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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 too...
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Working Paper
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July 01, 2006
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Informal lending and savings institutions exist around the world, and often include regular door-to-door deposit collection of cash. Some banks have adopted similar services in order to expand access to banking services in areas that lack physical branches. Using a randomized control trial, we investigate determinants of participation in a deposit collection service and evaluate the impact of offering the service for micro-savers of a rural bank in the Philippines. Of 137 individuals offered the service in the treatment group, 38 agreed to sign-up, and 20 regularly used the service. Take-up is predicted by distance to the bank (a measure of transaction costs of depositing without the service) as well as being married (a suggestion that household bargaining issues are important). Those offered the service saved 188 pesos more (which equates to about a 25% increase in savings stock) and were slightly less likely to borrow from the bank.
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May 01, 2006
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We designed a commitment savings product for a Philippine bank and implemented it using a randomized control methodology. The savings product was intended for individuals who want to commit now to restrict access to their savings, and who were sophisticated enough to engage in such a mechanism. We conducted a baseline survey on 1777 existing or former clients of a bank. One month later, we offered the commitment product to a randomly chosen subset of 710 clients; 202 (28.4 percent) accepted the offer and opened the account. In the baseline survey, we asked hypothetical time discounting questions. Women who exhibited a lower discount rate for future relative to current trade-offs, and hence potentially have a preference for commitment, were indeed significantly more likely to open the commitment savings account. After twelve months, average savings balances increased by 81 percentage points for those clients assigned to the treatment group relative to those assigned to the control group...
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May 01, 2006
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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.
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March 01, 2006
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Anemia is among the most widespread health problems for children in developing countries. This paper evaluates the impact of a randomized health intervention delivering iron supplementation and deworming drugs to Indian preschool children. At baseline 69 percent were anemic and 30 percent had intestinal worm infections. Weight increased among assisted children, and preschool participation rates rose by 5.8 percentage points, reducing absenteeism by one fifth. Gains were especially pronounced for those most likely to be anemic at baseline. Results contribute to a growing view that school-based health programs are an effective way of promoting school attendance in less developed countries.
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February 01, 2006
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There is a long tradition in development economics of collecting original data to test specific hypotheses. Over the last 10 years, this tradition has merged with an expertise in setting up randomized field experiments, resulting in an increasingly large number of studies where an original experiment has been set up to test economic theories and hypotheses. This paper extracts some substantive and methodological lessons from such studies in three domains: incentives, social learning, and time-inconsistent preferences. The paper argues that we need both to continue testing existing theories and to start thinking of how the theories may be adapted to make sense of the field experiment results, many of which are starting to challenge them. This new framework could then guide a new round of experiments.
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January 01, 2006
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Absent providers are a major problem both for public health facilities and primary schools in many developing countries. For example, in India, absence rates for teachers are over 24 percent, and for health providers they are over 40 percent. This paper presents evidence on a number of innovative strategies to reduce absenteeism in government- and nongovernmental organization-run schools and health facilities. These strategies were implemented in Kenya and India over the past few years and have been evaluated using the randomized evaluation methodology. The strategies involved alternative levers to fight absence. Some tried to improve incentives for providers, either through rewards and punishments implemented by external monitors, or through facilitating a more active involvement of those who expect to benefit from the service. Others are based on the idea that the providers are discouraged by the lack of interest among the potential beneficiaries in what they are being offered; these...
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January 01, 2006
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This paper studies the productivity and distributional effects of large irrigation dams in India. Our instrumental variable estimates exploit the fact that river gradient affects a district’s suitability for dams. In districts located downstream from a dam, agricultural production increases, and vulnerability to rainfall shocks declines. In contrast, agricultural production shows an insignificant increase in the district where the dam is located but its volatility increases. Rural poverty declines in downstream districts but increases in the district where the dam is built, suggesting that neither markets nor state institutions have alleviated the adverse distributional impacts of dam construction.
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July 01, 2005
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This paper studies the impact of reservation for women on the performance of policy makers and on voters’ perceptions of this performance. Since the mid 1990’s, one third of Village Council head positions in India have been randomly reserved for a woman: In these councils only women could be elected to the position of chief. Village Councils are responsible for the provision of many local public goods in rural areas. Using a data set which combines individual level data on satisfaction with public services with independent assessments of the quality of public facilities, we compare objective measures of the quantity and quality of public goods, and information about how villagers evaluate the performance of male and female leaders. Overall, villages reserved for women leaders have more public goods, and the measured quality of these goods is at least as high as in non-reserved villages. Moreover, villagers are less likely to pay bribes in villages reserved for women. Yet, residents of...
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October 01, 2004
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This paper uses political reservations for women in India to study the impact of women’s leadership on policy decisions. Since the mid-1990’s, one third of Village Council head positions in India have been randomly reserved for a woman: In these councils only women could be elected to the position of head. Village Councils are responsible for the provision of many local public goods in rural areas. Using a dataset we collected on 265 Village Councils in West Bengal and Rajasthan, we compare the type of public goods provided in reserved and unreserved Village Councils. We show that the reservation of a council seat affects the types of public goods provided. Specifically, leaders invest more in infrastructure that is directly relevant to the needs of their own genders
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September 01, 2004
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Many countries are amending their political systems to set aside positions to groups, such as women and racial or religious minorities, that are perceived as being disadvantaged. Using evidence from India, this article assesses the case for these reservations.
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September 01, 2004
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We study race in the labor market by sending fictitious resumes to help-wanted ads in Boston and Chicago newspapers. To manipulate perceived race, resumes are randomly assigned African American or White sounding names. White names receive 50 percent more callbacks for interviews. Callbacks are also more responsive to resume quality for White names than for African American ones. The racial gap is uniform across occupation, industry, and employer size. We also find little evidence that employers are inferring social class from the names. Differential treatment by race still appears to still be prominent in the U.S. labor market.
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June 01, 2004
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This paper compares retrospective and prospective analyses of the effect of flip charts on test scores in rural Kenyan schools. Retrospective estimates suggest that flip charts raise test scores by up to 20% of a standard deviation. Yet prospective estimators based on a randomized trial provide no evidence that flip charts increase test scores. One interpretation is that the retrospective results suffered from omitted variable bias. If the direction of this bias were similar in other retrospective analyses of educational inputs in developing countries, the effects of inputs may be more modest than retrospective studies suggest. A difference-in-differences retrospective estimator seems to reduce bias, but it requires additional assumptions and is feasible for only some educational inputs.
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June 01, 2004
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What are the determinants of health and of well-being? Income and wealth are clearly part of the story, but does access to health care have a large independent effect, as the advocates of more investment in health care, such as the World Health Organization’s Commission on Macroeconomics and Health (Commission on Macroeconomics and Health, 2001), have argued? This paper reports on a recent survey in a poor rural area of the state of Rajasthan in India intended to shed some light on this issue, where there was an attempt to use a set of interlocking surveys to collect data on health and economic status, as well as the public and private provision of health care.
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May 01, 2004
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Many argue that organizations of the disadvantaged create positive externalities, and in particular strengthen the position of these groups in society. A natural inference is that these organizations should be subsidized. We argue that the benefits of expanding the operations of these groups must be set against the potential costs of weakening the role of the disadvantaged in these organizations. A prospective, randomized evaluation of a development program targeted at strengthening rural women’s groups in western Kenya suggests that the program did not improve group strength or functioning as measured by participation rates, assistance to members, and assistance to other community projects. The funding did, however, change the very characteristics of the groups that made them attractive to funders in the first place. Younger, more educated women and women employed in the formal sector joined the groups, and men and better-educated and wealthier women moved into key leadership position...
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January 01, 2004
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This paper discusses the role that impact evaluations should play in scaling up. Credible impact evaluations are needed to ensure that the most effective programs are scaled up at the national or international levels. Scaling up is possible only if a case can be made that programs that have been successful on a small scale would work in other contexts. Therefore the very objective of scaling up implies that learning from experience is possible.
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Report
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January 01, 2004
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Intestinal helminths—including hookworm, roundworm, whipworm, and schistosomiasis—infect more than one-quarter of the world’s population. Studies in which medical treatment is randomized at the individual level potentially doubly underestimate the benefits of treatment, missing externality benefits to the comparison group from reduced disease transmission, and therefore also underestimating benefits for the treatment group. We evaluate a Kenyan project in which school-based mass treatment with deworming drugs was randomly phased into schools, rather than to individuals, allowing estimation of overall program effects. The program reduced school absenteeism in treatment schools by one-quarter, and was far cheaper than alternative ways of boosting school participation. Deworming substantially improved health and school participation among untreated children in both treatment schools and neighboring schools, and these externalities are large enough to justify fully subsidizing treatment. Y...
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January 01, 2004
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Colombia's PACES program provided over 125,000 poor children with vouchers that covered half the cost of private secondary school. The vouchers were renewable annually conditional on adequate academic progress. Since many vouchers were assigned by lottery, program effects can reliably be assessed by comparing lottery winners and losers. Estimates using administrative records suggest the PACES program increased secondary school completion rates by 15-20 percent. Correcting for the greater percentage of lottery winners taking college admissions tests, the program increased test scores by two-tenths of a standard deviation in the distribution of potential test scores. Boys, who have lower scores than girls in this population, show larger test score gains, especially in math.
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January 01, 2004
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The 73rd Amendment paved the way for a fundamental change in the way public goods are delivered in rural areas in India. Through the structure of the Panchayati Raj, local councils directly elected by the people are responsible for making decisions on an array of public good decisions. Twice a year, the councils must also convene village meetings (Gram Sabhas), where the villagers must approve their plan and their budget. Eventually, the Gram Panchayats are supposed to be given control over an even broader array of social services, including basic education and primary health care. The hope is that decentralization, by bringing decision-making closer to the people, may improve both the quality of social services delivery in India, which is in many ways disastrous (e.g., Probe Team (1999)), and its adequacy to meet people’s needs.
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November 01, 2003
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This paper analyzes a randomized experiment to shed light on the role of information and social interactions in employees’ decisions to enroll in a Tax Deferred Account (TDA) retirement plan within a large university. The experiment encouraged a random sample of employees in a subset of departments to attend a bene!ts information fair organized by the university, by promising a monetary reward for attendance. The experiment multiplied by more than !ve the attendance rate of these treated individuals (relative to controls), and tripled that of untreated individuals within departments where some individuals were treated. TDA enrollment !ve and eleven months after the fair was signi!cantly higher in departments where some individuals were treated than in departments where nobody was treated. However, the effect on TDA enrollment is almost as large for individuals in treated departments who did not receive the encouragement as for those who did. We provide three interpretations—differentia...
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August 01, 2003

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