Shawn A. Cole

This paper evaluates the role of mobile phone-based advice in improving managerial practices of small-scale cotton farmers in Gujarat, India.  Demand for the service, “Avaaj Otalo,” is strong, even among farmers with very low levels of education. The service dramatically alters farmers information acquisition behavior, with connected farmers relying less on other farmers and agricultural input dealers. Management practices improve: we observe an increase in the adoption of more effective and less toxic pesticides, and farmers plant cumin, a profitable but risky crop, earlier in the season. Farmers appear willing to follow advice without understanding why the advice is correct: the average respondent does not demonstrate improved agricultural knowledge

This paper uses a series of experiments with commercial bank loan officers to test the effect of performance incentives on risk-assessment and lending decisions. We first show that, while high-powered incentives lead to greater screening effort and more profitable lending, their power is muted by both deferred compensation and the limited liability typically enjoyed by credit officers. Second, we present direct evidence that incentive contracts distort judgment and beliefs, even among trained professionals with many years of experience. Loans evaluated under more permissive incentive schemes are rated significantly less risky than the same loans evaluated under pay-for-performance.

Using rainfall, public relief, and election data from India, we examine how governments respond to adverse shocks and how voters react to these responses. The data show that voters punish the incumbent party for weather events beyond its control. However, fewer voters punish the ruling party when its government responds vigorously to the crisis, indicating that voters reward the government for responding to disasters. We also find evidence suggesting that voters only respond to rainfall and government relief efforts during the year immediately preceding the election. In accordance with these electoral incentives, governments appear to be more generous with disaster relief in election years.  These results describe how failures in electoral accountability can lead to suboptimal policy outcomes.

Shawn Cole regularly teaches executive education. He has taught in the ACCION microfinance in the HBS-ACCION Microfinance Program on Strategic Leadership, Develop India, Real Estate Executive Seminar, and the program on Consumer Financial Services.

This course, intended for second-year PhD students in economics and related fields, is taught by Michael Kremer, Phillippe Aghion, and Shawn Cole.

Part I (Kremer) of the course will cover macro-economic topics including aggregate and non-aggregate growth models, models of technology diffusion and choice, and population growth, as well as cultural factors (e.g. reputation, trust, and social norms) affecting economic development.

Part II (Aghion) will be a selection of topics related to economic growth, among them club convergence, trade, competition, volatility, education, health, and the environment.

Part III (Cole) of the course is intended to bring students to the forefront of research on finance in emerging markets. Topics will include the relationship between financial development and economic growth, consumer finance; small and medium enterprise finance; debt and equity markets; the role of management and corporate governance; the political economy of finance, and corruption.

This is an investing/finance course, designed to build on skills introduced in the RC finance course, but with an emphasis on how and whether investors should incorporate what have traditionally been considered “non-financial” criteria in their decisions: for example, climate risk, environmental sustainability, minority representation on boards, and even the potential to create social good. Covering both public and private markets, the course will present rigorous approaches to business model assessment, valuation, transaction structuring and exits, as well as equity selection and portfolio construction. The course also explores incentives, decision-making, and the crucial problems and opportunities within the industry itself.

This course is geared toward students interested in working in the investment industry - whether directly, as an asset manager/investor, advisor or private individual, or indirectly as an entrepreneur or operator receiving investment capital. We will emphasize practical skills, including pitching stocks, performing diligence, measuring impact, and evaluating portfolio performance.

This course will be differentiated from other excellent offerings at HBS by focusing on the intersection of investing/finance and key global challenges, guided for example by the Sustainable Development Goals, including climate, gender equality, and poverty reduction. Emphasis will be placed on the analytical tools needed to understand the financial perspective and make investing decisions; however, students will also be learn to rigorously assess investments in the context of non-financial objectives. Investing - Risk, Return, and Impact is a finance course, which could be taken on a stand-alone basis or as a complement to Private Equity Finance, VC/PE, and Entrepreneurial Finance, Investment Management or Investment Strategies.