Highlights 2025
WP 25/03
In “Math Exposure and University Performance: Causal Evidence from Twins”, Graziella Bertocchi, together with Luca Bonacini, Majlinda Joxhe and Giuseppe Pignataro, investigate the impact of exposure to math in high school on college major choice and academic performance, using a dataset of twins drawn from the student population of an Italian university. Their empirical approach accounts for confounding factors, such as family background, that would otherwise bias their results. They find that attending a low-math high school decreases the likelihood of choosing a STEM major, while it boosts academic performance in terms of on-time graduation and grades. A national high school reform that increased math hours in low-math curricula further reduced STEM enrollment but was the driver of the improvement in performance for treated students. Hence, more math does not increase STEM enrollment, but does provide students valuable skills.
WP 25/02
In "Does Distance Still Matter? Evidence from 30 Years of Mortgage Lending" Joao Monteiro, together with Menaka Hampole and Adam Jorring, study the role distance between lenders and borrowers plays in mortgage contracts. The find that mortgage lending by banks is still predominantly a local business. Local branches have a significant advantage in attracting and originating mortgages. More than 25% of borrowers are less than two miles from their branch, and more than 50\% are within 10 miles. Distance is associated with lower credit quality, and the additional risk is priced: higher distance is associated with a lower probability of approval, a higher interest rate spread, and a higher ex-post likelihood of delinquency. They document business cycle patterns as the distance rises in booms and falls in busts but find that the sensitivity of distance for loan approval and pricing has persisted over the past 30 years despite the dramatic rise in securitization and online banking. Using a quantitative spatial model of the mortgage market, they explore the economic mechanisms driving our results. Through the lens of the model, they find that decreasing search costs lowers the match quality of borrower search, which counteracts the effects of increasing screening technology. Their findings highlight that local bank branches are still highly relevant despite the "fintech" revolution.
WP 25/01
In "Government Support in Times of Crisis: Transfers and the Road to Socialism" Mounu Prem, together with Felipe González, explore the fact that despite economic crises, incumbents often retain electoral support. In particular, they study Chile’s 1970-1973 infant nutrition program under Salvador Allende’s left-wing government and attribute this electoral resilience to the political returns of transfers during crises. The program provided milk to preschoolers, reducing infant mortality and bolstering electoral support despite hyperinflation and economic hardship. Using administrative data, surveys, and variation in crisis severity, they show transfers had greater political returns in areas most affected by the crisis. Survey evidence suggests voters swayed by transfers did not blame the government for the crisis. Their findings highlight how transfers and crisis perceptions sustain electoral popularity.
