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The pricing and advertising of tied add-ons and overages have come under increasing scrutiny. Working with a large Turkish bank to test SMS direct marketing promotions to 108,000 existing holders of “free” checking accounts, we find that promoting a large discount on the 60% APR charged for overdrafts reduces overdraft usage. In contrast, messages mentioning overdraft availability without mentioning price increase usage. Neither change persists long after messages stop, suggesting that induced overdrafting is not habit-forming. We discuss implications for interventions to promote transparency in pricing and advertising, and for models of shrouded equilibria, limited attention, and salience.
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Working Paper
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January 20, 2016
Working Paper
Automatic payroll deductions represent one of the most effective means of increasing savings in developed countries. We design and experimentally evaluate a mobile phone-based automatic payroll deduction system in Afghanistan, a country with limited formal financial infrastructure. We find that employees initially assigned a default contribution rate of 5 percent are 40 percentage points more likely to contribute to the account than individuals assigned to a default contribution rate of zero. We also randomize employer matches, and estimate that a 50% match would be required to replicate the default effect through financial incentives alone. To better understand why the default effect is so pronounced, we conduct several additional experimental interventions designed to induce employees to make a non-default selection, and use behavioral protocols to elicit measures of time inconsistency. We conclude that the effect of default assignment is driven largely by dynamic inconsistency, and...
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Working Paper
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December 10, 2015
English
Financial products and transfer schemes are often designed to help individuals follow through intertemporal plans by not giving into “temptation”. We implement an artefactual field experiment in Malawi to test the ability of households to manage a cash windfall and learn whether savings defaults and delayed payments change consumption patterns in ways that are likely to be welfare improving. We vary whether 600 households receive a windfall payment in cash or through direct deposit into pre-established accounts at a local bank, and whether payments are made immediately, with one day’s delay, or with eight days’ delay. Defaulting the payment into a savings account leads to higher bank savings, an effect that persists for a number of weeks afterwards. However, neither savings defaults nor payment delays affect the amount or composition of spending, suggesting that households manage cash effectively without the use of formal financial products.
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Working Paper
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December 07, 2015
English
In the Philippines, we have continued our global tradition of rigorous, applicable research by building foundational research capacity and conducting evaluations in areas of pressing national concern. Two completed evaluations offer promising insights into everyday issues that affect the lives of the Filipino poor.
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Brief
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December 01, 2015
English
Experimental tests of microcredit programs have consistently failed to find effects on business and household income. Does the current microfinance model and targeting of clients miss important effects from finance? I present results of a randomized experiment with microenterprise owners in Uganda that sought to expand access to finance for men and women who generally did not qualify for finance under normal circumstances with the goal of inceasing business profits and employment. Participants were offered either capital with repayment (subsidized loans) or without (grants) and were randomly chosen to receive or not receive business skills training in conjunction with the capital. Consistent with existing literature, I find no effect for female enterprises from either form of capital or the training. However, I find large effects for men with access to loans combined with training. There is no effect for men or women from the grants, suggesting repayment requirements can increase the l...
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Working Paper
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December 01, 2015
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Journals, research funders and research groups such as Innovations for Poverty Action are increasingly recognizing the value of research transparency. Research transparency includes pre-registering studies and sharing materials such as data and code to allow others to re-analyze the reported results. Proper data and code management during a project are essential for transparency after a project’s completion. They are also important for internal use, as projects often run for multiple years, with several staff members working on them sequentially. This guide outlines best practices in data and code management. The scope of the guide is to cover the principles of organizing and documenting materials at all steps of the project lifecycle with the goal of making research reproducible. The guide does not cover best practices in designing surveys, cleaning data or conducting data analysis. In each section, we explain the “what,” “why” and “how” of each recommended practice.
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Guideline
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November 30, 2015
Spanish
Las PyMEs son las mayores creadoras de empleo a nivel mundial, proporcionando—en promedio—más del 66 por ciento de todos los trabajos. Además, se cree que las PyMEs impulsan la innovación, la movilidad social, y la productividad. Sin embargo, las empresas en los países en desarrollo crecen menos que aquellas en países desarrollados debido a los obstáculos que las primeras enfrentan. Entre estos obstáculos se encuentran el escaso acceso al financiamiento, bajos niveles de capital humano y el limitado acceso a mercados. Estas restricciones limitan la contribución del sector a la creación de empleos y al desarrollo económico, lo que ha llevado a gobiernos, organizaciones sin fines de lucro y organismos internacionales a destinar miles de millones de dólares cada año en programas orientados a superar estas barreras. Desafortunadamente, aún existe poca evidencia sobre la capacidad de estos programas para destapar el potencial de crecimiento de las PyMEs. Read this brief in English here. 
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Brief
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November 27, 2015
English
To explain persistent gender gaps in market outcomes, a lab experimental literature explores whether women and men have innate differences in ability (or attitudes or preferences), and a separate field-based literature studies discrimination against women in market settings. We posit that even if women have innate ability that is comparable to that of men, their relative performance may suffer in the market if the task requires them to interact with others in society, and they are subject to discrimination in those interactions. We test these ideas using a large-scale field experiment in 142 Malawian villages where men or women were randomly assigned the task of learning about a new agricultural technology, and then communicating it to others to convince them to adopt. Even though female communicators learn and retain the new information better, and those taught by women experience higher farm yields, the women are not as successful at teaching or convincing others to adopt. Micro-data...
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Working Paper
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November 18, 2015
English
Financial access is critical for the growth of small and medium-size enterprises (SMEs). It allows entrepreneurs to innovate, improve efficiency, expand to new markets, and provide millions of jobs. Yet, in developing countries, the majority of SMEs are unable to acquire the financing they need to reach their potential. Financing SMEs in the developing world can be risky and expensive for lenders, leading to an estimated financing gap of one trillion USD (International Finance Corporation, 2011). To reduce the credit gap, financial institutions, governments, and donors invest in lending products and policies designed to provide SMEs with the financing they need to grow and innovate. However, the extent to which such programs effectively reduce the barriers to SME financing has generally not been rigorously measured. The SME Program at Innovations for Poverty Action (IPA) rigorously evaluates potential solutions and promotes the most efficient and cost-effective ways to expand access to...
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Brief
Date:
November 17, 2015
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In recent years, the influx of available consumer data has presented corporate firms, non-profit organizations, and governments alike with an opportunity to increase the efficacy and targeting of their products and services. The key to identifying what works is to build experimentation through randomized controlled trials (RCTs) into the process of designing new products and services. Running RCTs, however, is not always straightforward: there are a multitude of technical, analytical, and logistical hurdles that arise during the course of designing and implementing an RCT.  To this end, the US Finance Initiative at Innovations for Poverty Action has compiled best practices gleaned from years of experience running RCTs in the finance sector into a toolkit. The toolkit assumes a certain amount of technical knowledge and is intended for researchers, but details the often-neglected “softer” skills of managing an RCT, including the logistics of implementation and the interaction between the...
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November 10, 2015
English
This paper tests whether worrying about rainfall risk impairs farmers’ decision-making, through worse cognition. Behavioral theories predict that worries could impose a psychological tax on farmers, reducing the quality of their decisions and, in turn, leading to material consequences at all times and across all states of nature – even when negative rainfall shocks do not materialize down the line. Using a novel technology to run lab experiments in the field, we combine survey experiments and recent rainfall shocks to estimate the effects of worrying about rainfall risk on farmers’ cognition. We find that worries about rainfall increase farmers’ cognitive load and their susceptibility to a variety of behavioral biases. In theory, insurance could mitigate those effects by alleviating the material consequences of rainfall risk. To test this hypothesis, we randomly assign offers of an index insurance product, and find that it does not affect farmers’ worries about rainfall, cognitive load...
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Working Paper
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November 01, 2015
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Almost all firms in developing countries have fewer than 10 workers, with a modal size of one. Are there potential high-growth entrepreneurs, and can public policy help identify them and facilitate their growth? A large-scale national business plan competition in Nigeria provides evidence on these questions. Random assignment of US$36 million in grants provided each winner with approximately US$50,000. Surveys tracking applicants over three years show that winning leads to greater firm entry, more survival, higher profits and sales, and higher employment, including increases of over 20 percentage points in the likelihood of a firm having 10 or more workers.
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Working Paper
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October 28, 2015
English
IPA is all about leverage. 2014 was focused on bringing in more talented people and more extraordinary partners to leverage existing resources for more impact on the world. Together with our partners, IPA has designed and evaluated more than 275 potential solutions to poverty problems, and has over 245 studies in progress. This performance is a testament to the dedication of IPA staff, both on the ground in the field and in our headquarters, our implementing partners and researchers, the decision-makers who help put our findings to work, and our funders.  This year was particularly exciting in a number of ways. For example, we officially started operating in two new countries, Colombia and Tanzania, bringing our total number of country offices to 17. Download our annual report to read more out our work in 2014. Browse an online version of the report here: annualreport.poverty-action.org  
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Annual Report
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October 01, 2015
English
A multifaceted livelihood program that provided ultra-poor households with a productive asset, training, regular coaching, access to savings, and consumption support led to large and lasting impacts on their standard of living across a diverse set of contexts and implementing partners.
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Brief
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September 08, 2015
English
Innovations for Poverty Action (IPA) works to identify and rigorously evaluate innovative products and programs that enhance poor households’ access to and usage of improved financial services.
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Brief
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September 01, 2015
English
The Financial Services for the Poor Initiative supports research on innovations that help low-income households in the developing world access and benefit from formal financial services. We address outstanding questions on how to design and scale innovations to bring affordable and effective services within the reach of previously unbanked and underserved clients.
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Brief
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September 01, 2015
English
With the support of the Citi Foundation, the Financial Capability Initiative at IPA incubates, develops, and rigorously evaluates products and programs that improve the ability of the poor to make informed financial decisions and adopt healthy financial behaviors. The Initiative conducts tests and evaluations of innovative, product linked financial education interventions and financial products that aim to improve financial capability.
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Brief
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September 01, 2015
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A seven-year randomized evaluation suggests education subsidies reduce adolescent girls’ dropout, pregnancy, and marriage but not sexually transmitted infection (STI). The government’s HIV curriculum, which stresses abstinence until marriage, does not reduce pregnancy or STI. Both programs combined reduce STI more, but cut dropout and pregnancy less, than education subsidies alone. These results are inconsistent with a model of schooling and sexual behavior in which both pregnancy and STI are determined by one factor (unprotected sex), but consistent with a two-factor model in which choices between committed and casual relationships also affect these outcomes.
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Published Paper
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September 01, 2015
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The results are in for the Community Health Assistant (CHA) incentives evaluation: increases in the productivity of CHAs that were recruited via career (versus social) incentives are mirrored by significantly improved health outcomes at the household level.
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August 31, 2015
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Heavily subsidizing essential health products through existing health infrastructure could substantially improve health in sub-Saharan Africa. There is, however, widespread concern that poor governance – in particular, limited health worker accountability – seriously undermines the effectiveness of subsidy programs. Using innovative audits of targeted bed net distribution programs in Ghana, Kenya and Uganda, we measure the extent of local agency problems. Overall, agency concerns are modest and do not undermine the cost-effectiveness of free distribution. Around 80% of the eligible receive the subsidy as intended, and leakage to the ineligible appears limited, even when the ineligible have a high willingness to pay.
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Working Paper
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August 29, 2015

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