evolution of competitiveness and cooperation. We conducted an experiment to elicit preferences for in-group egalitarianism and individual competitiveness for a random sample of 751 individuals in Sierra Leone (aged 18-85) to contrast the behavioural consequences of victimisation during the 1991-2003 civil war across gender and parental roles. Our data shows that mothers and fathers display the highest level of cooperation, yet conflict exposure does not affect them. Egalitarianism increases after victimisation only among non-parents, with the effect stronger for males who are the least egalitarian to start with. Conflict exposure tames everyone’s competitive tendencies, but has the opposite effect for mothers, the least competitive in the absence of conflict. A sample of competitiveness among 191 parents from Colombia shows a similar effect. Our results imply that conflict, by closing gender and parental gaps in behaviour, selects for pressures to reduce within-group differences possibly to enhance internal cooperation. It primes individuals towards group and individual survival depending on both gender and parental role. Overall, the thesis provides novel insights into some of the many challenges faced by low-income populations, including education and a lack of public safety nets. It also explores the consequences of negative economic shocks on mental health and behavioural preferences.
(2022) Sun, NingyiThesisIn this thesis, I study the question of how a policymaker should make a decision when the information is dispersed among social agents whose characteristics are interdependent, i.e., one agent's type depends on both her own signal and others' information. There are two challenges for the policymaker to make the institution more flexible. First, the interdependence of the agents presents difficulty to characterize the optimal mechanism by its implied multidimensionality. Second, the policymaker may face uncertainty over the beliefs of the agents and the equilibrium they would choose. This thesis contributes to the design of more flexible institutions by developing novel tools and methodologies to tackle these challenges. This thesis also demonstrates several important applications of the new techniques. Chapter 1 introduces a novel multidimensional majorization concept and shows the ordinal, topological features and convexity of the relevant function space. The new concept and properties are used to extend Myerson's ironing method for multivariate ironing of interdependent preferences. In this chapter, the multivariate ironing technique is used to solve a class of quasi-linear adverse-selection models with one principal and multiple agents. As demonstrated in Chapter 1, the optimal solution involves a particular partition of the type profile space. In Chapter 2, however, we consider all allowable partitions and introduce an innovative approach to geometrise these. Allowable partitions, with refinement-coarsening partial order, form a poset that can be represented by a Hasse diagram. The poset can be transformed into its secondary polytope in Euclidean space by the characteristic function. Chapter 2 derives not only the optimal mechanism but also determines the payoff environment in which one particular partition is optimal. Chapter 3 further introduces an admission-control scheme and derives the optimal public-control mechanism. The chapter examines two applications where public control plays an important role – supply chain regulation and club goods provision – to find the optimal policies for maximising social welfare. The chapter also provides some numerical examples to illustrate the characteristics of the optimal mechanisms with and without admission control.