IFPRI’s Applied Microeconomics & Development Seminar Series provides a forum for researchers to present top-quality applied microeconomics and development work. Seminars are held on the first and third Thursdays of each month at IFPRI’s Washington DC office, located at 2033 K St. NW. View presentations from past seminars.
Speaker: Pascaline Dupas, Associate Professor at Stanford University
Conference Room 7AB
Targeting Technology Adoption Subsidies: Methods and Mechanisms
Many technologies require local experimentation before individuals can make successful adoption and usage decisions. Since information is a public good, technology adoption subsidies are an important component of development policy. We ask whether it is possible to enhance technology adoption schemes by targeting the most appropriate experimenters. Building on Chassang et al. (AER 2012), we design and implement a set of field experiments that let us study the building blocks needed for successful targeting: Are people heterogeneous in their ability as experimenters? Is this information known, and by whom? Can it be elicited in an incentive-compatible way? Can it be used to enhance the effectiveness of subsidies?
Speaker: Sarah Baird, Associate Professor at The George Washington University
Conference Room 7AB
When the Money Runs out:Do Cash Transfers Have Sustained Effects?
We examine the medium-term effects of a two-year cash transfer program for adolescent girls on a broad range of outcomes. Just two years after the cessation of transfers, the substantial short-term impacts of unconditional cash transfers (UCTs) completely disappeared: in fact, UCT recipients were less empowered and had worse marriage market outcomes than the control group. However, children born to UCT beneficiaries during the program had significantly higher height-for-age z-scores. On the other hand, for those who had already dropped out of school at baseline, conditional cash transfers (CCTs) produced a large increase in educational attainment, a sustained reduction in the total number of births, and a more educated pool of husbands. Even in this group, however, there were no gains in health, labor market outcomes, or empowerment. These findings suggest that while UCTs provide adequate safety nets for families during their eligibility periods and CCTs can effectively contribute to sustained human capital accumulation, the current enthusiasm for the promise of cash transfer programs as a tool for transformative changes for their direct beneficiaries may be misguided.
Speaker: Jim Berry, Assistant Professor at Cornell University
Conference Room 7AB
When Student Incentives Don’t Work: Evidence from a Field Experiment in Malawi
We study the impacts of two types of merit-based scholarships on performance of primary school students through a field experiment in Malawi. One criticism of merit-based scholarship programs is that by providing rewards to only the very top performers, lower-performing students who are unlikely to receive the incentive may not respond to the programs. An incentive design that could address this concern follows that proposed by Barlevy and Neal (2012), in which students are grouped by baseline score, and incentives are awarded to the top performers in each group. We study the impacts of this “relative” merit-based scholarship program alongside a more typical “standard” merit-based scholarship program that provided scholarships to the top students in the sample. One hundred seventeen classrooms in 31 schools were randomly assigned to either the standard merit-based scholarship program, relative merit-based scholarship program, or to a control group. We find no evidence that either scholarship program increased test scores. In fact, the standard merit-based scholarship decreased student test scores by 0.14 standard deviaions compared to the control group, with the largest decreases concentrated among those least likely to win the scholarship. Although the relative merit-based scholarship program had no significant impacts on student test scores, there is little evidence of adverse effects, as found with the standard merit-based scholarship program.
Speaker: Robert Garlick, Assistant Professor at Duke University
Conference Room 8A
Heterogeneity in the Efficiency of Intrahousehold Resource Allocation: Empirical Evidence and Implications for Investment in Children
We present some of the first evidence of within-sample variation in the efficiency of intrahousehold resource allocation. In a sample of rural, low-income Mexican households, observed consumption patterns are Pareto efficient for households with relatively old heads, but not households with relative young heads. This variation in efficiency has important welfare implications: younger households invest less in children’s education and their education investments are less sensitive to the receipt of cash transfers. We believe this is the first empirical link between inefficient household resource allocation and lower investment in children’s education, though this link follows naturally from standard models of investment in household public goods. Heterogeneity in efficiency by household head age may be due to cohort and/or lifecycle effects. The specific patterns of heterogeneity we find are more consistent with cohort than lifecycle effects, which means that average efficiency may decline over time in this population. From a policy perspective, these results highlight a limitation of cash transfers relative to other forms of poverty alleviation policy in settings where at least some households engage in inefficient resource allocation. Many papers have already established that the distributional effects of development policy depend on whether households behave as unitary actors; our results emphasize that it is also important to assess whether (some) households behave as efficient collective units.
Speaker: Karen Macours, Associate Professor at Paris School of Economics and INRA Researcher
Conference Room 7AB
The Reliability and Validity of Skills Measurement in Rural Household Surveys
Measures of cognitive, non-cognitive and technical skills are increasingly used in development economics, to analyze determinants of skills formation, the role of skills in economic decisions or simply because they are potential confounders. Yet in most cases, these measures have only been validated in developed countries. This paper tests the reliability and validity of some of the most commonly used skills measures, in a rural developing context. To do so, we administrated a survey with a series of skills measurement to more than 900 households, asked them the same questions again after 3 weeks, and also collected questions on agricultural practices and production in rural western Kenya. The results show the cognitive skills measures are reliable and internally consistent. Technical skills are difficult to capture and very noisy, but predictive power and coherence increase as questions are aggregated through factor analysis. By contrast, the reliability of non-cognitive skills measures are low in this setting, and measurement error appears non-classical as correlation between questions are driven in part by answering patterns of respondents and the phrasing of the questions. We show that correcting for measurement error, leads to substantially different empirical results.
Speaker: Tom Vogl, Assistant Professor at Princeton University
Conference Room 7AB
Growth and Childbearing in the Short- and Long-Run
Despite being key to theories of economic growth and the demographic transition, evidence on how fertility responds to aggregate income change is mixed. We analyze economic growth and fertility change in the developing world over six decades, using data on 2.3 million women from 248 surveys in 80 countries. We find that fertility responds differently to fluctuations and long-run growth, and that the nature of these responses varies over the lifecycle. In the short run, conception rates are procyclical, declining sharply during recessions, with over half of this response offset in the subsequent year. In the long run, prime-age and total conception rates fall more rapidly in faster-growing economies, although older-age conception rates fall more slowly due to the postponement of childbearing. Across cohorts of mothers within a country, growth experienced at prime reproductive age has no relation to lifetime fertility, but growth at older ages leads to higher lifetime fertility. These results are consistent with standard models of demography and long-run growth, extended to include a lifecycle with liquidity constraints.
Speaker: Jessica Goldberg, Assistant Professor at University of Maryland
Conference Room 7AB
When Defaults Matter: Behavioral Economics and the Use of Savings Accounts in Malawi
Savings account holders are significantly less likely to switch to another, cheaper account, compared to new clients given a choice between the two accounts. While 42 percent of account holders retained their original, expensive accounts, none of the new clients chose the expensive accounts. We exploit previous experimental variation in account usage and find that account holders that used their account more frequently are more likely to switch. This suggests that induced familiarity with the account can mitigate the endowment effect.
Financial products and transfer schemes are often designed to help individuals improve welfare by following through on intertemporal plans. We implement an artefactual field experiment in Malawi to test the ability of households to manage a cash windfall by varying whether 474 households receive a payment in cash or through direct deposit into pre-established accounts at a local bank. Payments are made immediately, with one day delay, or with eight days delay. Defaulting the payments into savings accounts leads to higher bank account balances, an effect that persists for a number of weeks afterwards. However, neither savings defaults nor payment delays affect the amount or composition of spending, suggesting that households manage cash effectively without the use of formal financial products.
Speaker: Ketki Sheth, Assistant Professor at University of California, Merced
Conference Room 7AB
Insuring the Poor: Overcoming Adverse Selection and Increasing Demand for Health Insurance
Low demand and adverse selection are potential explanations for missing health insurance markets in low-income countries. Institutional innovations such as insuring groups can help complete insurance markets by mitigating adverse selection, but has ambiguous effects on total insurance demand. In low income countries, self-employment makes group insurance difficult to implement, but informal financial groups may be a promising alternative through which to offer insurance to groups. This study evaluates a micro health insurance (MHI) offered either as group insurance or individual insurance through Self Help Groups, a common informal financial group structure, in rural Maharashtra, India. I find strong evidence for adverse selection: both group and individual enrollees are significantly more likely than non-enrollees to report negative health incidences prior to the enrollment period. The total demand for group insurance is significantly higher (57 percent compared to 16 percent) and the relative effect of poor health on insurance demand is significantly reduced among those offered group insurance (35 percent compared to 100 percent). Together, these results are consistent with insurance offered through informal financial group structures increasing demand and reducing, but not eliminating, adverse selection relative to individual insurance. Surprisingly, I also find that insurance demand is higher for those with greater preference for risk, but fail to find support for additional demographic characteristics, including age and gender, predicting insurance demand.