We implement a novel deniers randomization evaluation of a private supplement to the free public ... more We implement a novel deniers randomization evaluation of a private supplement to the free public health system for one of the world’s deadliest health problems, diabetes. We estimate enormous impacts of the private supplement, increasing the share of those treated who are under control by 69%. This effect arises through both improved treatment compliance and health behaviors. Diabetes complications fall in the short run. The net costs of this intervention are at most one-third of the gross costs, and the returns to private care do not appear to reflect more productive delivery but rather more attachment to medical care. (JEL C93, I11, I15, I18, H51). *We are grateful to Eduardo Rivera for outstanding research assistance and to Dante Salazar for impressive field coordination. We also want to thank Mohit Karnani, Diego del Pilar and Andres Santos for their contributions as well as Jishnu Das, participants in the Harris Public Policy and Economics Workshop and the development and publi...
Stata code that takes the master dataset created in the companion do file, as well as additional ... more Stata code that takes the master dataset created in the companion do file, as well as additional raw datasets, and reproduces tables and figures in the paper and online appendix.
We study the bancarization of marginal borrowers using credit cards and document that this proces... more We study the bancarization of marginal borrowers using credit cards and document that this process is difficult: default risk is substantial, returns heterogeneous, and account closings common. We also take advantage of a randomized control trial that varied interest rates and minimum payments in a very wide range. Against our hypothesis, we find that default risk is very insensitive to (randomized) large changes in interest rates and minimum payments. This could imply that regulating these contract terms may not necessarily "protect" consumers against default and that moral hazard in this market is negligible on average.
We establish new facts about the way consumers allocate debt among their credit cards using data ... more We establish new facts about the way consumers allocate debt among their credit cards using data for a representative sample of cardholders in Mexico. We find that relative prices are weak predictors of the allocation of debt, purchases, and payments. Consumers allocate a large fraction of their debt to high-interest cards, incurring a cost of 31 percent above the minimum. Using an experiment, we find that consumers do not substitute in the price margin, although they respond to salient temporary low-interest offers. We conclude that limited attention and mental accounting best rationalize our results and discuss implications for the market.
Debit cards reduce the travel distance to access bank accounts and can increase financial inclusi... more Debit cards reduce the travel distance to access bank accounts and can increase financial inclusion. We show that in Mexico, cash transfer beneficiaries who already received their transfers in bank accounts and subsequently received debit cards reduce their median distance to access the account from 4.8 to 1.3 kilometers and report being less likely to forgo important activities (childcare, work) to withdraw their transfer. Using account level data, we find a strong negative correlation between the reduction in travel distance and financial activity: beneficiaries facing the largest reductions in distance increase both their number of withdrawals and their savings balances.
Consumer protection in financial markets in the form of information disclosure is high on governm... more Consumer protection in financial markets in the form of information disclosure is high on government agendas, even though there is little evidence of its effectiveness. We implement a randomized control trial in the credit card market for a large population of indebted cardholders and measure the impact of Truth-in-Lending-Act-type disclosures, de-biasing warning messages and social comparison information on default, indebtedness, account closings, and credit scores. We conduct extensive external validity exercises in several banks, with different disclosures, and with actual policy mandates. We find that providing salient interest rate disclosures had no effects, while comparisons and de-biasing messages had only modest effects at best. (JEL D14, D83, G21, G28, O16)
European Economics: Macroeconomics & Monetary Economics eJournal, 2017
The ability to borrow sequentially from multiple lenders might generate sizable externalities in ... more The ability to borrow sequentially from multiple lenders might generate sizable externalities in delinquencies. We provide evidence on the existence and "large" size of such effects. We first document that loan approval causes a persistent difference in the number of loans between initially approved and non-approved. We then show that while loan approval leads to no default for high credit score applicants, it causes a large 7pp increase in default on previously existing loans for lower score applicants. That is, a 1,000 MXN (60 USD) extra loan is associated with an increase in the probability of default of 1.5pp for the lower credit score group. This produces average losses close to 18% of total debt, an important externality on previous lenders. This shows that the financial inclusion of clients with lower credit scores is hard due to higher default, and that sequential banking may lead to high default equilibria.
We study a nationwide welfare program in Mexico in which the government, in an effort to eliminat... more We study a nationwide welfare program in Mexico in which the government, in an effort to eliminate hunger, sells milk to households at subsidized rates via a network of thousands of specialized “ration stores.” Existing in many countries, such direct-provision programs often appear puzzling to economists, as it seems unlikely that the government would have any comparative advantage over the private market in procuring and distributing milk. To understand direct provision, we develop and estimate an equilibriummodel of the market, then use the model to compare this program against natural (budget-neutral) alternatives, such as milk vouchers or unrestricted cash transfers. Using rich household-level panel data and the variation generated by the staggered introduction of new government stores, we show that market power by private milk suppliers is an important concern and that government-sold and privately-sold milk are close (though imperfect) substitutes. Consequently, direct provisi...
We measure the effects of two federal taxes in Mexico aimed at reducing obesity by taxing sugary ... more We measure the effects of two federal taxes in Mexico aimed at reducing obesity by taxing sugary drinks (SDs) and high caloric density foods (HCFs). We use a weekly scanner panel dataset with more than 58,721 product barcodes and find more than full price pass-through for SDs and 66 percent pass-through for HCFs, which translated to 6 percent lower SD consumption but no decrease in HCFs. We find substantial substitution towards non-taxed goods and to smaller product presentations. Overall, sugar consumption decreased, fat increased, while calories and BMI remained unchanged. We estimate a demand model and simulate better revenue-equivalent taxes. JEL: I18, H23, H51
This paper studies how exporting and importing firms match based on their capability by investiga... more This paper studies how exporting and importing firms match based on their capability by investigating the change in such exporter-importer matching during trade liberalization. During the recent liberalization on the Mexico-US textile/apparel trade, exporters and importers often switch their main partners as well as change trade volumes. We develop a many-to-many matching model of exporters and importers where partner switching is the principal margin of adjustment, featuring Beckerian positive assortative matching by capability. Trade liberalization achieves efficient global buyer-supplier matching and improves consumer welfare by inducing systematic partner switching. The data confirm the predicted partner switching patterns.
Abstract We study how proximate neighbors affect one’s propensity to vote using data on 12 millio... more Abstract We study how proximate neighbors affect one’s propensity to vote using data on 12 million registered voters in Mexico. To identify this effect, we exploit idiosyncratic variation at the neighborhood block level resulting from approximately one million relocation decisions. We find that when individuals move to blocks where people vote more (less) they themselves start voting more (less). We show that this finding is not the result of selection into neighborhoods or of place-based factors that determine turnout, but rather peer effects. Consistent with this claim, we find a contagion effect for non-movers and show that neighbors from the same block are much more likely to perform an electoral procedure on the same exact day as neighbors who live on different blocks within a neighborhood.
We implement a novel deniers randomization evaluation of a private supplement to the free public ... more We implement a novel deniers randomization evaluation of a private supplement to the free public health system for one of the world’s deadliest health problems, diabetes. We estimate enormous impacts of the private supplement, increasing the share of those treated who are under control by 69%. This effect arises through both improved treatment compliance and health behaviors. Diabetes complications fall in the short run. The net costs of this intervention are at most one-third of the gross costs, and the returns to private care do not appear to reflect more productive delivery but rather more attachment to medical care. (JEL C93, I11, I15, I18, H51). *We are grateful to Eduardo Rivera for outstanding research assistance and to Dante Salazar for impressive field coordination. We also want to thank Mohit Karnani, Diego del Pilar and Andres Santos for their contributions as well as Jishnu Das, participants in the Harris Public Policy and Economics Workshop and the development and publi...
Stata code that takes the master dataset created in the companion do file, as well as additional ... more Stata code that takes the master dataset created in the companion do file, as well as additional raw datasets, and reproduces tables and figures in the paper and online appendix.
We study the bancarization of marginal borrowers using credit cards and document that this proces... more We study the bancarization of marginal borrowers using credit cards and document that this process is difficult: default risk is substantial, returns heterogeneous, and account closings common. We also take advantage of a randomized control trial that varied interest rates and minimum payments in a very wide range. Against our hypothesis, we find that default risk is very insensitive to (randomized) large changes in interest rates and minimum payments. This could imply that regulating these contract terms may not necessarily "protect" consumers against default and that moral hazard in this market is negligible on average.
We establish new facts about the way consumers allocate debt among their credit cards using data ... more We establish new facts about the way consumers allocate debt among their credit cards using data for a representative sample of cardholders in Mexico. We find that relative prices are weak predictors of the allocation of debt, purchases, and payments. Consumers allocate a large fraction of their debt to high-interest cards, incurring a cost of 31 percent above the minimum. Using an experiment, we find that consumers do not substitute in the price margin, although they respond to salient temporary low-interest offers. We conclude that limited attention and mental accounting best rationalize our results and discuss implications for the market.
Debit cards reduce the travel distance to access bank accounts and can increase financial inclusi... more Debit cards reduce the travel distance to access bank accounts and can increase financial inclusion. We show that in Mexico, cash transfer beneficiaries who already received their transfers in bank accounts and subsequently received debit cards reduce their median distance to access the account from 4.8 to 1.3 kilometers and report being less likely to forgo important activities (childcare, work) to withdraw their transfer. Using account level data, we find a strong negative correlation between the reduction in travel distance and financial activity: beneficiaries facing the largest reductions in distance increase both their number of withdrawals and their savings balances.
Consumer protection in financial markets in the form of information disclosure is high on governm... more Consumer protection in financial markets in the form of information disclosure is high on government agendas, even though there is little evidence of its effectiveness. We implement a randomized control trial in the credit card market for a large population of indebted cardholders and measure the impact of Truth-in-Lending-Act-type disclosures, de-biasing warning messages and social comparison information on default, indebtedness, account closings, and credit scores. We conduct extensive external validity exercises in several banks, with different disclosures, and with actual policy mandates. We find that providing salient interest rate disclosures had no effects, while comparisons and de-biasing messages had only modest effects at best. (JEL D14, D83, G21, G28, O16)
European Economics: Macroeconomics & Monetary Economics eJournal, 2017
The ability to borrow sequentially from multiple lenders might generate sizable externalities in ... more The ability to borrow sequentially from multiple lenders might generate sizable externalities in delinquencies. We provide evidence on the existence and "large" size of such effects. We first document that loan approval causes a persistent difference in the number of loans between initially approved and non-approved. We then show that while loan approval leads to no default for high credit score applicants, it causes a large 7pp increase in default on previously existing loans for lower score applicants. That is, a 1,000 MXN (60 USD) extra loan is associated with an increase in the probability of default of 1.5pp for the lower credit score group. This produces average losses close to 18% of total debt, an important externality on previous lenders. This shows that the financial inclusion of clients with lower credit scores is hard due to higher default, and that sequential banking may lead to high default equilibria.
We study a nationwide welfare program in Mexico in which the government, in an effort to eliminat... more We study a nationwide welfare program in Mexico in which the government, in an effort to eliminate hunger, sells milk to households at subsidized rates via a network of thousands of specialized “ration stores.” Existing in many countries, such direct-provision programs often appear puzzling to economists, as it seems unlikely that the government would have any comparative advantage over the private market in procuring and distributing milk. To understand direct provision, we develop and estimate an equilibriummodel of the market, then use the model to compare this program against natural (budget-neutral) alternatives, such as milk vouchers or unrestricted cash transfers. Using rich household-level panel data and the variation generated by the staggered introduction of new government stores, we show that market power by private milk suppliers is an important concern and that government-sold and privately-sold milk are close (though imperfect) substitutes. Consequently, direct provisi...
We measure the effects of two federal taxes in Mexico aimed at reducing obesity by taxing sugary ... more We measure the effects of two federal taxes in Mexico aimed at reducing obesity by taxing sugary drinks (SDs) and high caloric density foods (HCFs). We use a weekly scanner panel dataset with more than 58,721 product barcodes and find more than full price pass-through for SDs and 66 percent pass-through for HCFs, which translated to 6 percent lower SD consumption but no decrease in HCFs. We find substantial substitution towards non-taxed goods and to smaller product presentations. Overall, sugar consumption decreased, fat increased, while calories and BMI remained unchanged. We estimate a demand model and simulate better revenue-equivalent taxes. JEL: I18, H23, H51
This paper studies how exporting and importing firms match based on their capability by investiga... more This paper studies how exporting and importing firms match based on their capability by investigating the change in such exporter-importer matching during trade liberalization. During the recent liberalization on the Mexico-US textile/apparel trade, exporters and importers often switch their main partners as well as change trade volumes. We develop a many-to-many matching model of exporters and importers where partner switching is the principal margin of adjustment, featuring Beckerian positive assortative matching by capability. Trade liberalization achieves efficient global buyer-supplier matching and improves consumer welfare by inducing systematic partner switching. The data confirm the predicted partner switching patterns.
Abstract We study how proximate neighbors affect one’s propensity to vote using data on 12 millio... more Abstract We study how proximate neighbors affect one’s propensity to vote using data on 12 million registered voters in Mexico. To identify this effect, we exploit idiosyncratic variation at the neighborhood block level resulting from approximately one million relocation decisions. We find that when individuals move to blocks where people vote more (less) they themselves start voting more (less). We show that this finding is not the result of selection into neighborhoods or of place-based factors that determine turnout, but rather peer effects. Consistent with this claim, we find a contagion effect for non-movers and show that neighbors from the same block are much more likely to perform an electoral procedure on the same exact day as neighbors who live on different blocks within a neighborhood.
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Papers by Enrique Seira