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Despite good intentions, people often make less-than-optimal financial choices. In this series, we match insights from our global research in behavioral economics with specific financial service and product design opportunities both for providers in the U.S. and in other countries. Providers can use these evidence-based insights to expand financial inclusion, improve client offerings, and continue to promote financial health. This booklet combines a series of briefs, which are also available to download as individual briefs: Count on Commitment, The Power of Doing Nothing, Top of Mind. Count on CommitmentCommitment devices are voluntary, binding arrangements that people make to reach specific goals that may otherwise be difficult to achieve. When built into savings products, commitment devices can help address behavioral and social obstacles to saving by providing a mechanism that forces people to save according to their self-set plans. These devices vary in terms of commitment activi...
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Brief
Date:
February 13, 2017
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Financial education is widely used by governments, financial service providers, and non-governmental organizations as a tool to help people navigate the financial system and make better financial choices. Financial education programs are built on the assumption that education will lead to knowledge, and that knowledge will lead to better choices and improved financial health. Recent evidence suggests that assumption is flawed, but also shows promise for some new, alternative approaches to financial education. A robust body of evidence shows that on average conventional approaches to financial education have not been successful in either imparting lasting knowledge or in changing people’s financial behavior. While these findings may seem discouraging at first glance, the conventional approach to financial education is not the only approach, and several new methods have been rigorously tested in recent years and yielded positive results. This brief explores the emerging evidence on these...
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Brief
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January 27, 2017
English
IPA is synonymous with impact. We’re known for both measuring impact and using those results to impact people’s lives. In 2015, we further improved our research quality and grew in research quantity, and we began new efforts to share results to improve programs and policies for the poor. Since our founding in 2002, IPA has worked with over 400 leading academics to conduct over 600 evaluations in 51 countries. This research has informed hundreds of successful programs that now impact millions of individuals worldwide. Browse an online version of the report here: annualreport.poverty-action.org
Type:
Annual Report
Date:
September 12, 2016
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An audit study was conducted in Colombia following the protocols in Giné and Mazer (2017). Trained auditors visited multiple financial institutions, seeking credit and savings products. Consistent with Gabaix and Laibson (2006) and similar to Giné and Mazer (2017), the staff only provided information about the cost when asked, disclosing less than a third of the total cost voluntarily. In addition, clients were rarely offered the cheapest product, most likely because staff was incentivized to offer more expensive and thus more profitable products to the institution.
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Working Paper
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March 20, 2017
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Climate change-induced natural disasters affect an estimated 230 million people worldwide. Droughts, flooding, pollution, and other weather events are especially threatening in developing countries, which have limited capacity to cope. Within those countries, the poor and marginalized are the most vulnerable, since climate change makes food more expensive, poses health risks through waterborne disease and extreme weather (particularly in areas with poor infrastructure and sanitation), and limits farmers’ ability to create and maintain sustainable livelihoods. The poor are inadequately equipped to cope with income shocks that accompany extreme weather conditions. A study in India found that while farmers adjusted to weather fluctuations (in this case monsoons) by changing irrigation and crop choices, they only recovered 15% of profits lost. Substantial financial barriers may prevent farmers from adapting effectively to harmful impacts of climate change. For example, farmers may not have...
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Brief
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March 14, 2017
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Approximately 767 million people live on less than $1.90 a day.1 Across the world, the extreme poor generally depend on insecure and fragile livelihoods, and their income is frequently irregular or seasonal, putting them and their families at risk of hunger. Innovations for Poverty Action (IPA) works with academics from top research institutions to discover sustainable ways to lift these households out of extreme poverty and to support the scale-up of effective programs. In recent years, IPA has helped propel breakthrough findings—particularly on cash transfers and the “big-push” strategy known as the Graduation approach—into large-scale programs, reaching tens of millions of people. We are now testing variations of the Graduation approach in Ghana, Uganda, and the Sahel to identify what drives the impacts and how to make it more cost-effective. 1 http://www.worldbank.org/en/topic/poverty/overview. Accessed November 7, 2016.
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Brief
Date:
March 10, 2017
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Research shows that when people participate in the financial system, they are better able to manage risk, start or invest in a business, and fund large expenditures like education or a home improvement. Increasing women’s financial inclusion is especially important as women disproportionately experience poverty, stemming from unequal divisions of labor and a lack of control over economic resources. While demand and supply side barriers to women’s financial inclusion remain, this review shows that appropriate financial product design can help overcome some of these barriers. This review is organized by product and presents the existing evidence on the impact of savings, credit, payments, and insurance products on women’s economic empowerment outcomes, as well as the remaining open research questions in each area. The studies included in this review are limited to those designed as randomized control trials (RCTs), widely considered to be the gold standard in impact evaluation methodolog...
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Brief
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March 06, 2017
French A4
In Burkina Faso, Côte d'Ivoire, Mali, and Senegal, we have continued our global tradition of rigorous, applicable research by building foundational research capacity and conducting evaluations in areas of pressing national concern. Examples of our work below offer promising insights into everyday issues that affect the lives of the Francophone West African poor.
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Brief
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March 06, 2017
English
In 2008, 682 secondary school scholarships were awarded by lottery among 2,064 Ghanaian students (aged 17 on average) who were admitted to a specific school and track but could not immediately enroll, in most cases due to lack of funds. We use follow-up data collected until 2016 to document downstream impacts by age 25. For the whole sample, scholarship winners were 26 percentage points (55%) more likely to complete secondary school, obtained 1.26 more years of secondary education, scored an average of 0.15 standard deviations greater on a reading and math test, and adopted more preventative health behavior. Women who received a scholarship had 0.217 fewer children by age 25. Scholarship winners were also 3 percentage points (30%) more likely to have ever enrolled in tertiary education. Despite the fact that they were 2.5 percentage points more likely to be enrolled in school at the time of the last survey, they were 5.5 percentage points (10%) more likely to have positive earnings and...
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Working Paper
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March 01, 2017
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Reminders can increase savings deposits at almost no cost to providers Despite good intentions, people often make less-than-optimal financial choices. In this series, we match insights from our global research in behavioral economics with specific financial product and service opportunities for U.S. providers. Providers can use these evidence-based insights to expand financial inclusion, improve client offerings, and continue to promote financial health. Providing access to savings accounts is an important step in bringing financial services to the poor, but access alone does not guarantee people will save. Many people struggle to develop good savings habits because they put off saving until a future time, or face so many seemingly urgent needs today that it is difficult to save for tomorrow, or they simply forget to save. Reminders that bring savings goals to the “top of mind” are a low-cost way to address these barriers and help clients reach their savings goals. This brief is part o...
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Brief
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February 13, 2017
English
How defaults can improve customer savings behavior Despite good intentions, people often make less-than-optimal financial choices. In this series, we match insights from our global research in behavioral economics with specific financial product and service opportunities for U.S. providers. Providers can use these evidence-based insights to expand financial inclusion, improve client offerings, and continue to promote financial health. Automatic (“opt-out”) enrollment is a simple product design modification in which consumers are informed they will be automatically enrolled in a product or service unless they choose to opt out. Setting the default to “opt-out” instead of “opt-in” has been shown to significantly increase uptake of certain savings products and lead to behavior change through automation, for example by increasing participation in retirement and savings plans. It is important that financial services providers use these tools with care, fully and conspicuously inform their c...
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Brief
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February 13, 2017
English
Helping clients stick to their goals and increase their savings balances with commitments Despite good intentions, people often make less-than-optimal financial choices. In this series, we match insights from our global research in behavioral economics with specific financial product and service opportunities for U.S. providers. Providers can use these evidence-based insights to expand financial inclusion, improve client offerings, and continue to promote financial health. Commitment devices are voluntary, binding arrangements that people make to reach specific goals that may otherwise be difficult to achieve. When built into savings products, commitment devices can help address behavioral and social obstacles to saving by providing a mechanism that forces people to save according to their self-set plans. These devices vary in terms of commitment activity, consequence for failing to fulfill the commitment, and control over how savings are spent. “Hard” commitments feature financial pen...
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Brief
Date:
February 13, 2017
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In the coming decades, most of the poor will live in fragile states, yet rigorous evidence on how to build peace and stability is still limited. What helps communities heal and prosper after a crisis? How can peace and stability be maintained after war? IPA works with academics from top research institutions to generate evidence on how to facilitate peace and mitigate the negative social and economic impacts of conflicts and crises. We evaluate programs that aim to strengthen state capacities, prevent or reduce violence, or alleviate the fallout from crises ranging from health to natural to human-made. IPA works in fragile states and countries that have recently experienced conflict, violence, or disaster. IPA also collaborates with decision-makers to ensure that this evidence is both useful and implemented at scale.
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Brief
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February 02, 2017
A4
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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February 01, 2017
English
This paper presents an experimental approach to study competition in agricultural markets, based on the random allocation of subsidies to crop traders. We compare prices of subsidized and unsubsidized traders to recover the key competition parameter in a standard model of imperfect competition. In addition, by combining the experimental results with quasi-experimental estimates of the pass-through rate, we estimate the effective number of traders competing in a location, or, the market size. In the context of the Sierra Leone cocoa industry, our results point at a competitive trading sector and suggest that the market size is substantially larger than the village. The methodology developed in this paper uses purely individual-level randomization to shed light on market structure. This approach may be useful for the many cases in which market-level randomization is not feasible.
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Working Paper
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February 01, 2017
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Many students arrive at primary school already behind, experiencing a lack of skills that may compromise their long-term learning and wellbeing. In Accra, Ghana, researchers evaluated the impact of an affordable, in-service kindergarten teacher training, with and without a parental awareness program. Results showed that the training improved the number of the play-based, child-friendly activities teachers used and improved the quality of teacher-child interactions. However, adding the parent education component had a negative effect on teachers’ use of emotional support and positive behavior management, and a small negative effect on child outcomes.
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Brief
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January 23, 2017
English
Distributing subsidized health products through existing health infrastructure could substantially and cost-effectively 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. We audit targeted bednet distribution programs to quantify the extent of agency problems. We find that around 80% of the eligible receive the subsidy as intended, and up to 15% of subsidies are leaked to ineligible people. Supplementing the program with simple financial or monitoring incentives for health workers does not improve performance further and is thus not cost-effective in this context.
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Working Paper
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January 16, 2017
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Over the past five years, the SME Program at IPA has grown from an ambitious idea to a thriving, prolific, and influential initiative. It is with great enthusiasm that we share this report highlighting some of our accomplishments—which would not have been possible without the collaboration and support of so many of you. Our work began at the end of 2010, when we sat down with leading practitioners and academics working on entrepreneurship and SME growth in developing countries, and assessed the most pressing knowledge gaps in the sector. At the time, only a handful of impact evaluations had been conducted on SME support programs in developing countries, and there was an urgent need for evidence to help guide decision-making. Following that initial event, IPA launched the SME Program (formerly known as the “SME Initiative”), with the goal of addressing the existing knowledge gaps and generating evidence on the most effective solutions to the constraints SMEs face in developing countries...
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Report
Date:
January 12, 2017
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Three hundred million of the world’s rural poor suffer from seasonal income insecurity, which often occurs between planting and harvest when the demand for agricultural labor falls and the price of food rises. Those who undergo a lean season typically miss meals for a two- to three-month period. This is especially problematic for pregnant women and young children since poor nutrition for even a short time can limit long-term cognitive and physical development. Seasonal hunger and deprivation is perhaps the biggest challenge to the reduction of global poverty that has remained largely under the radar. Members of some families in poor rural areas migrate to urban areas for work to cope with seasonal deprivation. In Bangladesh, however, researchers observed that many vulnerable households, who could potentially reap large benefits from temporary migration, didn’t send anyone away to work, thereby risking hunger. Why weren’t more people migrating? Would these households improve food securi...
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Brief
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December 29, 2016
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A clustered randomized trial in Bangladesh examines alternative strategies to reduce child marriage and teenage childbearing and increase girls’ education. Communities were randomized into three treatment and one control group in a 2:1:1:2 ratio. From 2008, girls in treatment communities received either i) a six-month empowerment program, ii) a financial incentive to delay marriage, or iii) empowerment plus incentive. Data from 19,060 girls 4.5 years after program completion show that girls eligible for the incentive for at least two years were 22% (-9.9ppts, p<0.01) less likely to be married under 18, 14% (-5.2ppts, p<0.01) less likely to have given birth under 20, and 21% (5.6ppts, p<0.05) more likely to be in school at age 22. Unlike other incentive programs that are conditional on girls staying in school, an incentive conditional on marriage alone has the potential to benefit out-of-school girls. We find insignificantly different effects for girls in and out of school at b...
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Working Paper
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December 28, 2016

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