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Elisa Macchi (UZH) (webinar)

13 January 2021 @ 12:00 - 13:15

 

Details

Date:
13 January 2021
Time:
12:00 - 13:15
Event Category:
Academic Events

“Worth your weight: experimental evidence on the benefits of obesity in low-income countries”

Abstract: This paper provides experimental evidence on the instrumental value of status signals in poor countries. I study the wealth-signaling value and associated financial benefits of obesity, a sign of status in many low-resource settings. My empirical strategy leverages two experiments that randomly assign obesity using weight-manipulated portraits. I provide three main results. First, residents of Kampala (Uganda) perceive obesity as a reliable proxy for wealth, against other traits such as beauty or health. Second, obesity facilitates access to credit. In a real-stake field experiment with 124 Kampala credit institutions, professional loan officers screen borrowers based on body mass. In an access-to-credit index based on loan officers’ evaluations, going from normal weight to obese has an effect equivalent to increasing a borrower’s earnings by 60%. Third, the obesity premium is mainly a response to asymmetric information and body mass matters because it serves as a proxy for wealth. To test for the wealth-signaling hypothesis, I vary the degree of asymmetric information over wealth: increasing the amount of borrowers’ financial information available to the lenders lowers the obesity premium by two-thirds. While these results could be consistent with standard screening mechanisms, on both sides of the credit markets, people appear to place too much weight on obesity as a wealth signal —possibly distorting allocation of and demand for credit. Finally, obesity benefits in access to credit are commonly known and significantly overestimated —thus inefficiently raising the perceived cost of healthy behaviors.

You can find paper at this link:

https://elisamacchi.github.io/papers/wyw_macchi_draft.pdf