News and Announcements

  • Subsidies Key in Improving Sanitation, New Study Finds

    Apr 16/15 | Announcement | 
     
     
    April 16, 2015, NEW HAVEN, CT – With poor sanitation estimated to cause 280,000 deaths per year worldwide, improving sanitation is a key policy goal in many developing countries. Yet governments and major development institutions disagree over how to address the problem. A new study released in Science today found that in Bangladesh, a community-motivation model that has been used in over 60 countries to increase use of hygienic latrines had no effect, yet latrine coverage expands substantially when that model is combined with subsidies for hygienic latrines targeted to the poor. 
     
    The study, led by Raymond Guiteras of the University of Maryland and James Levinsohn and Mushfiq Mobarak of Yale University, and implemented by Innovations for Poverty Action, tested three different approaches that are commonly used in the development sector for increasing the use of hygienic latrines.  Reducing open defecation, which is still practiced by 15 percent of the world’s population, is a key policy goal for this sector. The study took place in northwest Bangladesh, in an area where 50 percent of the population had access to a hygienic latrine before the study began.
     
    “While there is general agreement among development professionals and institutions about the importance of improving access to hygienic latrines, there is still vigorous debate about the most cost-effective ways to achieve this.” said Mobarak. “Is the problem a lack of cash, or is the problem an absence of strong community norms against open defection? Even when households are willing to pay for hygienic latrines, does lack of access to toilet components or lack of information about quality or installation methods impede adoption?”
     
    Researchers randomly assigned 380 neighborhood communities, or 18,254 households total, to one of four groups. Villages either received a community motivation program, subsidy vouchers with the community motivation program, information and technical support, or none of the above. By comparing outcomes in latrine coverage, investment in hygienic latrines, and open defecation between the groups over time, researchers were able to compare the effect of the different approaches.
     
    The subsidy vouchers, which were only provided to a random subset of households in the second group through a public lottery, could be redeemed for a 75 percent discount on available models of latrines, priced (after subsidy) from $5 to $12. The households were responsible for their own transportation and installation costs, and the richest 25 percent of households were not eligible for vouchers.  
     
    The community motivation program, called the Latrine Promotion Program (LPP), was modeled after “Community-Led Total Sanitation”, which focuses on behavioral change and community mobilization in eliminating open defection. Such programs have been implemented in over 60 countries worldwide.
     
    Researchers found that the community motivation model alone did not significantly increase adoption of hygienic latrines or reduce open defection relative to the comparison group, nor did providing information and technical support to community members.
    However, the subsidy had substantial effects when coupled with the community motivation program, increasing hygienic latrine coverage by 22 percentage points among subsidized households and 8.5 percentage points among their unsubsidized neighbors.
    This suggests that latrine investment decisions are inter-linked across neighbors, and that there are positive effects on others of subsidizing even a few households. People were more likely to invest if more of their neighbors received vouchers, pointing to a virtuous cycle where adoption of improved latrines spurs further adoption.
     
    Adding subsidies to the community motivation model also reduced open defection rates by 22 percent among adults in villages that received subsidies (including households that did not receive subsidies), relative to the comparison group.
     
    These results counter the concern among many development practitioners that subsidies undermine intrinsic motivation. Rather, this research shows price is a primary barrier, which is consistent with a growing body of research on adoption of health products.
     
    “These results have particularly important implications in densely populated developing countries, such as India and Bangladesh, where sanitation coverage is low and the public health consequences are high,” said Annie Duflo, Executive Director of Innovations for Poverty Action. “The study also teaches us about how to conduct ‘smart subsidy’ policy, allocating subsidies in a way that maximizes the chances of behavioral changes among neighbors. Given how widespread the community motivation model is, the results of this study can help the sector allocate funds more efficiently,” Duflo said.
     
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    Contacts:
     
    Heidi McAnnally-Linz, Innovations for Poverty Action, 203-974-2976, hlinz@poverty-action.org
     
    Sophie Beauvais, The Abdul Latif Jameel Poverty Action Lab (J-PAL), 617-324-4498, sbeauvai@mit.edu
     
    Innovations for Poverty Action (IPA)is a research and policy non-profit that discovers and promotes effective solutions to global poverty problems. IPA brings together researchers and decision-makers to design, rigorously evaluate, and refine these solutions and their applications, ensuring that the evidence created is used to improve opportunities for the world’s poor. www.poverty-action.org.
     
    The Abdul Latif Jameel Poverty Action Lab (J-PAL)was established in 2003 as a research center at MIT’s Department of Economics. Since then, it has built a global network of 117 affiliated professors and regional offices in Africa, Europe, North America, South Asia, South East Asia, and Latin America and the Caribbean. J-PAL’s mission is to reduce poverty by ensuring that policy is informed by scientific evidence. It does this by working with governments, non-profits, foundations and other development organizations to conduct rigorous impact evaluations in the field, policy outreach to widely disseminate the lessons from research, and building the capacity of practitioners to generate and use evidence. Over 200 million people have been reached by the scale-up of programs evaluated by J-PAL and found to be effective. Find J-PAL on Twitter, Facebook, LinkedIn, and YouTube.
     
  • IPA, randomized controlled trials and researcher Lori Beaman in Burkina Faso news

    Apr 09/15 | From the newsroom | 
     
    Burkina Faso's Tribune profiles PI Lori Beaman and the role of randomized controlled trials in development using the project Agricultural Microfinance in Mali as an example. Full article here (PDF, in French).
  • IPA & J-PAL Microcredit research in Fast Company

    Mar 10/15 | From the newsroom | 

    Fast Co Exist, discusses IPA and J-PAL's recent roundup of the latest microcredit research in their article "Does Microfinance Actually Work?" You can read the bulletin summarizing the research here (PDF), and find a summary of the recent event at the World Bank with CGAP, including with a link to the video, on our blog here.

  • Rebuilding after Ebola

    Feb 06/15 | From the newsroom | 
    The development news site DevEx discusses rebuilding West African economies after Ebola, referencing IPA's work studying the disease's economic impact. Read more about IPA's work to support the response to Ebola here, and more on the crucial role of good data in crisis reponse by IPA researchers in the New York Times here.
  • IPA researchers in on Ebola and data in the New York Times

    Jan 30/15 | From the newsroom | 

    In the New York Times, IPA researchers Rachel Glennerster and Tavneet Suri of MIT, and Herbert M'Cleod of the International Growth Centre write about the critical role of good data in fighting Ebola. They compare the numbers found by IPA and other researchers with the misinformaiton often repeated by government officials or media. Glennerster adds a piece cut from the op-ed on her blog, about the agriculture crisis that wasn't, where IPA's data showed food price stability, in contrast with popular reports.

  • IPA, J-PAL, and IADB at Paraguay Finance Ministry

    Jan 23/15 | From the newsroom | 

    IPA, together with J-PAL and the Inter-American Development Bank recently held a workshop with Paraguay’s Ministry of Finance. Staff from different areas of government worked with researchers and staff to learn the basics of impact evaluations. You can read about it on the Ministry’s site here, as well as in Ultima Hora, and here.

  • Microcredit does not live up to promise of transforming lives of the poor, six studies show

    Jan 21/15 | Announcement | 
     
    January 22, 2015, NEW HAVEN, CT - Microcredit—providing small loans to underserved entrepreneurs—has been both celebrated and vilified as a development tool. Six new studies from four continents bring rigorous evidence to this debate, finding that while microcredit has some benefits, it is not a viable poverty alleviation tool.
     
    The studies, conducted by researchers affiliated with Innovations for Poverty Action (IPA) and The Abdul Latif Jameel Poverty Action Lab (J-PAL), conclude that while microloans can increase small business ownership and investment, the small, short-term loans generally do not lead to increased income, investments in children’s schooling, or substantial gains in women’s empowerment for poor borrowers.
     
    “The studies do not find clear evidence, or even much in the way of suggestive evidence, of reductions in poverty or substantial improvements in living standards. Nor is there robust evidence of improvements in social indicators,” the introductory paper to the studies reads.
     
    The six studies, conducted independently in Bosnia and Herzegovina, Ethiopia, India, Mexico, Mongolia, and Morocco, and released in the American Economic Journal: Applied Economics, followed over 37,000 individuals in total. Across all six studies, researchers conducted randomized evaluations in which one group of potential borrowers received access to microcredit, while the other group received no such offer. By comparing outcomes between these two randomly chosen groups, researchers were able to identify the effect of expanded access to microcredit on business activity, financial behavior, and household welfare. The results showed modest, but not transformative, improvement in the lives and financial well-being of individuals one to four years after they accessed microloans.  
     
    All studies found some evidence of expanded business activity, but these investments did not often result in significant increases in profits. In Mexico, for example, where Innovations for Poverty Action (IPA) followed over 16,000 households, those with access to the loans showed increased business revenue and costs, but these did not translate into increased profits or income. In general, microcredit had mixed effects on household income and consumption.
     
    In some instances, however, microcredit did afford people more freedom in how they earn and spend money. In Morocco, borrowers cut back on wage labor as business sales and profits improved. In Mexico, microcredit helped women avoid selling assets to pay off debts.
     
    Results from all six studies show little support for the assumption that microloans, which are often offered to women, increase women’s empowerment or investment in their children’s education. Researchers found in Morocco, for example, that the loans made no difference in the chances of children being enrolled in school or on a number of women’s empowerment measures.
     
    Economist Esther Duflo of the Massachusetts Institute of Technology, a co-founder and co-director of J-PAL, co-author of the India and Morocco studies, and founding editor of the American Economic Journal: Applied Economics, said, “These loans do help, but the changes are not transformative, certainly not transformative enough to justify charitable donations to the standard microcredit model. We have seen, though, that these are viable profit-making products, and so investors interested in a double-bottom line should take note.” Duflo suggests researchers and non-profits focus their attention on other approaches for financial inclusion for the poor.
     
    “We must think beyond the standard microcredit model. Modern microfinance—savings and insurance, and more flexible credit products—often has generated larger impacts than simple credit,” said economist Dean Karlan of Yale University, founder of Innovations for Poverty Action, and chair of finance at J-PAL, who co-authored the Mexico study. “Financial services can make important differences in people's lives, but we need more innovation and evidence to determine what is best to do, and meanwhile we should set our expectations appropriately,” Karlan said.
     
    --
     
    Contacts:
     
    Heidi McAnnally-Linz, Innovations for Poverty Action, 203-974-2976, hlinz@poverty-action.org
     
    Sophie Beauvais, The Abdul Latif Jameel Poverty Action Lab (J-PAL), 617-324-4498, sbeauvai@mit.edu
     
    Innovations for Poverty Action (IPA) discovers and promotes effective solutions to global poverty problems. IPA designs, rigorously evaluates, and refines these solutions and their applications together with decision-makers to ensure that the evidence created is used to improve opportunities for the world’s poor. In the ten years since its founding IPA has worked with over 250 leading academics to conduct over 400 evaluations in 51 countries.
     
    The Abdul Latif Jameel Poverty Action Lab (J-PAL) was established in 2003 as a research center at MIT’s Department of Economics. Since then, it has built a global network of 113 affiliated professors and regional offices in Africa, Europe, North America, South Asia, South East Asia, and Latin America and the Caribbean. J-PAL’s mission is to reduce poverty by ensuring that policy is informed by scientific evidence. It does this by working with governments, non-profits, foundations and other development organizations to conduct rigorous impact evaluations in the field, policy outreach to widely disseminate the lessons from research, and building the capacity of practitioners to generate and use evidence. Over 200 million people have been reached by the scale-up of programs evaluated by J-PAL and found to be effective. Find J-PAL on Twitter, Facebook, LinkedIn, and YouTube.
     
    About the Authors: Manuela Angelucci, University of Michigan; Orazio Attanasio, University College of London; Britta Augsburg, Institute for Fiscal Studies; Abhijit Banerjee, Massachusetts Institute of Technology; Bruno Crépon, Centre de Recherche en Économie et Statistique; Ralph De Haas, European Bank for Reconstruction and Development;Florencia Devoto, Paris School of Economics; Jaikishan Desai, Victoria University of Wellington; Esther Duflo, Massachusetts Institute of Technology; Emla Fitzsimons, Institute for Fiscal Studies; Rachel Glennerster, Abdul Latif Jameel Poverty Action Lab; Heike Harmgart, European Bank for Reconstruction and Development; Kristin Johnson, Metropolitan State University of Denver; Dean Karlan, Yale University; Cynthia Kinnan, Northwestern University; Costas Meghir, Yale University; William Parienté, Université Catholique de Louvain; Alessandro Tarozzi, Universitat Pompeu Fabra;  Jonathan Zinman, Dartmouth College

     

  • Malawi Business Times on how to help farmers save more

    Dec 30/14 | From the newsroom | 
    Malawi’s Business Times features IPA Researcher Jessica Goldberg, of the University of Maryland, and Chief Program Officer Jessica Kiessel, from a recent IPA conference on achieving better banking in Malawi. The article describes an IPA study conducted by Goldberg, along with Xavier Giné and Dean Yang designed to encourage farmers to save more of their harvest profits for the next planting. The project, described here, found that offering direct deposits, with sales profits to be automatically deposited in bank accounts significantly increased how much farmers saved, and subsequent spending and yields in the following harvest. The full article is here.
  • Dean Karlan's Charitable Giving Tips in Project Syndicate

    Dec 26/14 | From the newsroom | 
    IPA Founder Dean Karlan shares his perspective on how to be an effective charitable giver in Project Syndicate. Among other things, he discusses why to think about charitable giving goals like dieting goals, how to create smart ones, and how to stick to them. He also explains how smart givers create an investment “portfolio” of charities aligned with their goals, and offers some of his charities of choice who run evidence-based programs. Read the full piece here.
  • Vox's holiday giving guide features IPA & evidence-based charities

    Dec 23/14 | From the newsroom | 
    Writing for news site Vox.com, Dylan Matthews gives their holiday charity recommendations, formed around the kind of evidence produced by IPA and its partners. He discusses deworming, free distribution of bednets, and direct cash transfers, among others. Crucially, he points out what he calls "meta charities" like IPA and GiveWell, that channel other efforts efficiently, can return more than a dollar for each dollar invested. Read the full piece here.

     

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