News and Announcements
Armed with data, an MIT lab offers fresh insight on some of the world’s most vexing problems
IPA's partner organization, J-PAL, is featured in the Boston Globe highlighting IPA Research Affiliates Esther Duflo and Abhijit Banerjee. Paired with an interesting infographic, the article brings more attention to evidence-based development and research that has followed the publication of Duflo and Banerjee's Poor Economics.
It’s no one’s idea of an MIT laboratory: not a beaker or an oscilloscope in sight. But in a wood-paneled suite, on the third floor of a bland, concrete building, researchers are tackling problems as complex and vexing as any in technology, science, or medicine.
This is the Abdul Latif Jameel Poverty Action Lab, or J-PAL, where economists through precise, detailed studies are trying to find ways to alleviate poverty. For nearly a decade, MIT economics professors Esther Duflo, and Abhijit Banerjee, have worked with a global network of researchers to conduct experiments in the world’s poorest places - where families live on less than $1 day - and reached conclusions that are changing the way economists and policy makers think about development in impoverished areas.
The findings are contained in their new book, “Poor Economics,’’ which earlier this month won the Financial Times and Goldman Sachs Business Book of the Year Award for “the most compelling insight . . . into modern business issues.’’ In the book, the MIT professors argue that antipoverty policies must be built on evidence from careful, controlled tests that detail how the poor live, act, and react.
Duflo and Banerjee came to the study of global poverty from very different starting points. To Duflo, who grew up in a comfortable, academic family in France, global poverty was a remote abstraction. For Banerjee, abject poverty was as close as the ramshackle houses behind his childhood home in Calcutta. They met at MIT when Duflo, as a student, took a course in development economics from Banerjee. After Duflo earned her doctorate in 1999 and joined the MIT faculty, the two founded the Poverty Action Lab in 2003.
Since then Duflo, 39, and Banerjee, 50, have received multiple honors and prizes. In 2010, Duflo was awarded the prestigious John Bates Clark Medal for the best American economist under 40. The year before, she received a MacArthur Fellowship, the so-called genius award.
What inspires their interest in poverty, Banerjee explained, is the idea that the poorest people must deal with different conditions than the rest of the world’s population.
From DevEx News: USAID's Chief Innovation Officer, Maura O'Neill, wrote an informative article on using innovation and systematic research to create sustainable development solutions, using IPA's Safe Water Program, specifically the Chlorine Dispenser project in Kenya, as an example.
Read the full text below or click here to open a window with the original article.
A few miles outside of Busia in Western Kenya, Carol Nekesa brings us out to a small village that is enjoying a regular supply of clean water for the first time. Next to the stream where the villagers regularly fill up their containers of water, a chlorine dispenser has been installed.
For years, we have known that adding a little bit of chlorine to water can kill the bacteria that make people sick. And getting sick from bad water can too often turn fatal for people already ravaged by disease.
But until recently, only 10 percent of Kenyan families have been using chlorine. Why was that and how could that change? Carol, a Kenyan from Busia, was part of a team that was pioneering not just a particular solution, but a systematic method for creating more cost-effective solutions again and again.
As the OECD Development Assistance Committee holds the Fourth High Level Forum on Aid Effectiveness in Busan, South Korea, at the end of this month, we all seek better answers to “what works” in the fight against poverty. How can we uncover what people really will use to lift themselves out of extreme poverty and debilitating disease instead of what others think they need? How do we source and deploy solutions faster and cheaper? And how do we discover innovative ways to finance them?
Official Development Assistance as cataloged by DAC is now over $128 billion dollars a year. We need to be as prudent as possible with the U.S. taxpayer’s dollars and also leverage private investment. Net private capital flows to developing countries were as high as $1.1 trillion in 2007, according to the World Bank. While up from $152 billion, in just six years, with the global downturn, private investment was down in 2009 but still a big number: $598 billion. With our economic climate and the stakes as high as they are for so many in desperate poverty, we need to leverage every dollar as effectively as we can to deliver development results. We need to test what works — not just what products or services yield the highest impact for the lowest cost, but also what business or public sector deployment models allow for sustained impact.
Let’s return to Carol. She is the Kenya deputy country director for Innovations for Poverty Action, a nonprofit group whose members include some of the world’s foremost development economists. It is an organization dedicated to researching what works to fight poverty. Carol is part of a team of 500 researchers and practitioners in 40 countries that use tried and true methods pioneered by pharmaceutical researchers and adapted by leading economists to systematically test development solutions. As IPA researchers sought to improve chlorine uptake in Kenya, they considered adding chlorine to piped water like we do in most U.S. cities.
But Kenya’s desire to bring piped water to its 40 million people has far outstripped its financial and institutional abilities to do so in the last decade. Waiting for this infrastructure means millions of Kenyans would suffer from stunted growth or die in the meantime.
Researchers tried selling or giving away small bottles of chlorine so that people could add a little to their water jug. But people used the chlorine once or twice and the bottles then just decorated the shelf. It was only when researchers installed a dispenser right at the water hole that they saw terrific, persistent results. IPA manufactured the device in Kenya with a special valve imported from Minnesota. The dispenser capital costs (US$1 per person) were a tenth of the piped costs, with annual operating costs (30 cents U.S. per person) much less as well.
Suddenly, clean water for millions in rural East Africa could become a reality in the next decade if we figure out a sustainable financing model for scaling.
This article was originally published on DevEx's website on November 21.
- Nov 18/11 | Announcement |
New Haven, CT, USA:
Innovations for Poverty Action (IPA) today announced the appointment of Annie Duflo to the position of Executive Director. Ms. Duflo replaces Dean Karlan, who will remain as President of IPA.
Ms. Duflo’s appointment comes at a time of transition for IPA. The research organization began in 2002 as a small group of like-minded researchers, and has since become a global leader in the effort to evaluate anti-poverty programs and identify and scale those that truly help the world’s poor. Today, IPA has more than 500 employees and more than $25 million in annual income. Ms. Duflo will provide the professional management and leadership necessary for an organization of IPA’s size and scope. With this appointment, Ms. Duflo will take over day-to-day operations and implementation of IPA’s strategic plan.
“As the outgoing Executive Director, I am thrilled with Annie’s appointment to this role,” says Mr. Karlan. “She has the skills, expertise, and vision to lead this organization as it enters its next phase, and I look forward to continuing to work with her to ensure that IPA continues to grow and to be a leader in the field.”
Prior to this appointment, Ms. Duflo served as IPA’s Vice President and Research Director, a role she held since 2008. During her tenure, IPA more than doubled its income, its field research staff and its network of research affiliates.
“Annie has made a major contribution to our research capacity,” says Delia Welsh, Managing Director at IPA. “We can run far more projects now at the same level of quality than we ever could because she thought through what we needed in terms of staff training and professional project management, and then put together the resources needed to accomplish it. That was all her.”
At IPA, Ms. Duflo has played a key role in scaling up programs that have been tested and proven to bring significant development impact. She made a major contribution to scaling up educational interventions in Ghana, among other achievements. In 2009, Ms. Duflo began working in Ghana to help the West African government adapt an education program pioneered by Indian education nonprofit Pratham. Together with former IPA board member Wendy Abt, Ms. Duflo brought together a group of stakeholders to convince the Ghanaian teachers union and the Ministry of Education to test the program there, and she engaged funders to support the effort. Due to her vision, advocacy, and fundraising, the Ghana’s Teacher Community Assistant Initiative launched in 2010.
“Annie has an amazing ability to get diverse groups of people with very different priorities and understandings of the project to work together, while never losing sight of the overall scientific objectives,” says Abhijit Banerjee, Professor of Economics at MIT, Director at JPAL and IPA Research Affiliate.
Kentaro Toyama, a researcher at UC Berkeley and IPA board member says, “Once in a while, you get a providential match between the person and the position. Annie’s appointment as Executive Director is just that. Her formal qualifications are a terrific fit, of course, but what impresses me is her ability to quickly establish both respect and rapport with the full range of people that IPA works with.”
Prior to joining IPA, Ms. Duflo was the Executive Director of the Centre for Microfinance (CMF) at the Institute for Financial Management and Research (IFMR) in Chennai, India, which she joined at its founding. Ms. Duflo has also served as a consultant for the World Bank advising on the role of NGOs and MFIs in implementing a new health insurance scheme for poor households in India, and has also worked for two large NGOs, Seva Mandir and Pratham. Ms. Duflo holds a Master of Public Administration and International Development from Harvard University’s John F. Kennedy School of Government, a Diplôme d’études approfondies (Master) in Social Sciences from EHESS (Ecole des Hautes Etudes en Sciences Sociales)/ENS (Ecole Normale Supérieure) in Paris, and two BA degrees, in German Studies and Philosophy, from University Paris X.
Innovations for Poverty Action is a nonprofit organization dedicated to discovering what works to help the world’s poor. The organization designs and evaluates programs in real contexts with real people, and provides hands-on assistance to bring successful programs to scale. For more information, visit www.poverty-action.org or email email@example.com.
Emily Brandon at US News cites a 2003 study by IPA Research Affiliate Esther Duflo with colleague Emmanuel Saez, in describing how colleagues have been shown to influence people's plans for their retirement investment and savings:
Earlier research has shown that your colleagues may also influence whether you sign up for the 401(k) plan or attend a 401(k) education seminar. One study offered a randomly selected subset of employees who were not yet enrolled in their company's retirement account $20 to attend a benefits information fair. Among those who were offered the financial incentive, 28 percent attended, while only 5 percent of employees who worked in departments in which no one was offered a monetary reward attended. Interestingly, employees who were not offered a financial incentive but who worked in the same department as someone who was offered a reward had a 15.1 percent attendance rate for the seminar, perhaps because their peers receiving the reward influenced them to attend.
"An employee who sees colleagues receiving the inducement letter might be reminded of the fair and be led to think that this is an important event worth rewarding employees for attending and thus might decide to attend herself," write Esther Duflo of the Massachusetts Institute of Technology and Emmanuel Saez of the University of California - Berkeley in the 2003 study of 6,200 university staff employees. "Individuals who receive the letter and decide to go to the fair might ask their colleagues to join them."
A year later, the retirement-plan enrollment rates in departments in which some employees received the financial incentive were about 1.25 percentage points higher than in departments in which no reward was offered for attendance. But the sign-up rate was not significantly higher among people who received the reward themselves than among those who worked in a department where someone else received the $20 incentive. "Social-network effects definitely caused some people to take steps which ultimately led them to change their tax-deferred account participation decision," the researchers found. "Our experiment induced 50 extra employees to start contributing to the tax-deferred account."
Read the full article here.
A joint initiative between a local New Haven bank and IPA, with the help of IPA's partner student advocacy group Students for Proven Impact, has been generating some buzz in the media. The "Loot Camp", a financial training program for at-risk students, is the project of Lynn Smith, Senior Vice President at Start Community Bank, "a full-service bank [that] also works to improve financial access in New Haven by lending to local businesses, homebuyers and non-profits while offering financial education and support to low-income or at-risk individuals."
Highlights from the article:
...Last summer, Smith took her "Loot Camp" to the Youth@Work (Y@W) program, which offers part-time summer jobs to 14 to 21 year olds in New Haven who might face socio-economic and academic challenges. Now, with the help of a few Yale students and an international non-profit, she's trying something that's never been successfully done. She's trying to track whether or not financial education actually works.
The students Smith reaches out to, she said, may have never thought about a checking account, or may not know what credit means. "They have to learn things that many of us take for granted."
The core of her curriculum is saving, Smith said. "It's about knowing the difference between want and need--knowing what money really is," she said.
By the end of the summer, of the 167 students with accounts, 40 percent saved more than $300. "We did use a little bit of behavioral economics," Smith said. They raffled off an iPad 2 for those who saved the most.
Then Smith saw a further opportunity -- to track effectiveness of those literacy classes and the account.
"We still don't know two years out, five years out, 20 years out, whether they have better credit scores, whether they're better savers, or whether they borrow less money," she said.
Smith got in touch with Rebecca Rouse [Project Coordinator] at Innovations for Poverty Action in New Haven.
"As far as we're aware, there really aren't any rigorous quantitative evaluations that say 'Yes, financial education programs do lead to behavior change,'" Rouse said. "It's a really hard thing to evaluate."
START and IPA hope to conduct that kind of formal, long-term trial including a control group--kids with no savings account--and a treatment group--those who opt to go for the account.
"And then we track outcomes after time. Is the treatment group managing money better, do they accumulate more savings? Pay less in check cashing fees? Or is it the control group exactly same?" said Rouse.
Besides being featured in the CT Mirror, the upcoming evaluation was further covered in Your Public Media, a CT-based public media venture:
The goal is a 12-18 month trial starting next summer, tracking how students fare after Loot Camp with a savings account for beginners. [...] Smith hopes to have an initial, exploratory survey done before the Thanksgiving break.
- Nov 08/11 | From the newsroom |
The SME Initiative is hosting its Annual Conference on Wednesday, November 30 at the Inter-American Development Bank in Washington, DC. The conference provides an opportunity to present results from some of the most current research on Entrepreneurship and SME Development in emerging markets to a broad stakeholder group of researchers, practitioners and policymakers. The conference will begin with a brief presentation on “What we know about SMEs and Development.” Three sessions will follow focusing on Access to Managerial Human Capital, Access to Finance, and Job Creation. The conference will conclude with a panel discussion entitled: Why should we care about the “Missing Middle”?
Confirmed Presenters include:
- Nick Bloom, Stanford University
- Dean Karlan, Yale University
- David McKenzie, World Bank
- Philipp Schnabl, NYU-Stern School of Business
- Antoinette Schoar, MIT-Sloan School of Management
- Chris Woodruff, Warwick University
*Include full name and organization in RSVP.
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