Financial products and transfer schemes are often designed to help individuals improve welfare by following through on intertemporal plans. This paper implements an artefactual field experiment in Malawi to test the ability of households to manage a cash windfall. This study varies whether 474 households receive a payment in cash or through direct deposit into pre-established accounts at a local bank. Payments are made immediately, with one day delay, or with eight days delay. Defaulting the payments into savings accounts leads to higher bank account balances, an effect that persists for several weeks. 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
Date:
August 01, 2016
English

Weather index insurance protects farmers against losses from extreme weather and facilitates investment in their farms, but randomized evaluations in South Asia and sub-Saharan Africa have shown low demand for these products at market prices, suggesting the need for alternative approaches. 

Key Findings:

Without substantial subsidies, take-up of insurance was low. Large discounts increased take-up substantially, and interventions designed to increase financial literacy or reduce basis risk also had positive effects. However, at market prices, take-up was in the range of 6–18 percent, which cannot sustain unsubsidized markets.

Insured farmers were more likely to plant riskier but higher-yielding crops. In the three studies that measured changes in farmer behavior, farmers who felt protected against weather risks shifted production toward crops that were more sensitive to weather but more profitable on average.

While self-sustaining markets for weather index insurance have not emerged, finding ways to address weather risk remains a priority for agricultural development. Some possibilities are improving index quality, providing subsidized insurance, selling insurance to institutions, and exploring other risk-mitigating technologies, such as irrigation and stress-tolerant crops.

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Brief
Date:
March 24, 2016
English

Labor-intensive public works programs are important social protection tools in low- income settings, intended to supplement the income of poor households and improve public infrastructure. In this evaluation of the Malawi Social Action Fund, an at- scale, government-operated program, across- and within-village randomization is used to estimate effects on food security and use of fertilizer. There is no evidence that the program improves food security, and suggestive evidence of negative spillovers to untreated households. These disappointing results hold even under modifications to the design of the program to offer work during the lean rather than harvest season or increase the frequency of payments. 

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Working Paper
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March 09, 2016
English

We implement an artefactual field experiment in rural Malawi to study revisions of prior choices regarding future income receipts. This allows examination of intertemporal choice revision and its determinants. New tests provide evidence of self-control problems for some participants. Revisions of money allocations toward the present are positively associated with refined measures of present-bias from an earlier survey, and with the randomly assigned closeness in time to the first possible date of money disbursement. We find little evidence that revisions of allocations toward the present are associated with spousal preferences for such revision, household shocks, or the financial sophistication of respondents.

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Working Paper
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January 01, 2016
English

We implemented a randomized intervention among Malawian farmers aimed at facilitating formal savings for agricultural inputs. Treated farmers were offered the opportunity to have their cash crop harvest proceeds deposited directly into new bank accounts in their own names, while farmers in the control group were paid harvest proceeds in cash (the status quo). The treatment led to higher savings in the months immediately prior to the next agricultural planting season, and raised agricultural input usage in that season. We also find positive treatment effects on subsequent crop sale proceeds and household expenditures. Because the treatment effect on savings was only a small fraction of the treatment effect on the value of agricultural inputs, mechanisms other than alleviation of savings constraints per se are needed to explain the treatment’s impact on input utilization. We discuss other possible mechanisms through which treatment effects may have operated.

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Published Paper
Date:
January 01, 2016
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 on individual interactions from 4000 farmers in these villages suggest that other farmers perceive female communicators to be less able, and pay less attention to the women’s messages. 
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Working Paper
Date:
November 18, 2015

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