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In order to evaluate the effect of a policy or treatment with pre- and post-treatment outcomes, we propose an approach based on a transition model, which may be applied with multivariate outcomes and accounts for unobserved heterogeneity. This model is based on potential versions of discrete latent variables representing the individual characteristic of interest and may be cast in the hidden (latent) Markov literature for panel data. Therefore, it can be estimated by maximum likelihood in a relatively simple way. The approach extends the difference-in-difference method as it is possible to deal with multivariate outcomes. Moreover, causal effects may be expressed with respect to transition probabilities. The proposal is validated through a simulation study, and it is applied to evaluate educational programs administered to pupils in the sixth and seventh grades during their middle school period. These programs are carried out in an Italian region to improve non-cognitive skills (CSs). We study if they impact also on students’ CSs in Italian and Mathematics in the eighth grade, exploiting the pretreatment test scores available in the fifth grade. The main conclusion is that the educational programs aimed to develop noncognitive abilities help the best students to maintain their higher cognitive abilities over time.

Despite extensive literature on peer effects, the role of peers on personality skill development remains poorly understood. We fill this gap by investigating the effects of having disadvantaged primary school peers, generated by random classroom assignment and parental migration for employment. We find that having disadvantaged peers significantly lowers conscientiousness, agreeableness, emotional stability, and social skill. The implied effects of a 10-15 percentage point change in the classroom proportion of disadvantaged peers are comparable to the effects of popular early childhood interventions. Furthermore, we find suggestive evidence that these effects are driven by the peers' personality skills.

Although a large literature highlights the impact of personality traits on key labor market outcomes, evidence of their impact on agricultural production decisions remains limited. Data from 1,200 Ghanaian rice farmers suggest that noncognitive skills (polychronicity, work centrality, and optimism) significantly affect simple adoption decisions, returns from adoption, and technical efficiency in rice production, and that the size of the estimated impacts exceeds that of traditional human capital measures. Greater focus on personality traits relative to cognitive skills may help accelerate innovation diffusion in the short term, and help farmers to respond flexibly to new opportunities and risks in the longer term.

A parallel of education with transformative processes in standard markets suggest that a more severe control of the quality of the output will improve the overall quality of the education. This paper shows a somehow counterintuitive result: an increase in the exam diffculty may reduce the average quality (productivity) of selected individuals. Since the exam does not verify all skills, when its standard rises, candidates with relatively low skills emphasized in the test and high skills demanded in the job may no longer qualify. Hence, an increase in the testing standard may be counterproductive. One implication is that policies should emphasize alignment between the skills tested and those required in the actual jobs, rather than increase exams’ diffculty.