The current trend in antipoverty policy emphasizes mandated empowerment: the poor are being handed the responsibility for making things better for themselves, largely without being asked whether this is what they want. Beneficiary control is now being built into public service delivery, while microcredit and small business promotion are seen as better ways to help the poor. The clear presumption is that the poor are both able and happy to exercise these new powers. This essay uses two examples to raise questions about these strategies. The first example is about entrepreneurship among the poor. Using data from a number of countries, we argue that there is no evidence that the median poor entrepreneur is trying his best to expand his existing businesses, even if we take into account the many constraints he faces. While many poor people own businesses, this seems to be more a survival strategy than something they want to do. The second example comes from an evaluation of a program in India that aims to involve poor rural parents in improving local public schools. The data suggest that despite being informed that they now have both the right to intervene in the school and access to funds for that purpose, and despite being made aware of how little the children were learning, parents opt to not get involved. Both examples raise concerns about committing ourselves entirely to antipoverty strategies that rely on the poor doing a lot of the work.
The Millennium Development Goals call for reducing by half the proportion of people without sustainable access to safe drinking water. This goal was adopted in large part because clean water was seen as critical to fighting diarrheal disease, which kills 2 million children annually. There is compelling evidence that provision of piped water and sanitation can substantially reduce child mortality. However, in dispersed rural settlements, providing complete piped water and sanitation infrastructure to households is expensive. Many poor countries have therefore focused instead on providing community-level water infrastructure, such as wells. Various traditional child health interventions have been shown to be effective in fighting diarrhea. Among environmental interventions, handwashing and point-of-use water treatment both reduce diarrhea, although more needs to be learned about ways to encourage households to take up these behavior changes. In contrast, there is little evidence that providing community-level rural water infrastructure substantially reduces diarrheal disease or that this infrastructure can be effectively maintained. Investments in communal water infrastructure short of piped water may serve other needs and may reduce diarrhea in particular circumstances, but the case for prioritizing communal infrastructure provision needs to be made rather than assumed.
This paper is a practical guide (a toolkit) for researchers, students and practitioners wishing to introduce randomization as part of a research design in the field. It first covers the rationale for the use of randomization, as a solution to selection bias and a partial solution to publication biases. Second, it discusses various ways in which randomization can be practically introduced in a field settings. Third, it discusses designs issues such as sample size requirements, stratification, level of randomization and data collection methods. Fourth, it discusses how to analyze data from randomized evaluations when there are departures from the basic framework. It reviews in particular how to handle imperfect compliance and externalities. Finally, it discusses some of the issues involved in drawing general conclusions from randomized evaluations, including the necessary use of theory as a guide when designing evaluations and interpreting results.
This paper argues that the important challenge for an impact evaluation study is to determine the answer to the question how lives of participants would have changed had the policy not been implemented. An evaluation that provides an answer to be above question can be considered as a reliable evaluation.
This paper presents an application of the randomized controlled trial methodology to evaluating modifications to the design of microcredit programs. As microfinance becomes an even more popular tool for fighting poverty, institutions innovate in their products and programs at a rapid pace. Policymakers and practitioners should know the relative impact of different designs, both to the client (in terms of welfare) and to the institution (in terms of financial sustainability). We discuss the current approach to evaluating product or program changes, and the reasons why more rigorous evaluations are necessary. We then discuss why randomized controlled trials can prove vital to icrofinance institutions in identifying effective program designs in different environments. In this paper, we focus on the choice of lending methodologies – credit with education versus credit only, and group versus individual liability -- to illustrate the benefits of randomized controlled trials as a business tool for measuring impact and learning how to improve sustainability and growth. This methodology can be employed for a plethora of program design issues, such as timing of payments, loan size, interest rates, term, and other services such as insurance and savings.
This article considers several aspects of the economic decision making of the poor from the perspective of behavioral economics, and it focuses on potential contributions from marketing. Among other things, the authors consider some relevant facets of the social and institutional environments in which the poor interact, and they review some behavioral patterns that are likely to arise in these contexts. A behaviorally more informed perspective can help make sense of what might otherwise be considered “puzzles” in the economic comportment of the poor. A behavioral analysis suggests that substantial welfare changes could result from relatively minor policy interventions, and insightful marketing may provide much needed help in the design of such interventions.