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Evidence on the effectiveness of financial education and formal savings account access is lacking, particularly for youth. We randomly assign 250 youth clubs to receive either financial education, access to a cheap group account, or both. The financial education treatments increase financial literacy; the account-only treatment does not. Administrative data shows the education plus account treatment increases bank savings relative to account-only. But survey-measured total savings shows roughly equal increases across all treatment arms. Earned income also increases in all treatment arms. We find little evidence that education and account access are strong complements, and some evidence they are substitutes.
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Working Paper
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May 01, 2014
English
We use a clustered randomized trial, and over 16,000 household surveys, to estimate impacts at the community level from a group lending expansion at 110 percent APR by the largest microlender in Mexico. We find no evidence of transformative impacts on 37 outcomes (although some estimates have large confidence intervals), measured at a mean of 27 months post-expansion, across six domains: microentrepreneurship, income, labor supply, expenditures, social status, and subjective well-being. We also examine distributional impacts using quantile regressions, given theory and evidence regarding negative impacts from borrowing at high interest rates, but do not find strong evidence for heterogeneity.
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Published Paper
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May 01, 2014
English
We conduct a business plan competition to determine whether survey instruments or panel judges are able to predict which participating firms will grow fastest. Participants were required to submit a simple six- to eight-page business plan and then defend that plan before a panel of three or four judges. We surveyed the pool of applicants shortly after they applied, and then one and two years after the business plan competition. We use the follow-up surveys to construct a measure of enterprise growth, and use the baseline surveys and panel scores to construct measures of the potential for growth of the enterprise. We find that a measure of ability correlates quite strongly with future growth, but that the panel scores add to predictive power even after controlling for the measure of ability and other variables from the survey. The survey questions appear to have more power to explain the variance in growth. Participants presenting before the panel were give a chance to win customized tr...
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Working Paper
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April 03, 2014
English A4
In Kenya, 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 research below offer promising insights into everyday issues that affect the lives of the Kenyan poor.
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Brief
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April 01, 2014
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In Uganda, 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 Ugandan poor.
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April 01, 2014
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This paper uses a field experiment to test whether intrahousehold heterogeneity in discount factors leads to inefficient strategic savings behavior. I gave married couples in rural Kenya the opportunity to open both joint and individual bank accounts at randomly assigned interest rates. I also directly elicited discount factors for all individuals in the experiment. Couples who are well matched on discount factors are less likely to use costly individual accounts and respond robustly to relative rates of return between accounts, while their poorly matched peers do not. Consequently, poorly matched couples forgo significantly more interest earnings on their savings.
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Working Paper
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March 24, 2014
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Existing learning models suggest that the availability and informativeness of data determine the pace of learning. However, in learning to use a technology, there are often a staggering number of potentially important input dimensions. People with limited attention must choose which dimensions to attend to and subsequently learn about from available data. We use this model of “learning through noticing” to shed light on stylized facts about technology adoption and use. We show how agents with a great deal of experience may persistently be off the production frontier, simply because they failed to notice important features of the data that they possess. The model also allows for predictions on when these learning failures are likely to occur. We test some of these predictions in a field experiment with seaweed farmers. The survey data reveal that these farmers do not attend to pod size, a particular input dimension. Experimental trials suggest that farmers are particularly far from opti...
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Working Paper
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March 09, 2014
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Group liability in microcredit purports to improve repayment rates through peer screening, monitoring, and enforcement. However, it may create excessive pressure, and discourage reliable clients from borrowing. Two randomized trials tested the overall effect, as well as specific mechanisms. The first removed group liability from pre-existing groups and the second randomly assigned villages to either group or individual liability loans. In both, groups still held weekly meetings. We find no increase in short-run or long-run default and larger groups after three years in pre-existing areas, and no change in default but fewer groups created after two years in the expansion areas.
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Published Paper
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March 01, 2014
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The poor can and do save, but often use formal or informal instruments that have high risk, high cost, and limited functionality. This could lead to undersaving compared to a world without market or behavioral frictions. Undersaving can have important welfare consequences: variable consumption, low resilience to shocks, and foregone profitable investments. We lay out five sets of constraints that may hinder the adoption and effective usage of savings products and services by the poor: transaction costs, lack of trust and regulatory barriers, information and knowledge gaps, social constraints, and behavioral biases. We discuss each in theory, and then summarize related empirical evidence, with a focus on recent field experiments. We then put forward key open areas for research and practice.
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Published Paper
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March 01, 2014
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This paper reports results from the randomized evaluation of a group lending microcredit program in Hyderabad, India. A lender worked in 52 randomly selected neighborhoods, leading to an 8.4 percentage point increase in takeup of microcredit. Small business investment and profits of pre-existing businesses increased, but consumption did not significantly increase. Durable goods expenditure increased, while “temptation goods” expenditure declined. We found no significant changes in health, education, or women’s empowerment. Two years later, after control areas had gained access to microcredit but households in treatment area had borrowed for longer and in larger amounts, very few significant differences persist.   Research brief available here.
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Published Paper
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March 01, 2014
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Research indicates that preschool children need to learn pre-math skills to build a foundation for primary- and secondary-level mathematics. This paper presents the results from the early stages of a pilot mathematics program implemented in Cordillera, Paraguay. In a context of significant gaps in teacher preparation and pedagogy, the program uses interactive audio segments that cover the entire preschool math curriculum. Since Paraguayan classrooms tend to be bilingual, the audio and written materials use a combination of Spanish and Guaraní. Based on an experimental evaluation since the program’s implementation, we document positive and significant improvements of 0.16 standard deviations in standardized test scores. The program helped narrow learning gaps between low- and high-performing students, and between students with trained teachers and those whose teachers lack formal training in early childhood education. Moreover, the program improved learning equally among both Guaraní- a...
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Published Paper
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February 01, 2014
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Dispute resolution institutions facilitate agreements and preserve the peace whenever property rights are imperfect. In weak states, strengthening formal institutions can take decades, and so state and aid interventions also try to shape informal practices and norms governing disputes. Their goal is to improve bargaining and commitment, thus limiting disputes and violence. Mass education campaigns that promote alternative dispute resolution (ADR) are common examples of these interventions. We studied the short-term impacts of one such campaign in Liberia, where property disputes are endemic. Residents of 86 of 246 towns randomly received training in ADR practices and norms; this training reached 15% of adults. One year later, treated towns had higher resolution of land disputes and lower violence. Impacts spilled over to untrained residents. We also saw unintended consequences: more extrajudicial punishment and (weakly) more nonviolent disagreements. Results imply that mass education c...
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Published Paper
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February 01, 2014
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In 2013, Innovations for Poverty Action (IPA) performed a formative study of the preprimary education sectors in one peri-urban area in each of four cities: Accra (Ghana), Johannesburg (South Africa), Lagos (Nigeria), and Nairobi (Kenya). This study, launched and sponsored by the UBS Optimus Foundation, aimed to present descriptive details on access to and the quality of preschools in these areas. The preprimary education sector in peri-urban areas was found to be largely dominated by the private sector. While preschool enrollment rates are quite encouraging, overall age-appropriateness and quality of instruction need to be addressed.   The four study sites - Ashaiman in Accra, Soweto in Johannesburg, Agege in Lagos, and Mukuru in Nairobi- were chosen for their large size and their relative diversity. In each, the data collected is representative of the specific study area. However, they can provide broad insights on what the situation may be across other poor peri-urban neighborhoods....
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Report
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January 30, 2014
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We conducted two matching grant experiments with an international development charity. The first and primary experiment tests a matching grant from the Bill and Melinda Gates Foundation (BMGF) compared to a matching grant from an anonymous donor. The second, auxiliary experiment, establishes that the matching grant from BMGF in this context does generate further donations compared to a control. We find that naming BMGF as the matching donor raises more money, both compared to an anonymous donor and compared to control. In a key result, we find that the effect persists after the matching period, and that the naming-BMGF effect is heterogeneous—largest for donors who previously gave to other poverty-oriented charities. Combining this with a survey of representative Americans that shows a correlation between giving to poverty charities and familiarity with the BMGF, we conclude that the matching gift here primarily works through a quality signal mechanism.
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Working Paper
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January 12, 2014
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Accra has a vibrant private and public education sector at both the primary and preprimary levels. Attendance at preschool is exceptionally high, reflecting both strong parental beliefs in the importance of preschool and the recent government stipulation that two years of preschool should be part of the Free Compulsory Universal Basic Education (FCUBE) structure. Despite the Government’s success in expanding public preschool provision, however, the private school industry remains very strong: an estimated 90% of preschool students in the study area of Ashaiman are attending private preschools.   In September and October 2013 Innovations for Poverty Action conducted a data collection exercise in the large slum area of Ashaiman, in the Greater Accra region. A representative sample of 286 household surveys, 30 headmaster surveys and 40 classroom observations were conducted with the aim of discovering the scale, cost and quality and preschool education in this area. This paper details this...
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Report
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January 01, 2014
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An observed positive relationship between compensation and productivity cannot distinguish between two channels: (1) an incentive effect and (2) worker selection. We use a simplified Becker-DeGroot-Marschak mechanism, which provides random variation in piece rates conditional on revealed reservation rates, to separately identify the two channels in the context of casual labor markets in rural Malawi. A higher piece rate increases output in our setting, but does not attract more productive workers. Among men, the average worker recruited at higher piece rates is actually less productive. Local labor market imperfections appear to undermine the worker sorting observed in well-functioning labor markets.
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Working Paper
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January 01, 2014
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Standard models of investment predict that credit-constrained firms should grow rapidly when given additional capital, and that how this capital is provided should not a§ect decisions to invest in the business or consume the capital. We randomly gave cash and in-kind grants to male- and female-owned microenterprises in urban Ghana. For women running subsistence enterprises we find no gain in profits from either treatment. For women with larger businesses we strongly reject equality of the cash and in-kind grants; only in-kind grants cause growth in profits, suggesting a flypaper e§ect whereby capital coming directly into the business sticks there, but cash does not. The results for men also suggest a lower impact of cash, but di§erences between cash and in-kind grants are less robust. There is suggestive evidence that the di§erence in the e§ects of cash and in-kind grants is associated more with lack of self-control than with external pressure. 
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Published Paper
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January 01, 2014
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Assumptions about individual demand for savings underlie workhorse models of intertemporal choice and intra-household bargaining, banking strategy, and financial inclusion policy. A Philippine bank tested sensitivity to interest rates and account ownership requirements in 10,000 randomized door-to-door solicitations for a commitment savings account. Take-up is substantial (23%), but price elasticity of saving in this account is not significantly different from zero in either the full sample or sub-groups of plausibly marginal savers. The upper bound is less than 0.5 in the full sample, and exceeds 1.0 in only 1 of 22 sub-groups. Nor do we find sensitivity to ownership requirements.
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Working Paper
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January 01, 2014
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Many micro-enterprises in Kenya have low productivity. We focus on one particular business decision which may indicate low productivity: keeping enough change on hand to break larger bills. This is a surprisingly large problem. Our estimates suggest that the average firm loses approximately 5-8% of total profits because they do not have enough change. We conducted two experiments to shed light on why this happens: surveying firms weekly about lost sales, thereby increasing the salience of change, and explicitly informing firms about lost sales. We find that both interventions significantly altered change management and reduced lost sales. This largely rules out many potential explanations such as the risk of theft or the costs of holding change being too high. One explanation consistent with firms’ response to the survey and information on their lost sales is that firms were not perfectly attentive to change management prior to the interventions.
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Working Paper
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January 01, 2014
English
In the past several decades, the non-profit sector has made huge inroads in expanding access to financial services for the poor around the world. Now for-profits have moved in and dominate in many markets. Is there still a role for the non-profit sector in financial inclusion for the poor? If so, what exactly is the area where a subsidy is warranted? This report focuses on three roles for non-profits: to innovate; to reach those too young, too poor, or too rural for the for-profit financial institutions; and to bridge trust gaps.
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Report
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January 01, 2014

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