In addition to his academic appointments,Karlan is also a social entrepreneur,having founded several organizations leveraging insights from development economics and behavioral science.
StickK.com
During graduate school,Karlan entered into a bet with fellow student John Romalis,agreeing to pay his peer $10,000 if he did not lose at least 38 pounds by a pre-determined date.[10] The bet was conceived as a commitment mechanism,encouraging both parties to act in their own self-interest by aligning their dietary goals with their financial incentives.[10] The experience encouraged Karlan and Ian Ayres,a lawyer and economist at Yale University,to found StickK.com,an internet company allowing users to enter into legally binding agreements relating to their own personal goals.[11] The company is based on two related principles from behavioral economics:time inconsistency,i.e. when individuals make decisions inconsistent with the wishes of their future selves,and loss aversion:individuals' often strong negative emotional response to even small losses.[11]
StickK was founded in 2008[10] with $150,000 in seed funding from its founders:Karlan,Ayres,and Jordan Goldberg,then an MBA student at Yale University.[12] The company subsequently raised two rounds of additional funding totaling over $2 million.[13] By September 2009,the platform had 42,000 registered users and been used to create 28,000 contracts.[13]
Research
Karlan's research focuses on the areas of development economics,behavioral economics and international development policy. He has studied microeconomic issues of financial decision-making,specifically employing randomized controlled trials (RCTs) to examine what works and what does not and why with respect to interventions and businesses intended to address problems in society. Internationally,he focuses on microfinance,and domestically he focuses on voting,charitable giving,and commitment contracts.
In microfinance,Karlan has studied the following topics:interest rate policy,credit evaluation and scoring policies,entrepreneurship training,group versus individual liability,savings product design,credit with education,and impact from increased access to credit and savings.[14] His work on savings and health typically uses insights from psychology and behavioral economics to design and test specialized products.[15]
Karlan has published extensively "Graduation" programs,a set of anti-poverty programs which provide a multifaceted,complementary set of interventions including a productive asset,training,coaching,access to savings,consumption support and in some cases mental health treatment.[16] A six-country study found that these programs cause lasting progress out of poverty for the very poor.[17]
Karlan's research intersects with effective altruism,and many of the development interventions recommended by effective altruist organizations such as GiveWell and The Life You Can Save are based on studies conducted by Innovations for Poverty Action.[23] Karlan has studied and written about how to increase the quality and quantity of giving. His research has shown that nonprofits with high overhead rates are extremely rare,[24] that cost-effectiveness information can increase donations[25] and that a match from a high-profile organization (in this case,The Bill &Melinda Gates Foundation) can increase donations.[26]
Karlan co-founded ImpactMatters with Elijah Goldberg in 2015. ImpactMatters produced estimates of impact and corresponding ratings,and was acquired by Charity Navigator in 2020.[27]
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