Research

Mental health conditions are strongly associated with reduced labor market participation, but the underlying channels through which such conditions impact labor supply remain unclear. We conduct a two-phase study decomposing this relationship by examining (i) job take-up decisions and (ii) labor supply, output, and earning conditional on job take-up, and (iii) quit rates. In Phase 1, women in rural Ghana are asked whether they would be willing to take-up a cash-for-work job during the lean season when alternative work is scarce. We find that individuals with depression and anxiety, which are common in this population, are much more likely to decline work offers outside the home but equally likely to accept work-from-home positions. In Phase 2, we randomly offer jobs at home to those who were willing to work from home, avoiding selection effects. Neither depression nor anxiety predict work completion, income, or quit rates when working from home. These findings suggest that poor mental health may harm labor market outcomes in traditional jobs outside of the home via reduced take-up, above and beyond the established negative impacts of mental health on productivity in work outside of the home. But, the results also suggest an alternative approach to improving labor market outcomes for those in poor mental health: work-from-home opportunities, which are not associated with lower take-up or lower productivity on the job for those in poor mental health.

Much development policy has followed from the idea of poverty traps, the belief that the poor (and poor countries) lack capital and the ability to borrow, thus cannot invest sufficiently to build a better future for themselves. Poverty is thus self-reinforcing. This essay explores a complementary, alternate hypothesis, that poverty traps may be driven not only by lack of access to capital, but also (or instead) by differential exposure to uninsured risk and ability to cope with that risk. We explain the hypothesis and its historical roots, discuss empirical evidence, and tease out prospective solutions to the possibility of risk-based poverty traps.

Schooling may build human capital not only by teaching academic skills, but by expanding the capacity for cognition itself. We focus specifically on cognitive endurance: the ability to sustain effortful mental activity over a continuous stretch of time. As motivation, we document that globally and in the US, the poor exhibit cognitive fatigue more quickly than the rich across field settings; they also attend schools that offer fewer opportunities to practice thinking for continuous stretches. Using a field experiment with 1,600 Indian primary school students, we randomly increase the amount of time students spend in sustained cognitive activity during the school day—using either math problems (mimicking good schooling) or non-academic games (providing a pure test of our mechanism). Each approach markedly improves cognitive endurance: students show 22% less decline in performance over time when engaged in intellectual activities—listening comprehension, academic problems, or IQ tests. They also exhibit increased attentiveness in the classroom and score higher on psychological measures of sustained attention. Moreover, each treatment improves students’ school performance by 0.09 standard deviations. This indicates that the experience of effortful thinking itself—even when devoid of any subject content—increases the ability to accumulate traditional human capital. Finally, we complement these results with quasi-experimental variation indicating that an additional year of schooling improves cognitive endurance, but only in higher-quality schools. Our findings suggest that schooling disparities may further disadvantage poor children by hampering the development of a core mental capacity.

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.

Poverty confers many costs on individuals, both through direct material deprivation and by reducing the mental bandwidth (cognitive resources) needed to engage meaningfully with life’s activities. We hypothesize that poverty may also reduce human welfare by decreasing the experiential value of what little the poor are able to consume – a de facto “tax” on consumption. We test this hypothesis using a randomized controlled trial in which we experimentally simulate key aspects of poverty via methods commonly used in laboratory studies (e.g. memorizing sequences) and via introducing stressors commonly associated with life in poverty (e.g. thinking about financial security and experiencing thirst). Participants then engaged in consumption activities and were asked to rate the value of these activities. Consistent with our hypothesis, the randomly assigned stressors reduced ratings of the consumption activities, with the strongest effects on the consumption of food.

This paper develops and applies a multi-criteria algorithm to help policymakers prioritize health conditions given limited resources, implemented in the context of the Waikato District Health Board in New Zealand. The algorithm ranks 25 health conditions along five criteria—scale of disease, household financial impact, health equity, cost-effectiveness, and multimorbidity burden—weighted using an ordered-choice survey of the general public. Heart disease and cancer receive the highest priority rankings under both the algorithm and the survey data, and the health equity weighting is significantly higher among Māori than non-Māori respondents. The approach offers a practical, transparent tool connecting public health strategic priorities, disease burden, and public preferences for evidence-based priority setting.

This paper is a primer for economists interested in the relationship between poverty and cognitive function. We begin by discussing a set of underlying aspects of cognitive function relevant to economic decision-making — attention, inhibitory control, memory, and higher-order cognitive functions — including descriptions of validated tasks to measure each of these areas. Next, we review literature that investigates channels through which poverty might impact cognitive function and economic behavior. We then highlight ways in which the different aspects of cognitive function may impact economic outcomes, discussing both theoretical models and empirical evidence.

This 36-week randomized trial tests whether employer matching of employees’ monetary contributions to deposit contracts increases participation and weight loss among 132 obese employees at a large employer. Participants were randomized to make optional daily deposits of $1 to $3 that were unmatched, matched 1:1, or matched 2:1, refunded for each day they were at or below their goal weight. Only 29% of eligible participants made at least one deposit, and employer matching did not increase participation. Despite low take-up, participants in the no-match and 1:1 match arms lost significantly more weight than controls at 24 and 36 weeks, likely driven by the frequent automated feedback and more frequent self-weighing these groups received rather than the deposits themselves.

This study examines the impact of individually oriented, purely altruistic, and a hybrid of competitive and cooperative monetary reward incentives on older adults’ completion of cognitive exercises and cognitive function. We find that all three incentive structures approximately double the number of exercises completed during the six-week active experimental period relative to a no incentive control condition. However, the altruistic and cooperative/competitive incentives led to different patterns of participation, with significantly higher inter-partner correlations in utilization of the software, as well as greater persistence once incentives were removed.

We examine the possibility of habit formation in labor supply. Using a field experiment with casual urban laborers in India, we randomly provide treated workers with small financial incentives for attendance at labor stands for 7 weeks, leading to a 26% increase in labor supply. We then test for the persistence of impacts after the incentives are removed. First, we see a persistent 18% increase in labor supply over the following 2 months, resulting in a 10% increase in overall employment days. Second, treated workers exhibit a higher willingness to accept work contracts that are of longer duration and less flexible. Third, labor market disruptions deplete habit stock: shocks that temporarily pull workers out of the labor market instantly eliminate treatment effects on labor supply and work contract choice; in the absence of these shocks, we cannot reject that there is no decay in persistence over time. Fourth, we see no “fixed cost” changes in household time use, or learning among workers or employers — consistent with “true” state-dependence in labor supply. Rather, workers self-report an increase in automaticity — suggesting a change in their psychological default. Fifth, employers accurately predict treatment effects, and are willing to pay to hire workers who have been treated with our habit stock intervention. Our results offer evidence for habit formation as a micro-foundation for state-dependence in labor supply and labor market hysteresis. They also suggest that in low-income settings, intermittent employment and frequent shocks may inhibit workers from becoming habituated to regular work—with potential implications for absenteeism and barriers to structural transformation in developing countries.

We study how temperature affects productivity growth among Indian data-entry workers new to the job. Higher temperatures impede on-the-job learning, reducing the rate of productivity growth by 3.0 percentage points per degree Celsius over the past week. This productivity loss persists through the second half of the study, with no evidence of catch-up among those exposed to high initial temperatures. These effects are beyond the contemporaneous impact of heat: each additional degree Celsius lowers same-day productivity by 1.1%, driven by increased breaks, with no change in days worked or hours in the office. The effect of temperature on both the growth rate and level of output occurs despite strong incentives for production. The findings suggest that rising temperatures slow the accumulation of productive human capital, with consequences for both workers’ earnings trajectories and firms’ productivity and training costs. These impacts are likely to be more pronounced in low-income countries, where workers face greater heat exposure.

Religious practice is widespread and disproportionately prevalent among the world’s poor, yet its contemporaneous economic costs are difficult to quantify at a micro-level given the challenges of finding credible, exogenous variation in observance. This paper provides well-identified estimates of this cost in a large low-income population, using granular production data from agriculture and variation in the timing of the observance of Ramadan fasting among India’s Muslim minority. Because Ramadan follows a lunar calendar, its overlap with the labor-intensive sowing and harvesting periods varies across crops within a district-year, across districts within a crop-year, and over time for a given crop-district pair as the holiday cycles through the year. Using this variation in a differences-in-differences-in-differences design, I find that full overlap between Ramadan and sowing or harvesting periods in a given year produces a contemporaneous reduction in agricultural output of 2.0 to 2.9% in quantity and 3.4 to 4.7% in value, or roughly 1% of India’s agricultural GDP annually. The effect is concentrated in districts with an above-median Muslim population share. There is little evidence that farmers offset this predictable shock through meaningful changes to other inputs such as land, draft labor, or fertilizer. Direct evidence rules out reduced labor supply as a driver of the output decline. However, survey data show a substantial decline in caloric intake during Ramadan, and additional tests, including the persistence of output declines beyond the holiday itself, are consistent with reduced caloric intake as an important contributor to the productivity decline.

The Economist

The potential for heat to harm mental health is well-known, but inconsistent across populations. We explore a potential source of heterogeneity in this effect that may drive these conflicting results: underlying economic stress. We draw on panel data from Indonesia and capture three types of economic shocks: income losses driven by international price changes for palm oil, sudden and large fuel cost increases, and job loss. In the general population we find no association between temperature and depressive symptoms—captured via the CES-D scale—and are able to rule out even small harmful effects. But, for those experiencing a negative economic shock, we find robust negative impacts of heat ranging from 0.044 to 0.09 SD per degree Celsius. As climate change increases both the frequency of extreme heat and the prevalence of economic shocks, our findings suggest the psychological toll of a warming climate will be concentrated among the most economically vulnerable.

This commentary discusses Lawton (2025), which leverages the timing of early-20th-century hookworm eradication campaigns across the southeastern United States to test the “hygiene hypothesis” — the idea that early-life pathogen exposure benefits long-run health by training the immune system. Contrary to that hypothesis, deworming is shown to reduce inflammation and allergy markers and to increase lifespan by roughly 2.5 months on average, using variation in both the geographic prevalence of hookworm and the timing of the eradication campaign’s rollout to identify the effect. The piece situates these findings within the broader evidence on deworming’s short-run benefits and highlights open questions about whether the pattern generalizes to other pathogens and populations.