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We estimate the impact of Kenya’s post-election crisis on individual risk preferences. The crisis interrupted a longitudinal survey of more than five thousand Kenyan youth, creating plausibly exogenous variation in exposure to civil conflict by the time of the survey. We measure individual risk preferences using hypothetical lottery choice questions which we validate by showing that they predict migration and entrepreneurship in the cross-section. Our results indicate that the post-election violence sharply increased individual risk aversion. Immediately after the crisis, the fraction of subjects displaying extreme risk aversion increased by more than 80 percent. Findings remain robust when we use an IV estimation strategy that exploits random assignment of respondents to waves of surveying. Our results suggest that the crisis also impacted trust, social capital, and beliefs about the economy, though it did not have any detectable negative impacts on job prospects or wages.
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Working Paper
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April 01, 2016
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We show that extremely poor, war-affected women in northern Uganda have high returns to a package of $150 cash, five days of business skills training, and ongoing supervision. Sixteen months after grants, participants doubled their microenterprise ownership and incomes, mainly from petty trading. We also show these ultrapoor have too little social capital, but that group bonds, informal insurance, and cooperative activities could be induced and had positive returns. When the control group received cash and training 20 months later, we varied supervision, which represented half of the program costs. A year later, supervision increased business survival but not consumption.
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Published Paper
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April 01, 2016
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Can innovation among micro-entrepreneurs in South Africa teach global corporations a lesson? Rajesh Chandy, Stephen Anderson-Macdonald and Bilal Zia reckon so. Mass poverty is a huge world problem, typically addressed through multibillion aid programmes. But a grassroots research project in South Africa’s impoverished townships suggests another, sustainable solution. It isn’t the first study into the impact of skills training on microentrepreneurs in developing countries. But prior initiatives have tended to show that any benefits are small or short-lived. This project is remarkable because it is the first to demonstrate the opposite. “You can solve many of the problems of poverty and growth in the world by doing better business,” says LBS’s Rajesh Chandy, one of the three academics who devised the project. “Microentrepreneurs represent the most common type of business in the world. Yet we tend to ignore them – even though they are hiding in plain sight. If we can help them transform t...
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March 30, 2016
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Background. By 2009, two decades of war and widespread displacement left the majority of the population of Northern Uganda impoverished. Methods. This study used a cluster-randomized design to test the hypothesis that a poverty alleviation program would improve economic security and reduce symptoms of depression in a sample of mostly young women. Roughly 120 villages in Northern Uganda were invited to participate. Community committees were asked to identify the most vulnerable women (and some men) to participate. The implementing agency screened all proposed participants, and a total of 1800 were enrolled. Following a baseline survey, villages were randomized to a treatment or wait-list control group. Participants in treatment villages received training, start-up capital, and follow-up support. Participants, implementers, and data collectors were not blinded to treatment status. Results. Villages were randomized to the treatment group (60 villages with 896 participants) or the wait-lis...
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March 30, 2016
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Weather index insurance protects farmers against losses from extreme weather and facilitates investment in their farms, but randomized evaluations in South Asia and sub-Saharan Africa have shown low demand for these products at market prices, suggesting the need for alternative approaches.  Key Findings: Without substantial subsidies, take-up of insurance was low. Large discounts increased take-up substantially, and interventions designed to increase financial literacy or reduce basis risk also had positive effects. However, at market prices, take-up was in the range of 6–18 percent, which cannot sustain unsubsidized markets. Insured farmers were more likely to plant riskier but higher-yielding crops. In the three studies that measured changes in farmer behavior, farmers who felt protected against weather risks shifted production toward crops that were more sensitive to weather but more profitable on average. While self-sustaining markets for weather index insurance have not emerged, f...
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March 24, 2016
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Loans and business management training helped men grow their small business profits, but women did not experience any impacts on their businesses as a result of loans, training, or grants.
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March 21, 2016
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Labor-intensive public works programs are important social protection tools in low- income settings, intended to supplement the income of poor households and improve public infrastructure. In this evaluation of the Malawi Social Action Fund, an at- scale, government-operated program, across- and within-village randomization is used to estimate effects on food security and use of fertilizer. There is no evidence that the program improves food security, and suggestive evidence of negative spillovers to untreated households. These disappointing results hold even under modifications to the design of the program to offer work during the lean rather than harvest season or increase the frequency of payments. 
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Working Paper
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March 09, 2016
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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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March 04, 2016
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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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March 04, 2016
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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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Using a randomized evaluation with 432 Mexican small and medium enterprises, this paper shows that access to management consulting led to better firm performance: one-year results show positive effects on return-on-assets and total factor productivity. Owners also had large increases in “entrepreneurial spirit” (an entrepreneurs’ managerial confidence index). Using Mexican social security data, the analysis finds a large increase in the number of employees and total wage bill several years after the program. The paper documents large heterogeneity in the specific managerial practices that improved as a result of the consulting, but there is no singular mechanism as a panacea for all firms.
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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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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
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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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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
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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...
Type:
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.
Type:
Goldilocks Toolkit
Date:
January 05, 2016

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