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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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March 04, 2016
English
Low school attendance, absent or overwhelmed teachers, and underperforming schools are on-going impediments to educational attainment for the poor around the world. While many more children are in school than a decade ago, there are still 58 million children out of school, and even when these kids are in school and complete a few years of education, they are often still unable to read, write, and do basic math. The Education Program Area at Innovations for Poverty Action rigorously evaluates programs that aim to improve education outcomes and school attendance. In partnership with academic leaders in the field, our work has produced evidence on how to keep kids in school, such as through school-based deworming or sharing information on the benefits of schooling, and on how to make sure kids learn while there, such as in our teacher community assistant initiative in Ghana and through incentives, such as merit scholarships for students.
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Brief
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March 04, 2016
English
I use a field experiment in rural Kenya to study how temporary incentives to save impact long-run economic outcomes. Study participants who were randomly selected to receive large temporary interest rates on an individual bank account had signifi- cantly more income and assets 2.5 years after the interest rates expired. These changes are much larger than the short-run impacts on experimental bank account use and almost entirely driven by increased rates of entrepreneurship. Temporary interest rates directed to joint bank accounts had no detectable long-run impacts on entrepreneurship or income, but increased investment in household public goods and led to greater spousal consensus over financial matters. The short-run effects of modest unconditional cash payments were similar to those of the interest rates, but the cash payments had no apparent long-run impact on economic outcomes.
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Working Paper
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March 01, 2016
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Firms in the developing world exhibit much flatter life-cycle dynamics compared to firms in developed countries. This paper examines the role of demand constraints in limiting the growth of small and medium firms in Brazil. We test whether firms that win government procurement contracts grow more compared to firms that compete for these contracts but do not win. We assemble a comprehensive data set combining matched employer-employee data for the universe of formal firms in Brazil with the universe of federal government procurement contracts. Exploiting a quasi-experimental design, we find that winning at least one contract in a given quarter increases firm growth by 2.2 percentage points over that quarter, with 93% of the new hires coming from either unemployment or the informal sector. These effects also persist well beyond the length of the contracts. Part of this persistence comes from firms participating and wining more future auctions, as well as penetrating other markets.
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Working Paper
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February 01, 2016
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We investigate the impacts of subsidies for technology adoption, and how savings constraints affect subsidy impacts. In a theoretical model in which risk-averse households face liquidity constraints as well as incomplete insurance, alleviating savings constraints could promote persistence of technology adoption over time (dynamic enhancement), or could instead reduce technology investment by encouraging savings accumulation (dynamic substitution). We implemented a field experiment in rural Mozambique, randomly assigning households one-time subsidies for adopting modern agricultural technology (chiefly fertilizer). Entire localities were later randomly assigned programs facilitating formal savings. In localities with no savings program, subsidy recipients raise their fertilizer use in the subsidized season and for two subsequent unsubsidized seasons. By contrast, in savings-program localities, subsidy impacts on fertilizer use do not persist: households shift resources away from fertili...
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Working Paper
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January 29, 2016
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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
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This paper tests whether uncertainty about future rainfall affects farmers’ decision-making through cognitive load. Behavioral theories predict that rainfall risk could impose a psychological tax on farmers, leading to material consequences at all times and across all states of nature, even within decisions unrelated to consumption smoothing, and even when negative rainfall shocks do not materialize down the line. Using a novel technology to run lab experiments in the field, we combine recent rainfall shocks and survey experiments to test the effects of rainfall risk on farmers’ cognition, and find that it decreases farmers’ attention, memory and impulse control, and increases 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’ cognitive load. These res...
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Working Paper
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January 19, 2016
English
We provide evidence from field experiments with three different banks, that reminder messages increase commitment attainment for clients who recently opened commitment savings accounts. Messages that mention both savings goals and financial incentives are particularly effective, while other content variations such as gain versus loss framing do not have significantly different effects. Nor do we find evidence that receiving additional late reminders has an additive effect. These empirical results do not map neatly into existing models, so we provide a simple model where limited attention to exceptional expenses can generate under-saving that is in turn mitigated by reminders.
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Published Paper
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January 19, 2016
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Administrative data refers to data collected for the administration of programs. It should be systematically collected, stored and used for program operation and management decisions. While administrative data is designed to track a program’s implementation—primarily the project’s activities and expenses—it can also include indicators on program outcomes. Examples of administrative data include educational records, client information from financial institutions, and hospital records of patient visits and health outcomes. Other examples include information held by government agencies, such as tax filings and Medicare claims. The CART principle of responsibility tells us that organizations should find the right balance between collecting enough data necessary to obtain credible, actionable information about a program, and the costs of doing so. Administrative data, due to its low cost and accuracy, can be an important part of a data collection strategy, useful for both monitoring and eva...
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Goldilocks Toolkit
Date:
January 10, 2016
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Acumen: Defining Impact in Impact Investment Acumen raises charitable donations to invest in enterprises that help solve some of the world’s toughest social problems. As a non-profit impact investor, the organization invests with ‘patient capital’ meaning it invests in seemingly risky markets that may require working over a longer time horizon to develop viable businesses producing goods and services that benefit the poor. Through these investments, Acumen aims to maximize social return while also turning a profit, which also supports the sustainability of the enterprises in the long run. Among supporters of impact investment, this is known as a “third way” for international development assistance, occupying a space in between traditional philanthropy and for-profit private enterprise. Acumen has been a leader in pushing for a more concrete definition of social impact in impact investing. The organization prioritizes two things in its own approach to monitoring and evaluating its inves...
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Goldilocks Toolkit
Date:
January 05, 2016
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Women for Women International: Monitoring and Evaluation in Conflict and Post-Conflict Settings Women survivors of war and conflict are disproportionately affected by acts of violence, displacement, poverty, and loss of property and relatives. Conflict disrupts familial and community networks, compelling women to assume greater responsibility for generating household income and supporting their dependents and community. Women for Women International (WfWI) works in countries affected by conflict and war and addresses these issues by supporting women to earn and save money, improve health and well-being, influence decisions in their home and community, and connect to networks for support. This case study examines WfWI’s collection and use of data in conflict and post-conflict settings to monitor and measure the results of their work. Despite the challenging setting, WfWI has developed a data collection system that produces high quality data and is in the process of making important chan...
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Goldilocks Toolkit
Date:
January 05, 2016
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Theory of Change: Laying the Foundation for Right-Fit Data Collection The first step in designing a right-fit data collection strategy is to create a solid theory of change. A theory of change is a clear visual map that represents how a program will make an impact on the world. It illustrates what goes into a program, what gets done, and how the world is expected to change as a result. A theory of change supports right-fit data collection in several ways: by pointing organizations to the elements of the program they need to track to ensure it is operating as planned; by providing a foundation for impact measurement by differentiating the outputs to be tracked from the outcomes to be measured using a credible counterfactual; and by generating credible research questions. The Goldilocks Initiative does not offer a complete manual on building a theory of change—many resources exist for that—but here we break down the basics of creating a theory of change and explain how a clear theory, to...
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Goldilocks Toolkit
Date:
January 05, 2016
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A mobile phone in every person’s pocket will soon be a reality. What does this mean for development organizations? This report reviews the current state of mobile technology for survey and telephonic data collection, activity monitoring, and impact measurement. It also addresses the notion of crowdsourcing, and the various ways it is used to improve organizational decision-making.
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Goldilocks Toolkit
Date:
January 05, 2016
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Theory of change is the foundation of a right-fit monitoring and evaluation strategy. A theory of change provides a road map that outlines how a program will work to change outcomes and deliver impact. It identifies the key assumptions of the program and risks to successful implementation, and helps organizations pinpoint the data they need to collect. When done well, a theory of change should also enjoy widespread buy-in from staff throughout the organization. This helps to focus data collection activities on the most important questions about implementation and impact. Building a theory of change with solid theoretical foundations and widespread buy-in requires organizations to invest time and resources into a process with multiple steps and participation at all levels of the program. Chapter 3 of The Goldilocks Problem outlines the key elements that make up a theory of change and walks through several examples. In this article we outline some of the preparatory work needed to guide...
Type:
Goldilocks Toolkit
Date:
January 05, 2016
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One key message of the Goldilocks Initiative is that impact evaluation is not for everyone. Yet, even when measuring impact is not feasible, social enterprises and non-profits can still answer important questions about their programs using rigorous measurement techniques. One of these is techniques rapid-fire testing: randomized trials that compare the effect of related interventions on a single, immediate (or short-term) outcome. This method is used to test operational issues and aims to influence immediate outcomes, such as product take-up, program enrollment, loan repayment, and attendance, among others. In rapid-fire tests, participants are randomized into different treatment groups (and sometimes, but not necessarily, a pure control group) and exposed to variations in a program’s design or message. The outcome of interest (usually program take-up or use) is measured and compared across treatment and control groups. Often outcomes are measured administratively, so that there is no...
Type:
Goldilocks Toolkit
Date:
January 05, 2016
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Satellites are mobile, remotely controlled communications systems that orbit the planet, capturing imagery and other data for transmission back to Earth. While satellites can provide relatively high-resolution imagery of the entire globe, historically they have been operated by government agencies and a small number of companies. The instruments themselves traditionally cost between $200 and 500 million dollars, and leverage billions of dollars of public sector investment in research, development, and maintenance. Access to imagery has thus been available to a limited set of organizations, including government space agencies, research institutions, and corporations with the analytic capacity to use satellite data for business intelligence and decision-making. In recent years, there has been a rapid trend towards small private organizations sending their own satellites into the sky. Because these are much smaller in size, have shorter life cycles, and much lower upfront costs (as little...
Type:
Goldilocks Toolkit
Date:
January 05, 2016
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Organizations face many challenges in measuring their impact using rigorous evaluation methodologies such as randomized controlled trials (RCTs). While technical requirements—such as sufficient sample size—are often an issue, for most organizations the main challenge is overcoming internal and external resistance to impact evaluation. Some objections are well placed. For example, most operational learning does not require impact evaluation. And for some organizations, a focus on measuring impact may not be appropriate, particularly when it takes resources away from other strategic priorities and program monitoring. External pressures from donors or other stakeholders can be the driving force behind impact evaluations, with both positive and negative consequences. When there is little regard for accuracy or quality, organizations waste resources that could have helped to improve their programs.
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Goldilocks Toolkit
Date:
January 05, 2016
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Sensing technologies are ubiquitous in most developed markets, where they are used for industrial process monitoring, product tracking, and information services. More recently, non-governmental organizations (NGOs) have begun leveraging sensors for supply chain management, remote monitoring, and consumer product testing. This report describes how sensors work, and how they can be harnessed for data collection in low-resource settings.
Type:
Goldilocks Toolkit
Date:
January 05, 2016
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At the Goldilocks Initiative, we argue that organizations should be doing two things: monitoring what they do and evaluating the impact of what they do. And we’ve argued that the impact part of the equation is often prioritized over the monitoring part. As a result, we are often evaluating the impact of programs before we know whether they are well implemented. Consider what happens if we boil down the recipe for organizational impact to a simple formula: A x B = Impact In this formula, “A” means doing what you said you would do and doing it efficiently, and “B” means choosing good ideas that actually work. If only life were that simple. Although not everything sorts quite so cleanly, the terms monitoring and evaluation roughly align with this formula. Think of monitoring as “A” and evaluation as “B.” Much academic work focuses on “B,” evaluating the social impact of programs, particularly the work of development economists running randomized evaluations. But organizations should nev...
Type:
Goldilocks Toolkit
Date:
January 05, 2016
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For many organizations, a central goal of monitoring and evaluation is to prove that programs are making a difference—that they have an impact. Not only is it important to know if programs work, but providing hard proof can attract much-needed funding and may also improve an organization’s reputation. The reality, though, is that not everyone can and should measure impact: sometimes it’s not possible to muster up a sample size that would be large enough to conduct a good study, or there simply isn’t anything to randomize. When programs are structured such that impact measurement is possible, it’s still important to approach evaluation carefully. Impact measurement that aligns with the CART Principles must be well-designed, implemented well, and timed appropriately. If the evaluation design or fieldwork are sub-par, results will be biased (meaning wrong), which can lead organizations and policymakers to start or continue programs that have little or no impact, or to miss opportunities t...
Type:
Goldilocks Toolkit
Date:
January 05, 2016

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