Faculty seminar with Vincent Somville

Vincent Somville - CV

Title: 

The Causal Effects of Income Volatility and Income Risk.

Abstract:

We study the effects of income uncertainty on psychological wellbeing and economic behavior using a randomized controlled trial in Ghana. Participants earn income over six periods across four arms: no income (Control), fixed income (Stable), variable income with the schedule known in advance (Predictable), and variable income revealed each period (Unpredictable). All treated arms receive identical expected total income.

All three income arms improve mental health by 0.3–0.4 SD, but unpredictable income produces mental health indistinguishable from  stable income, while predictable income — paradoxically — produces worse anxiety and depression than the other arms. The design separates two channels: a surprise channel in the unpredictable arm, where stress reactions to income shocks are acute but transient and average out; and a knowledge channel in the predictable arm, where awareness of the schedule creates a chronic psychological burden  independent of current income.

Economically, all arms spend the study income on food and appear to largely be able to smooth consumption. The mental health divergence is driven by the information structure, not by differences in economic behavior.

The seminar is Friday 1245-1400 in the seminar room of the department (room 327).