Natural Experiment Setting Research Articles

Boys’ Underperformance, Teacher Scoring Bias and Unbalanced Teacher Market in Rural Philippines

This study exploits a natural experimental setting in rural Philippines to investigate the reversed gender disparity in education. We compare two rating systems implemented in the Philippines, observing that boys’ underperformance persists in evaluations by teachers who know the examinees. Conversely, this bias is not evident in external assessments where the examinees’ attributes are concealed from evaluators. Our empirical analyses identify two underlying channels. The first is the disparity rooted in a stereotype against male students. The second is teacher-rated scores capturing a broader range of diligence aspects, such as attendance, where male students are likely to underperform. This bias is also amplified by the likelihood of student–teacher gender (mis)match, reflecting teacher labour-market conditions in developing countries. This study has limitations due to the relatively small sample to generalise and determine which mechanism prevails over the other. Nonetheless, we emphasise that gender disparity is driven by stereotypes (i.e. being male or diligent towards a specific gender) of one gender over the other.

The Effect of Lead Exposure on Children’s Learning in the Developing World: A Meta-Analysis

Abstract Around half of children in low-income countries have elevated blood-lead levels. What role does lead play in explaining low educational outcomes in these settings? We conduct a new systematic review and meta-analysis of observational studies on the relationship between lead exposure and learning outcomes. Adjusting for observable confounds and publication bias yields a benchmark estimate of a $-0.12$ standard-deviation reduction in learning per natural log unit of blood lead. As all estimates are non-experimental, we present evidence on the likely magnitude of unobserved confounding, and summarize results from a smaller set of natural experiments. Our benchmark estimate accounts for over a fifth of the gap in learning outcomes between rich and poor countries, and implies moderate learning gains from targeted interventions for highly exposed groups ($\approx$ 0.1 standard deviations) and modest learning gains ($\lt 0.05$ standard deviations) from broader public health campaigns.

The impact of a disaster recovery policy on health status of the 2015 Gorkha earthquake victims: Evidence from a natural experiment

AbstractThe 2015 Gorkha earthquake destroyed key infrastructure in Greater Kathmandu and the surrounding earthquake‐affected areas, undermining the health status of affected households. As one of the disaster recovery policies, the Nepalese government distributed taxi permits to severely affected households through a lottery. Leveraging on this natural experimental setting, we examine the impact of the policy on their health status and access to health services. The results show that the treated households have fewer chronic and diarrhoeal diseases, and fewer doctor visits. However, we find no significant difference in the households' medical expenditure between the two groups. We also find that rural households with the taxi permits benefit more from the policy. The results of this study may provide policymakers with some insight to enhance their post‐disaster recovery strategy.

A staging table of Balkan crested newt embryonic development to serve as a baseline in evolutionary developmental studies.

There is an increased interest in the evolution and development of newts from the genus Triturus because: (1) morphological differentiation among the nine constituent species largely corresponds to different ecological preferences, (2) hybridization between different species pairs has various evolutionary outcomes in terms of life history traits and morphology, and (3) the genus expresses a balanced lethal system that causes arrested growth and death of half of the embryos. These features provide natural experimental settings for molecular, morphological, and life-history studies. Therefore, we produce a staging table for the Balkan crested newt (T. ivanbureschi). We provide detailed descriptions of 34 embryonic stages based on easily observable and interpretable external morphological characters, to ensure reproducibility. Compared with previous staging tables for Triturus, we include a vastly increased sample size and provide high-resolution photographs in lateral, ventral, and dorsal view, complemented by videos of specific developmental periods, and accompanied by detailed explanations on how to delineate the specific stages. Our staging table will serve as a baseline in comparative studies on Triturus newts: an emerging model system in evolutionary and developmental studies.

A systematic review of mobile brain/body imaging studies using the P300 event-related potentials to investigate cognition beyond the laboratory.

The P300 ERP component, related to the onset of task-relevant or infrequent stimuli, has been widely used in the Mobile Brain/Body Imaging (MoBI) literature. This systematic review evaluates the quality and breadth of P300 MoBI studies, revealing a maturing field with well-designed research yet grappling with standardization and global representation challenges. While affirming the reliability of measuring P300 ERP components in mobile settings, the review identifies significant hurdles in standardizing data cleaning and processing techniques, impacting comparability and reproducibility. Geographical disparities emerge, with studies predominantly in the Global North and a dearth of research from the Global South, emphasizing the need for broader inclusivity to counter the WEIRD bias in psychology. Collaborative projects and mobile EEG systems showcase the feasibility of reaching diverse populations, which is essential to advance precision psychiatry and to integrate varied data streams. Methodologically, a trend toward ecological validity is noted, shifting from lab-based to real-world settings with portable EEG system advancements. Future hardware developments are expected to balance signal quality and sensor intrusiveness, enriching data collection in everyday contexts. Innovative methodologies reflect a move toward more natural experimental settings, prompting critical questions about the applicability of traditional ERP markers, such as the P300 outside structured paradigms. The review concludes by highlighting the crucial role of integrating mobile technologies, physiological sensors, and machine learning to advance cognitive neuroscience. It advocates for an operational definition of ecological validity to bridge the gap between controlled experiments and the complexity of embodied cognitive experiences, enhancing both theoretical understanding and practical application in study design.

Expectations and the neutrality of interest rates

Our central banks set interest rates, and do not even pretend to control money supplies. How do interest rates affect inflation? We finally have a complete economic theory of inflation under interest rate targets and unconstrained liquidity. Its long-run properties mirror those of monetary theory: Inflation can be stable and determinate under interest rate targets, including a peg, analogous to a k-percent rule.Uncomfortably, stability means that higher interest rates eventually raise inflation, just as higher money growth eventually raises inflation. Sticky prices generate some short-run non-neutrality: Higher nominal interest rates can raise real rates and lower output. A model in which higher nominal interest rates temporarily lower inflation, without a change in fiscal policy, is a harder task. I exhibit one such model, but it paints a more limited picture than standard beliefs. Generically, without a change in fiscal policy, monetary policy can only move inflation from one time to another.The last decade has provided a near-ideal set of natural experiments to distinguish the principal theories of inflation. Inflation did not show spirals or indeterminacies at the long zero bound. The large monetary-fiscal expansion of the covid era produced a temporary spurt of inflation. The same money unleashed in quantitative easing had no such effect.

Phenotypic selection patterns in a hybrid zone between two Calceolaria species with contrasting pollinators: insights from field surveys and fitness assessments.

Hybrid zones provide natural experimental settings to test hypotheses about species divergence. We concentrated on a hybrid swarm in which oil-collecting bees and flower-pecking birds act as pollinators of two Calceolaria species. We asked whether both pollinators contributed to flower divergence by differentially promoting prezygotic fitness at the phenotypic extremes that represent parentals. We studied pollinator-mediated selection on phenotypic traits critical in plant-pollinator mechanical interaction, namely plant height, reward-to-stigma distance, and flower shape. We utilised the quantity and quality of pollen deposited as fitness measures and distinguished between the contribution of the two pollinator types. Results showed uni- and bivariate disruptive selection for most traits through pollen grains deposited by both pollinators. Bird-mediated fitness favoured low plants with a long reward-to-stigma distance and a straight corolla, while bee-mediated fitness favoured tall plants with a short reward-to-stigma distance and curved corolla. In addition, stabilising selection at one end of the phenotypic range showed a bird-mediated reproductive asymmetry within the swarm. The disruptive pattern was countered, albeit weakly, by hybrids receiving higher-quality pollen on the stigmas. Results suggest that pollinator-mediated selection promotes divergence of integrated flower phenotypes mechanically adjusted either to bees or birds underscoring the importance of pollinator specialisation in diversification.

An empirical analysis of the effect of economic activity and COVID-19 restrictions on road traffic accidents in Italy

Road traffic accidents are one of the leading causes of death for the young segment of the population. Prevention strategies can mitigate the occurrence of road accidents, and successful actions should take into account the most relevant causes of accidents. We use a comprehensive dataset which reports information from police records on all road traffic accidents with injures and/or deaths in Italy between 2014 and 2020 to explore the relationships among economic forces, driving behaviours and accident frequency and severity. More specifically, the natural experiment setting provided by the 2020 COVID-19-related movement restrictions allows to capture the effect of traffic intensity and other factors on the frequency of serious accidents and mortality. The empirical findings confirm a direct relationship between the level of economic activity and the frequency of accidents, whereas there is no clear link with their severity. Instead, lockdown periods are associated with a relatively higher occurrence of fatal road traffic accidents, due to both riskier driving behaviours at times of reduced traffic, and changes in transportation habits reflected by a higher probability of accidents involving bicycles and motorcycles.

Spectators or Influencers? The Crowd Effect Upon Winning in the NFL: A Natural Experiment

Abstract: Previous research has determined that home field advantage (HFA) is positively related to crowd density. Isolating this effect is a substantial empirical challenge as crowd density is endogenous with home win-likelihood via fan interest. We consider a natural-experimental setting that introduces exogenous crowd-density variation into National Football League (NFL) games. COVID-19 safety protocols allow us to disentangle crowd-presence, crowd-density, and built-environment effects upon HFA. We find strong evidence that crowd presence is a significant, substantial source of HFA, but crowd density is not. No-crowd games in 2020 featured no measurable HFA conditional upon team strengths, whereas partially fan-restricted games featured no significant decline in HFA relative to games without crowd restrictions (2016‒2019 and 2021). Results suggest HFA is fully attributable to crowd presence, with no evidence of stadium familiarity or travel distance effects. Betting markets efficiently predicted the partial-crowd effect from season's outset but adjusted incrementally (behaviorally) to incorporate the true no-crowd effect only by season's end.

Overcoming barriers to technology transfer: empirical evidence from the German Democratic Republic

This paper provides empirical evidence on a special case of restricted technology transfer: the German Democratic Republic (GDR) characterized by a socialist innovation system with a supply-side-oriented technology-push model encompassing intellectual property rights protection partially distinct from the one employed in most market economies. We exploit the natural experiment setting of the formerly separated regions in Germany and compare the productivity effects of knowledge generation, accumulation, and diffusion in the GDR with those of the Federal Republic of Germany (FRG) between 1970 and 1989. By applying a Cobb–Douglas production function to original primary and harmonized productivity data and manually cleaned patent data, we show that knowledge generation, accumulation and diffusion contributed to sectoral productivity in the GDR similarly compared to the FRG, despite the institutional misalignments in the socialist innovation system. We explain these findings and provide implications for present organizations with regard to incentive schemes for patenting, the support of personal creativity and education, and alternative technology transfer mechanisms in case of institutional barriers to innovation.

Non-monetary motivations of the EU agri-environmental policy adoption. A causal forest approach

This paper investigates the non-monetary motivations of farmers' adoption of agri-environmental policies. Unlike the monetary (income) motivations, non-monetary drivers can not be directly observed but can be identified from observational data within appropriate quasi-experimental designs. A theoretical justification of farmers' choices is first formulated and a consequent natural experiment setting is derived. The latter admits heterogeneous, i.e. Individual, Treatment Effects (ITE) that, in turn, can be interpreted in terms of more targeted and tailored policy expenditure. A Causal Forest (CF) approach is adopted to estimate these ITEs for both the treated and not treated units. The approach is applied to two balanced panel samples of Italian Farm Accountancy Data Network (FADN) farms observed over the 2008–2018 period and concerns agri-environmental policies delivered through the Common Agricultural Policy (CAP). Results show how heterogeneous the farmers’ response and the associated non-monetary motivations can be, thus indicating room for a more efficient policy design.

To alert or alleviate? A natural experiment on the effect of anti-phishing laws on corporate IT and security investments

In the United States, between 2005 and 2017, 23 states enacted anti-phishing laws to prosecute those suspected of phishing. As the primary targets of phishing attacks, firms' interpretations and reactions toward these laws are worth investigating. Utilizing a unique dataset in a natural experimental setting, this study employed the difference-in-differences method to contrast firms' investment decisions related to IT and cybersecurity in states in which such laws had been enacted and those in states without such laws, both before and after their enactment. We found that firms with different operational experiences react to the enactment of the anti-phishing laws in different ways. We further demonstrate the moderating roles of the industry risk landscape and IT capability. Specifically, firms with high-IT increased investments in both IT and cybersecurity while the risk landscape stimulated investments in cybersecurity only. This suggests that the risk landscape facilitates sensitivity to the immediate risk signaled by enactment of the laws, and IT capability further enables the alignment between IT investments and security objectives. This study also discusses the policy implications of our findings.

Breached and Denied: The Cost of Data Breaches on Individuals as Mortgage Application Denials

While a large body of the information systems (IS) literature has investigated the antecedents and consequences of data breaches in organizations, we do not have a good understanding of whether a data breach has a material impact on individuals whose private information is compromised and how much damage it causes. We overcome empirical challenges in investigating the impact of data breaches on individual victims by utilizing a unique natural experimental setting that allows us to credibly identify treated and controlled populations—the breach of South Carolina (SC) taxpayer records in 2012. With residents in SC as the treatment group and those in Georgia and North Carolina as the control group, our difference-in-differences estimations find that after the breach to the SC Department of Revenue, there was a significant increase in denials to SC residents’ residential mortgage applications for refinance and home improvement. We also find that the adverse impact of the breach was more profound for Black and Hispanic residents. Our study provides significant theoretical and policy implications with respect to the harm and costs of a large-scale data breach.

Forget about voting, we are going on vacation! Examining the effect of school holidays on turnout

Abstract Media and politicians widely debate the relationship between holidays and political participation, but research in the field is underdeveloped. To test the impact of holidays on election turnout, we use a natural experimental setting in general elections in Slovakia with respect to the presence of holidays near election day. More specifically, while a part of the country had no holidays, other regions either experienced holidays for the first time or had the holiday in a repeated manner. The results from difference--in-differences and OLS regressions employed in the analysis show that experiencing a holiday near election day decreases electoral turnout. However, this negative effect of holidays on turnout is found to be significant only in territories that experienced holidays for the first time, while it is absent in territories that had holidays near elections repeatedly. This finding points to a potential habituation of the electorate and the holidays’ influence in the long run. The paper thus contributes to our understanding of how different time aspects of holidays affect electoral turnout.

Do Financial Analysts Herd?

ABSTRACT Financial analysts may have strategic incentives to herd or to anti-herd when issuing forecasts of firms' earnings. This paper develops and implements a new test to examine whether such incentives exist and to identify the form of strategic behaviour. We use the equilibrium property of the finite-player forecasting game of Kim and Shim [2019. “Forecast Dispersion in Finite-Player Forecasting Games.” The B.E. Journal of Theoretical Economics 19 (1).] that forecast dispersion decreases (resp. increases) as the number of forecasters increases if and only if there is strategic complementarity (resp. substitutability) in their forecasts. Using the I/B/E/S database, we find strong evidence that supports strategic herding incentive of financial analysts through a plausible natural experiment setting of brokerage house mergers. We show further that this finding is robust to different forecast horizons and is more pronounced for firms with low initial coverage.

Micro‐responses to shocks: pricing, promotion, and entry*

AbstractWe study the market response to firm‐specific demand shocks in a natural experiment setting. In 2006, a boycott of Danish products in several Arab countries was devastating for Danish cheese products firms. In Saudi Arabia, their market share collapsed from 16.5 percent in January to below 1 percent in March, and never fully recovered; by 2009, it was 6.3 percent. By analyzing micro‐level (scanner) price and sales data, we find the following. (i) Danish firms lowered prices but kept the product mix the same. (ii) Non‐Danish firms kept prices constant but changed their product mix by introducing new products and new product bundles. (iii) Non‐Danish firms chose to introduce products that were similar to the Danish products in characteristic space in order to compete head‐to‐head. We complement the analysis with a theoretical framework that helps to account for our main findings.

Impact of economic shocks on mental health during COVID-19: A longitudinal study of adult residents of Indian metropolitan cities.

The causal impact of income shocks on mental well-being in developing countries is an under-researched area. The COVID-19 pandemic, along with the economic recession caused by the lockdowns to reduce transmission, provides a natural experimental setting to examine the causal impact of a decline in monthly per capita expenditure (MPCE) on mental health of the general population in India during the pandemic. To evaluate the impact of income shocks on mental health of adults in metro cities during the COVID-19 pandemic. The data were collected using the abridged version of the Depression Anxiety Stress Schedule administered through a telephonic survey on adult residents of six metropolitan cities in September-August 2020 and July-August 2021. In the present study, 994 adults participated from six metropolitan cities. Average treatment effects were estimated using Propensity Score Matching. The mean normalized scores are significantly higher for respondents whose MPCE had fallen (treated) vis-à-vis respondents whose MPCE had remained same or increased (control): anxiety (0.21 for treated vs -0.19 for control), stress (0.16 vs -0.14), and depression (0.04 vs -0.19). Propensity score matching reveals that the normalized scores for anxiety, stress, and depression were 33 (95% confidence intervals, CI: 20.0-46.7), 25 (95% CI: 12.9-36.9), and 36 (95% CI: 18.6-53.1) higher among the treated group vis-a-vis control group. The ATET was 34 (95% CI: 18.9-48.9), 26 (95% CI: 10.1-42.9), and 32 (955 CI: 12.3-50.7) for these three outcomes, respectively. The post-estimation tests indicated that the results are valid. The study advocates that policies to ensure income security should be made an integral part of the response packages to tackle pandemics like COVID-19.

The impact of unexpected flood events and adaption measures on lot prices

Associated with climate change are the rising frequency, probability, and intensity of natural hazards, as stated by IPCC (2014). To contribute to the evaluation of climate change consequences, we study the impact of river floods caused by torrential rain periods, which are supposed to become and already are one of the major future challenges. Since subsequent flood and adaptation measures are usually interdependent, identifying causal effects is the main challenge. Therefore we investigate a sequence of river floods and subsequent adaption measures in a natural experiment setting. Our study area is the city of Dresden, Germany in the time period from 2000 until 2017. Remarkable in this setting is the exogeneity of the first flood event in 2002 that hit the city unexpectedly after 60 years without considerable flood events. We use a complete set of lot transactions from 2000 until 2017 to study the effect of these events on lot prices. The basis of our identification strategy is a Difference-in-Differences design in which we control for an unstable assignment to treatment and control group. Additionally we consider the heterogeneity of the treatment, which is caused by the varying intensity levels during a flood. It shows that flood risk is incorporated into lot prices only after awareness is risen due to a sudden flood event and that a higher expected intensity increases discounts. A long-term effect can be verified once we control for adaption, such as public protection measures.

Temporary work contracts and female labor market outcomes

How does initial placement in a temporary work contract affect workers’ subsequent labor market outcomes? We study a unique set of natural experiments: In the mid-1990s, the Japanese airline industry implemented a new hiring policy using temporary employment contracts. The policy was later reversed in the mid-2010s. Examining the universe of employment records from one of Japan’s major airlines as well as government surveys to compare outcomes for cohorts of flight attendants hired just before to those hired just after these changes in industry policy, we find that workers starting on temporary contracts were less likely to remain with the firm over time and are less likely to have children within 10 years after starting the job. These findings do not appear to be the result of selection on observables.

Foreign Holding Companies and the US Taxation of Foreign Earnings: Evidence from the Tax Increase Prevention and Reconciliation Act of 2005*

ABSTRACTI analyze US multinationals' (MNCs) use of foreign holding companies in their organizational structures and the impact of holding companies on internal capital markets. The look‐thru rule in the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) reduces the after‐tax cost of foreign intercompany financing transactions. I use TIPRA as a natural experimental setting to test whether a shift in US tax policy that reduces the cost of moving foreign capital increased firms' reliance on foreign holding company subsidiaries. I find that MNCs responded to TIPRA by creating more foreign holding companies. Furthermore, consistent with the policy objectives of TIPRA, I document that MNCs that rely on holding companies gained tax efficiencies in their post‐TIPRA foreign internal capital markets, reducing domestic taxation on foreign earnings and easing financial constraints. Overall, my results expand our understanding of foreign organizational structure decisions and their internal financing benefits. I contribute to the tax literature by documenting a response to TIPRA that sheds light on the growing complexity of foreign subsidiary ownership structures.