Markets in the Air

I stumbled on this nifty business idea, Nanny in the Clouds, to create a market in the air for nannies. Think match.com, but for wanna-be-nannies and parents on airplanes.

A clear market failure: people on flights with kids want some help; other people on flights want to make some money taking care of kids. Social norms don’t really allow for instantaneous markets to appear (“hey, for $10 I’ll watch your kid for the next two hours so that you can take a nap” is unlikely to get many takers, I suspect). But prearranged, where the norm adheres to our expectations in the babysitter market, and we have a market helping make trades otherwise not made.  

Here is how it works: Sign up on the website, put in the flight you’re going to take, and see if any parents (nannies) signed up and are looking for a nanny (parent who wants a nanny) on the same flight. Negotiate your rates directly, and pay Nanny in the Clouds $10 if the match is made.

Hypotheses for an Impact Study on a For-Profit Microlender

Through Innovations for Poverty Action, I am co-Principal Investigator on a randomized trial of the impact of Compartamos, a for-profit microlender in Mexico. Compartamos was the first microcredit organization to go public, and at IPO time had a market capitalization of US$1.5 billion.  Needless to say, that created a lot of buzz.  Several years later, we will soon be finishing a randomized trial to measure the impact on communities in the Nogales area in northern Mexico.We will be posting our hypothesis before we do the analysis, and encourage readers to do the same, for three reasons:

Can Consultants Improve Small Firms?

A few months ago I ran a contest here at Freakonomics (results here) to predict the outcome of a randomized trial on charitable giving.

Although we are long way from realization (and it may be a pipe dream), the idea is simple: imagine a market on results from research studies. This could help not just hold people accountable for their ex-ante stated views, but also serve as a guiding tool for investors, practitioners, policymakers and donors, to help make decisions and allocate resources using the collective wisdom of markets. Of course this requires liquidity, and a certain faith in markets. Anyhow, until that dream comes true, we are doing this the simple way: running contests!

Answer to Our Nudge Photo Contest

The results are in from the nudge photo contest we posted on Monday. Thirty-six out of 103 responses got it exactly right: to stop folks from urinating on the wall. Many also wrote that it was to prevent grafitti, so close but not (as I've been told) the exact motivation.

The first to answer correctly was, Skyjo, whose response was third overall.

Of the 36 correct answers, we randomly chose comment #63 by ann, "So that people won't urinate on the wall as a sign of respect."

Nudges aren't just for humans. Here is a photo, also from Jan Chipchase, of a similar nudge with the same exact goal of reducing public urination. This time the target is dogs, not humans.

A Nudge Photo Contest

What is this photo about? It came to me courtesy of Jan Chipchase, a design guru who spoke at a great meeting last week on how to help microfinance meet the needs of clients better. As an aside, the most poignant question posed at this meeting of donors, investors, policymakers and researchers on microfinance: Why oh why did it take so long for "client needs" to be the topic of conversation? And the most important question posed: How can we go beyond understanding something about client behavior and choices and translate that knowledge to scalable policies for banking to the poor?

Anyhow, I digress, back to the contest.

Bargain Hunting for Charities

Gosh that sounds so stingy. When we are charitable, we don’t want to be cheap. This is our moment of giving, of generosity, not bah-humbugness. Alas, that is exactly what we should be. If we go to a restaurant for chicken wings, what would you think of the following prices:

4 chicken wings: $8
6 chicken wings: $8
8 chicken wings: $8

Which would you opt for (assuming more is always better)? Naturally, it shouldn’t require much thought. So why not apply this to charity?

This is what Givewell does. (And I’m pleased to say, you can see the imprint of lots of research from Innovations for Poverty Action on their assessments and recommendations). You may remember I blogged about Givewell over the summer, and how there is no correlation between their assessment of organizational effectiveness and the horrid measure often used by those in search of a good charity, “general administrative and fundraising expenditures as a proportion of program expenses.”

What Do Hockey Visors and Birth Control Hormone Shots Have in Common?

The New York Times recently reported that using Depo-Provera, one of the most popular contraceptives in eastern and southern Africa, may increase a person’s risk of transmitting HIV. I fear this is a case for The Guardian's Ben Goldacre… where a study gets a bit (understatement) too much spin in the media. I first became aware of this while in Uganda and saw the following headline in the local paper: “The injectable contraceptive that could double the risk of women contracting HIV.” That sure sounds like the shot itself does something. Or could this instead be a by-product of behavior change? Huge difference if you are deciding what birth control to use!

The Times article cited a study recently published in The Lancet, which showed that women using hormonal contraception—primarily the injection more commonly known in the U.S. by its brand name, Depo-Provera—were twice as likely to acquire HIV from their infected partners, and twice as likely to transmit the virus to their HIV-negative partners.

What Percentage of Microfinance Loans Actually Go to Business Investment?

If someone with a clipboard came up to you in the street and asked you if you secretly harbor racist views, have stolen things in the past, had unprotected sex, or some other illicit behavior, how likely would you be to tell the truth?

Probably not very. This causes havoc for any researcher who wants to study behavior that may deviate from social norms in some way. A survey technique called "list randomization" allows researchers to calculate the average response to a question in a population, without being able to identify the response of any one individual. In theory this gives people the freedom to answer truthfully, knowing that even the interviewer won't be able to tell what they answered.

This method has indeed been used to measure hidden racism and sexism among American voters, as well as all sorts of bad behavior by American teens.

In a paper, forthcoming in the Journal of Development Economics, Jonathan Zinman and I apply this approach to the question of how the poor spend their microfinance loans.

How to Improve iPhone's New Charity Snooze App: Pick an Anti-Charity

A new iPhone app links your alarm clock snooze button to your wallet. Every time you hit snooze, you pay. To be precise, 25 cents goes to charity. Whilst I admire the charitable impulse and the entrepreneurialism here, I do wonder how effective this commitment device will be. A quarter isn’t a lot. Particularly when in a deep slumber. And the money goes to a good thing. Two slight twists on this app would intrigue me:

1)      The anti-charity. A popular option at stickK.com (disclosure: Ian Ayres, fellow Freakonomics contributor, and I are co-Founders of stickK.com), is to pick an "anti-charity" such as the Bush or Clinton Presidential Libraries, depending on your particular persuasion (those in the UK can choose their most despised football team).

2)      The reverse: Donate if you do NOT press snooze. Set a goal for money to raise for a charity you love. Every day you do NOT press snooze, you add money to your “to donate” pot. (Yet another disclosure: this would thus work similarly to the American Cancer Society’s http://www.chooseyou.com campaign, which is powered by stickK.com).

Freakonomics Poll: Will New Cigarette Warning Labels Reduce Smoking?

Soon, new warning labels on cigarette packs will have even scarier messages, and photos too. Canada has been doing this for years. Will it reduce smoking?

Here are three quick thoughts.

1) I strongly doubt it will increase the quantity of information about smoking. Folks know it is bad for you already.

2) This does not mean it won’t work. Maybe people try to forget the health risks in that moment of passion (folks know birth control helps prevent pregnancy, but similarly, when faced with impending temptations, magically forget such trivial details). Will these photos remind them at that moment of temptation? Maybe. Or maybe it will increase how often their kids or friends give them grief for it, thus creating some social pressure to stop. Naturally there is a counter-argument, that this may enhance teenage smoking, if “being bad” makes it cooler.