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The canonical model of expenditure choices assumes that people are able to smooth their consumption. However, extensive empirical and theoretical work suggests that consumption smoothing is imperfect, so the precise timing of individuals’ income may affect their behavior. We report results from a randomized field experiment in Malawi that varied the timing of workers’ income receipt in two ways. First, payments were made either in weekly installments or as a monthly lump sum, in order to vary the extent to which workers had to save up to make profitable investments. Second, payments at a local market were made either on the weekend market day (Saturday) or the day before the market day (Friday), in order to vary the degree of temptation workers faced when receiving payments. We provide novel evidence that the frequency of payments matters for workers’ ability to benefit from high-return investment opportunities. Workers in the monthly group have more cash left in the week after the las...
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Working Paper
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November 01, 2014
English
We use a suite of economic experiments to study social preferences governing the distribution of earned and unearned income in rural villages in western Kenya. Our experiments vary the extent to which income depends on individual effort while holding other aspects of the economic environment constant. Results suggest that, in rural villages, the relative weight placed on others does not depend on the extent to which those individual increased the total surplus through their own effort. However, more educated subjects and those drawn from villages closer to the road do reward others for their effort; their allocation decisions are consistent with models of reciprocity.
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Published Paper
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October 24, 2014
English A4
Programs promoting financial literacy and savings among children and youth have the potential to effectively promote financial inclusion over participants’ lifetimes. Since 2009, Innovations for Poverty Action (IPA) has conducted randomized evaluations of three programs that aim to promote savings and financial education among children and youth and has found promising impacts in all three.
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Brief
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October 23, 2014
English
Background: Low rates of adherence to artemisinin-based combination therapy (ACT) regimens increase the risk of treatment failure and may lead to drug resistance, threatening the sustainability of current anti-malarial efforts. We assessed the impact of text message reminders on adherence to ACT regimens. Methods: Health workers at hospitals, clinics, pharmacies, and other stationary ACT distributors in Tamale, Ghana provided flyers advertising free mobile health information to individuals receiving malaria treatment. The messaging system automatically randomized self-enrolled individuals to the control group or the treatment group with equal probability; those in the treatment group were further randomly assigned to receive a simple text message reminder or the simple reminder plus an additional statement about adherence in 12-hour intervals. The main outcome was self-reported adherence based on follow-up interviews occurring three days after treatment initiation. We estimated the imp...
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October 18, 2014
High transaction and contracting costs are often thought to create credit and savings market failures in developing countries. The microfinance movement grew largely out of business process innovations and subsidies that reduced these costs. We examine an alternative approach, one that infuses no external capital and introduces no change to formal contracts: an improved “technology” for managing informal, collaborative village‐based savings groups. Such groups allow, in theory, for more efficient and lower‐cost loans and informal savings, and in practice have been scaled up by international non‐profit organizations to millions of members. Individuals save together and then lend the accumulated funds back out to themselves. In a randomized evaluation in Mali, we find improvements in food security, consumption smoothing, and buffer stock savings. Although we do find suggestive evidence of higher agricultural output, we do not find overall higher income or expenditure. We also do not find...
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Working Paper
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October 01, 2014
English
We report the results of a randomized experiment testing impacts of subsidies for modern agricultural inputs in rural Mozambique. One-time provision of a voucher for fertilizer and improved seeds leads to substantial increases in fertilizer use, which persist through two subsequent agricultural seasons. Voucher receipt also leads to large, persistent increases in household agricultural production and market sales, per capita consumption, assets, durable good ownership, and housing improvements.   Consistent with learning models of the adoption decision, we find positive treatment effects on farmers' estimated returns to the input package. We also document positive cross-household treatment spillovers: one's own fertilizer use rises in the number of social network members receiving vouchers. Our findings are consistent with theoretical models predicting persistence of impacts of temporary technology adoption subsidies, in particular due to learning effects.
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Working Paper
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September 30, 2014
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Declining fertility in both the developed and developing world has led to large and potentially welfare-enhancing changes in women’s labor supply, education and investment in children in recent decades. However, it has been widely noted that the pace of this decline has stalled even while access to contraception has continued to expand, raising the question of whether increasing access to contraception is sufficient to lead to declining fertility. This paper provides evidence about the relationship between contraceptive access and fertility from a randomized controlled trial in Lusaka, Zambia, in which women of child-bearing age were provided with a voucher for free and immediate access to long-acting forms of contraception; this voucher was provided either to the woman individually, or the woman jointly with her spouse. Results show that there is a significant increase in contraceptive use, and a particularly large increase in experimentation with new contraceptive methods, but no dec...
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Working Paper
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September 30, 2014
English
Hunger during pre-harvest lean seasons is widespread in the agrarian areas of Asia and Sub-Saharan Africa. We randomly assign an $8.50 incentive to households in rural Bangladesh to temporarily out-migrate during the lean season. The incentive induces 22% of households to send a seasonal migrant, their consumption at the origin increases significantly, and treated households are 8–10 percentage points more likely to re-migrate 1 and 3 years after the incentive is removed. These facts can be explained qualitatively by a model in which migration is risky, mitigating risk requires individual-specific learning, and some migrants are sufficiently close to subsistence that failed migration is very costly. We document evidence consistent with this model using heterogeneity analysis and additional experimental variation, but calibrations with forward-looking households that can save up to migrate suggest that it is difficult for the model to quantitatively match the data. We conclude with exte...
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September 01, 2014
English
Established in 2009, the US Household Finance Initiative (USHFI) leads IPA’s US research. Directed by researchers Jonathan Zinman (Dartmouth College) and Dean Karlan (Yale University), the initiative uses insights from behavioral economics to develop, rigorously evaluate, and scale cost-effective financial products and product innovations that help low- to moderate-income households lead healthier financial lives.
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Brief
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September 01, 2014
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Cash transfers directed to female caregivers in Nicaragua led to gains in child-development outcomes that persisted beyond the duration of the program. Early childhood is a critical period for investment in human development, the circumstances of which can have lifelong impacts. Physical, cognitive, or behavioral delays in development can result in long-term negative effects on health, educational attainment, labor-market outcomes, and other indicators of well-being. Conditional cash transfer (cct) programs are one way to help parents who lack resources invest more in their children. These programs provide families with cash grants as long as they undertake certain activities such as having their children attend regular health check-ups. While there is a large body of evidence on the short-term impacts of ccts on children’s development, there is less evidence on their long-term impacts. To better understand the effects of ccts later in life, researchers evaluated two distinct cct progr...
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Brief
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July 21, 2014
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We posit that household decision-making over fertility is characterized by moral hazard since most contraception can only be perfectly observed by the woman. Using an experiment in Zambia that varied whether women were given access to contraceptives alone or with their husbands, we find that women given access with their husbands were 19 percent less likely to seek family planning services, 25 percent less likely to use concealable contraception, and 27 percent more likely to give birth. However, women given access to contraception alone report a lower subjective well-being, suggesting a psycho-social cost of making contraceptives more concealable.
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July 01, 2014
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People may under-report sensitive and risky behaviors such as violence or substance abuse in surveys. Misreporting correlated with treatment is especially worrisome in causal analysis. We develop and test a survey validation technique that uses intensive qualitative work to check for measurement error in random subsamples of respondents. Trained local researchers spent several days speaking with and observing respondents within a few days of their survey, validating six behaviors: four potentially sensitive (crime, drug use, homelessness, gambling) and two non-sensitive (phone charging and video club expenditures). Subjects were enrolled in a randomized trial designed to reduce poverty and anti-social behaviors. We find no evidence of underreporting of sensitive behaviors, partly because (we discovered) stigma in this population is low. Nonsensitive expenditures were underreported, however, especially by the control group, probably because of strategic behavior and recall bias. The mai...
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Working Paper
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June 11, 2014
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Small-scale farming remains the primary source of income for a majority of the population in developing countries. While most farmers primarily work on their own fields, off-farm labor is common among small-scale farmers. A growing literature suggests that off-farm labor is not the result of optimal labor allocation, but is instead driven by households' inability to cover short-term consumption needs with savings or credit. We conduct a field experiment in rural Zambia to investigate the relationship between credit availability and rural labor supply. We find that providing households with access to credit during the growing season substantially alters the allocation of household labor, with households in villages randomly selected for a loan program selling on average 25 percent less off-farm labor. We also find that increased credit availability is associated with higher consumption and increases in local farming wages. Our results suggest that a substantial fraction of rural labor s...
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Working Paper
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June 01, 2014
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Empirical evidence on peer intermediation lags behind many years of lending practice and a large body of theory in which lenders use peers to mitigate adverse selection and moral hazard. Using a simple referral incentive mechanism under individual liability, we develop and implement a two-stage field experiment that permits separate identification of peer screening and enforcement effects. We allow for borrower heterogeneity in both ex-ante repayment type and ex-post susceptibility to social pressure. Our key contribution is how we deal with the interaction between these two sources of asymmetric information. Our method allows us to cleanly identify selection on the likelihood of repayment, selection on the susceptibility to social pressure, and loan enforcement. We estimate peer effects on loan repayment in our setting, and find no evidence of screening (albeit with an imprecisely estimated zero) and large effects on enforcement. We then discuss the potential utility and portability o...
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Published Paper
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June 01, 2014
English
We study a government program in Uganda designed to help the poor and unemployed become self-employed artisans, increase incomes, and thus promote social stability. Young adults in Uganda’s conflict-affected north were invited to form groups and submit grant proposals for vocational training and business start-up. Funding was randomly assigned among screened and eligible groups. Treatment groups received unsupervised grants of $382 per member. Grant recipients invest some in skills training but most in tools and materials. After four years, half practice a skilled trade. Relative to the control group, the program increases business assets by 57%, work hours by 17%, and earnings by 38%. Many also formalize their enterprises and hire labor. We see no effect, however, on social cohesion, antisocial behavior, or protest. Effects are similar by gender but are qualitatively different for women because they begin poorer (meaning the impact is larger relative to their starting point) and becau...
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May 31, 2014
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We partnered with a micro‐lender in Mali to randomize credit offers at the village level. Then, in no‐loan control villages, we gave cash grants to randomly selected households. These grants led to higher agricultural investments and profits, thus showing that liquidity constraints bind with respect to agricultural investment. In loan‐villages, we gave grants to a random subset of farmers who (endogenously) did not borrow. These farmers have lower – in fact zero – marginal returns to the grants. Thus we find important heterogeneity in returns to investment and strong evidence that farmers with higher marginal returns to investment self‐select into lending programs.
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Working Paper
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May 30, 2014
English
Microfinance institutions have started to bundle their basic loans with other financial services, such as health insurance. Using a randomized control trial in Karnataka, India, we evaluate the impact on loan renewal from mandating the purchase of actuarially-fair health insurance covering hospitalization and maternity expenses. Bundling loans with insurance led to a 16 percentage points (23 percent) increase in drop-out from microfinance, as many clients preferred to give up microfinance than pay higher interest rates and receive insurance. In a Pyrrhic victory, the total absence of demand for health insurance led to there being no adverse selection in insurance enrollment.
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May 30, 2014
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Compared to the number of randomized evaluations that have been conducted on cash transfers in Latin America, evaluations on cash grant interventions in African settings are few. However, the recent studies that have been conducted in Africa help to answer several key questions about cash grants.
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Brief
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May 22, 2014
English
We combine data from a randomized evaluation and a laboratory experiment to measure the causal impact of human capital on respect for earned property rights, a component of social preferences with important implications for economic growth and development. We find that higher academic achievement reduces the willingness of young Kenyan women to appropriate others’ labor income, and shifts players toward a 50-50 split norm in a modified dictator game. This study demonstrates that education may have long-run impacts on social preferences, norms and institutions beyond the human capital directly produced.
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May 20, 2014
English
There are few marketing studies of social learning about new technologies in lowincome countries. This paper examines how learning through opinion leaders and social networks influences demand for non-traditional cookstoves – a technology with important health and environmental consequences for developing country populations. We conduct marketing interventions in rural Bangladesh to assess how stove adoption decisions respond to (a) learning the adoption choices of locally identified ‘opinion leaders’ and (b) learning about stove attributes and performance through social networks. We find that households generally draw negative inferences about stoves through social learning, and that social learning is more important for stoves with less evident benefits. In an institutional environment in which consumers are distrustful of new products and brands, consumers appear to rely on their networks more to learn about negative product attributes. Overall, our findings imply that external info...
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May 02, 2014

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