Week of February 27, 2017

Money ain't Learnin' and the New Redlining

1. Mobile Money: The GSMA published it's annual mobile money "state of the industry" report, except that this time it's a review of the 2006-2016. Here's a summary (I know which one I would click on). As you'd expect, the GSMA heavily touts some impressive statistics on growth and usage. And I suppose you can't be surprised at the sometimes more than implied leaps from outputs to outcomes. But the more I look at things like this, the more I'm reminded of Lant Pritchett's book The Rebirth of Education: Schooling Ain't Learning and the history of using school enrollment as a very bad proxy for the outcome that everyone actually cares about, learning. Or to use a closer to the finance industry analogy, was there anyone tracking the spread of ATMs and debit cards and getting excited about how much it was going to help the poor?

2. The New Redlining: Fisman, Paravisini, and Vig have a new paper (and a summary) in AER on the effect of loan officer "cultural proximity" with borrowers in India. Loan officers who share religion, ethnicity and other traits with a borrower provide larger loans on better terms, and borrowers have higher repayment rates, meaning the loans are more profitable for the bank. The proposed mechanism is reduced "information frictions" in the lending process. It's a more subtle form of redlining--a systematic way that banks denied credit to minority communities in the United States. Fisman et. al. suggest hiring and promoting minority loan officers as the obvious way to combat the discrimination they document (that's a version of "immigrant" banks that you can still find in places like New York and San Francisco). It's also part of the reason that algorithmic approaches to credit, like this effort to use exam scores as a proxy for student lending in Kenya--remain appealing: you can simply skip past the bias inherent in human-to-human interactions! If only. The long battle against algorithmic redlining is only just beginning and will be much harder to win as long as we succumb to the fiction that algorithms fix bias. I wonder which socioeconomic class the people doing better on exams come from?  

3. Governance and Social Investment: If you pay attention to finance generally and tech in particular, you've surely come across stories about SnapChat's IPO--it's the first time in history that an IPO sold shares with no voting rights. That's right, buying a share of the company entitles you to nothing, not even a symbolic say in how the company is governed (such as at Facebook). Some of called this an absence of governance, but as Matt Levine at Bloomberg (citing John Plender) writes, its actually a shift of governance from shareholders to entrepreneurs (you'll have to scroll down) that is a logical consequence of an environment where capital is plentiful and the specialized labor of entrepreneurs is scarce. Which brings us to social investment. I'd argue that the specialized labor of social entrepreneurs who can build sustainable businesses with high levels of impact is even more scarce. And yet, social investors seem to still be able to, or at least want to, exert outsize control of firms they invest in. The Snap IPO suggests that may change. Why should a social entrepreneur seek social investment when regular old investors seemingly are willing to write blank checks?

4. Investment and Inequality: Most investment isn't social investment or even in tech (though sometimes it seems so). It also turns out that investment in the United States isn't from most people. Well, just barely most people. Only 52% of American adults owned any stocks in 2016, tied for the lowest figure since measurement began in 1998. But most of those people don't own very much stock at all--the top 20% of Americans own 92% of the stock held. In other words, while the stock markets are hitting record highs, that doesn't matter at all for most American households. 

5. Jobs: What does matter for most American households is the quality of jobs available to them. Here's Eduardo Porter on one of the reasons that even the jobs that are available are not nearly as stable, nor do they offer the same benefits, as they did before: outsourcing. No, not to other countries, just to other firms. In many large firms, much of the entry-level jobs are outsourced to specialty firms: receptionists, maintenance, food service and security. These jobs are routinely lower paying and offer fewer benefits than when an employee works directly for a firm--norms of fairness in wages no longer apply.

Bonus Updates: So maybe the next financial crisis isn't auto loans, empty retirement accounts or inflated valuations for tech companies with limited external governance, but pet leases? You have to click on a link that leads to, "Also this cat is ruining my credit score."

An amazing 1953 "explainer" about stock market investing narrated by Edward R. Murrow. The link is to a segment that talks about whether broad ownership of stock is a good or bad thing (see Item 4 above). Hattip to Morgan Housel.

An amazing 1953 "explainer" about stock market investing narrated by Edward R. Murrow. The link is to a segment that talks about whether broad ownership of stock is a good or bad thing (see Item 4 above). Hattip to Morgan Housel.

Week of February 20, 2017

The Impossibility Edition

1. Ken Arrow: Ken Arrow died this week, at age 95. Arrow is the youngest economist to win a Nobel (51), and probably could have won more than once so wide-ranging was his work and influence. He won the Nobel for his work on general equilibrium, but he made foundational contributions to health economics, insurance, risk analysis, and more. Still, he was most famous for his Impossibility Theorem, showing that no majority voting system can be free of arbitrary outcomes. It was also apparently impossible to discuss a subject he wasn't well read in. Here is Tim Harford's short obituary. Here is the Monkey Cage Blog's appreciation ("Arrow proved the existence of a solution to the problem of economics and the non-existence of a solution to the problem of politics."). And here is a three part interview with Arrow from 2009.

2. A Certain Kind of Aid: Speaking of impossible, it's impossible that the combination of subject and price of this new book isn't trolling, isn't it? To be fair, aid does go in cycles, and this was the explicit strategy during colonialism. The item name is a reference to this, if you were wondering. (Hat tip: Justin Sandefur)

3. Pick Your Crisis: Is the next US financial crisis going to come from widespread default on auto loans? Americans now owe $1.16 trillion on car loans, an average of $6000+ per licensed driver. Who is loaning all that money? The car manufacturers; 3/4s of lending to subprime borrowers is underwritten by the manufacturers. Or will the next crisis be the result of the large numbers of Americans who aren't saving for retirement? New data from the US Census Bureau based on tax records finds only 41% of American workers eligible to for a workplace retirement account are using them (another reason why the idea, noted in last week's faiV to make withdrawals from retirement accounts even harder may not help very many people). Or perhaps the next crisis will be based on uncertainty. The Trump administration seems to already be mucking with government statistics. In other words, you should probably lower your expectations of new data insights coming from the Federal government.

4. Household Finance: The Zambia Financial Diaries report is now available. Microfinance Opportunities tracked 355 people for a year in four different parts of Zambia. There are lots of good details here on how households use primarily informal financial services to manage cash flows and smooth consumption. In the US, here's the story of a mother of three in Boston and her weekly financial juggling to make an upwardly-mobile lifestyle on below-local-median-income--it's a mini-financial diary.

5. Mobility and Migration: Here's a piece by Jeff Bloem and Scott Loveridge on the mobility of resettled refugees in the US. Within a year of arrival, more than 10% of the refugees resettled in the US had moved to a different community. The number of refugees in Minnesota doubled because refugees resettled in other states quickly moved again in search of jobs, services and community. They note that there are large differences in the services available state-to-state and that refugees learn this quickly and react to incentives. Which makes it all the more curious that geographic mobility in the United States in general has dropped so much--if refugees can figure out that moving is great path to opportunity in less than 12 months in the United States, why can't everyone else?

David McKenzie presents "The State of Development Journals 2017" detailing the impact, acceptance rate, and time to acceptance at 10 academic journals focused on development topics. The blog post has much more (scary) details, like the average time to acceptance for AER is almost two years. Average! My conclusion: Start citing the Journal of Development Effectiveness at every opportunity everyone! Source: Development Impact Blog/David McKenzie

David McKenzie presents "The State of Development Journals 2017" detailing the impact, acceptance rate, and time to acceptance at 10 academic journals focused on development topics. The blog post has much more (scary) details, like the average time to acceptance for AER is almost two years. Average! My conclusion: Start citing the Journal of Development Effectiveness at every opportunity everyone! Source: Development Impact Blog/David McKenzie

Week of February 13, 2017

1. F*ck Nuance: I know what you're thinking, but that's not what this item is about. It's actually about Kieran Healy's forthcoming paper in Sociological Theory called, well, F*ck Nuance. He argues that the rising demand for "nuance" in sociological theories inhibits clear thinking and useful research. It reminds me of what I've heard a lot of economists say about the demand for complicated formal models in economics papers. It's not what Healy intended, but here's a story about a FinTech start-up ditching FICO scores while offering "the fastest [credit] on the market," which certainly doesn't bother with any nuance like whether the product is good for customers.

2. F*ck Impact: So that's not what Jishnu Das's blog post is actually titled, but it might as well have been. Das (quite ironically, as David McKenzie noted) blogs about how researchers being held accountable for having impact beyond academia, for instance by writing blog posts, is a drag. It's worth reading because there are some valuable nuggets especially about the "poorly specified model" of impact in use and the breakdown of trust between funders and researchers. If you were interested in hearing the thoughts of some development economists who care a lot about having an impact, you could do worse than checking this out. On a different note, the subdued reaction to the post convinces me that the development blogosphere really is dead.   

3. Commitment Savings: In the WSJ, Bernartzi and Beshears argue that evidence from commitment savings evaluations suggest that restrictions around retirement accounts should get even more severe, particularly citing the original Ashraf, Karlan, Yin work in the Philippines. It's true that retirement accounts in the US are very leaky, but the cause isn't just temptation or present bias as Benartzi and Beshears imply. Volatility of incomes and expenses seems to play a large role. Here's a video of Dean Karlan discussing the possibility that less restrictive accounts may work better.

4. Mobility: Kevin Williamson writes in National Review that more should be done to help the poor move to better opportunities. Of course, he's only talking about mobility for the poor within the United States (and he weirdly cites the circa 2000 early evaluations of Moving to Opportunity which were contradicted by later work, but then overturned again by the more recent, more comprehensive work from Chetty et al) and never seems to consider the implications of his argument for trans-national mobility. Here's what I wrote not too long ago about philanthropy stepping in to help the people of Flint, MI move (and here, channeling Hirschman). Speaking of philanthropy, I was disappointed to see that the semifinalists for the MacArthur 100&Change $100 million grants didn't include anyone working on mobility. They're described as "eight bold solutions" but mostly seem to be scaling up ideas with mixed evidence that have been around for a quite a while.

5. Nuance Lives!: At least for Daniel Kahneman, who responds to a blog post analyzing the Replicability Index of the papers on priming cited in Kahneman's Thinking Fast and Slow. Kahneman explains what he missed and how he came to believe too much in the priming results. The nuance comes at the end where Kahneman states that he has not "unbelieved" the individual studies and that he still believes that priming is possible, but has changed his views about the size and robustness of priming effects.

Credit Suisse's 2016 Global Wealth Report provides some perspective on why trans-national mobility is so attractive, and why it's meeting more resistance than in the recent past. Source: Credit Suisse Research Institute

Credit Suisse's 2016 Global Wealth Report provides some perspective on why trans-national mobility is so attractive, and why it's meeting more resistance than in the recent past. Source: Credit Suisse Research Institute

Week of February 6, 2017

1. The World's Largest Financial Inclusion Experiment(s): That's a descriptor that applies to basically any Indian or Chinese national policy, but India is definitely where the interesting financial inclusion experiments via sweeping policy changes action is right now. Whether we'll learn from these experiments remains to be seen. Here's an attempt to learn something from the Indian government's JDY scheme to make bank accounts widely available--finding that usage is growing, and the primary actions are person-to-person transfers (sounds familiar doesn't it?). And here's a story from the FT on how insurance companies are attempting to use the shock of demonetisation and the increasing use of bank accounts (via JDY) to increase penetration of microinsurance.

2. Economists' Social Skills: A big concern in developed economies is the "skill mismatch": the skills that people have today (and by implication that our education system is focused on imparting) are not the skills that will be required for jobs in the near future (if not the present). The two items I see most frequently in such discussions is "coding/programming" and "social skills." I've never understood the former--computers are obviously better at coding than people are already. Social skills though, those do seem important. The surprising thing in this piece on skills and future jobs is the chart about mid-way through which says that economists require strong social skills, even more so than physicians, nurses' aides, and police(!). Perhaps that mismatch between practicing economists and social skills explains why the chart also notes that employment share for economists is stagnant.

3. QTWTAIN: Definitely becoming a regular feature of the faiV. (For those of you with better things to do than spend hours on social media, that's "Questions To Which the Answer is No.") 1) Is dramatic reduction in societal inequality likely without violence? 2) Are smart phones going to be the driver of digital financial inclusion? 3) Does gentrification push out existing homeowners (thought I'm not quite clear on who thought this was true)? 4) Did Donald Trump understand what the job was? ("I am shocked--shocked--to find that gambling is going on in here!")

And the mother of all questions to which the answer is no, "Are the worm wars over?" If you're really looking for something to read, there are a bunch of pieces in that issue of IJE on causal inference in epidemiology. But if you're reading the faiV, I'm guessing you'd be more interested in what these people have to say about causal inference.

4. Expense Volatility: The JP Morgan Chase Institute has a new report based on their work with Chase customer data exploring expense volatility, finding a 29% month-to-month fluctuation in expenses for median-income households, and that households have to build up liquid assets for major medical expenses, but do not recover from that shock within 12 months. Expense volatility is a major theme of the forthcoming book The Financial Diaries. You can pre-order it now.

5. The Last Mile: If you provide information to citizens that lets them better plan around unreliable public services, does it help? Not if the people in charge of providing the information don't actually provide it. The fact that front line staff (public or private) don't do what their managers tell them to do is a too often ignored problem in both program development and program evaluation. It's a recurring theme in Karlan and Appel's book on failure in field experiments. But it remains one of the ways you can challenge the results of many economics papers, and usually you're going to sound smart when the presenter acknowledges that there wasn't a lot of attention paid to that factor.

Bonus Updates: Some more back and forth on whether cashlessness is good for low-income people. A new review of Experimental Conversations. And with immigration so much in the news, this research agenda on migration and remittances came back to mind--still many unanswered questions.

Yesterday I was guest lecturing with Jessica Goldberg, and she mentioned the table below from the AEA's Committee on the Status of Minority Groups in the Economics Profession. I suppose I shouldn't have been surprised, but I was: in 2013-2014, just 13 out of 422 economics Ph.D.'s were awarded to African-Americans.

Yesterday I was guest lecturing with Jessica Goldberg, and she mentioned the table below from the AEA's Committee on the Status of Minority Groups in the Economics Profession. I suppose I shouldn't have been surprised, but I was: in 2013-2014, just 13 out of 422 economics Ph.D.'s were awarded to African-Americans.

Week of January 30, 2017

1. Cashlessness: I continue to be amused that the most commonly written about and discussed issues in the field seem to be "more cash" and "less cash"--and those aren't actually opposing view points. Here's a piece critiquing the "less cash" arguments using the classic Baptists and Bootleggers lens. I remain puzzled that there isn't (even here) more discussion of the increased coercive power cashlessness would provide governments, which is something it appears a lot more people are starting to worry about in other domains. Here's a reading list on one of the arguments for cashlessness that I am least familiar with: how it enables more (and more effective?) monetary policy options. And here's an overview of the possibility of a universal basic (cash) income in India, plausible because of India's progress away from cash, including speculation about Gandhi's attitude about UBI. Meanwhile, Peru is making progress in building the infrastructure for ubiquitous digital payments, but adoption is concentrated among the urban and already banked. To summarize, I fall back to paraphrasing James Scott, "Underbanked is a strategy, not a condition."

2. Digitization: Digitization isn't all about digital payments. A start-up in Chicago is focused on digitizing the process for applying for food stamps. On it's face, it appears to be quite similar to Propel, a somewhat older start-up in New York. I wish much success to both. Interestingly, though, the above discussion of UBI in India contemplates one of the ways to keep program costs under control is to make it time-consuming to certify access so that only the truly needy take the time. It's a reminder, in the spirit of Bootleggers and Baptists, that difficulty in accessing public benefits is often a feature, not a bug.

3. Conspicuous Consumption (Is A Hell of A Drug): Conspicuous consumption is usually thought of as a feature of the spending choices of the wealthier tiers of society. Here's a new paper from Bellet and Sihra examining conspicuous consumption among the poorest in India finding that where inequality is greater, the poorest households substitute toward more visible spending and away from basic necessities like nutritious food. Here's one of the foundational pieces on spending patterns of poor households, The Economic Lives of the Poor, just because if you haven't read it, you should.  

4. QTWTAIN: Perhaps this will become a regular feature of the faiV. (For those of you with better things to do than spend hours on social media, that's "Questions To Which the Answer is No.") Three items this week: "Did a massive reduction in immigrant Mexican laborers in the United States raise wages or employment levels for native-born?", 2) "Does bribery in health care worker hiring necessarily lead to sub-optimal outcomes when access to education is highly unequal?", and 3) "Are public sector workers bystanders in the coalition of forces limiting housing supply?

5. Social Investing: Social investing is hard. That's sub-text of my recent piece on investing in microcredit and NextBillion's recent look at microfinance IPOs. Most often the focus is on balancing financial and social returns. But there's also a challenge in thinking through the various forms of delivering social finance and the implications that come along with them, and the needs of social investors at scale to manage an overall investment portfolio. In a recent piece for Stanford Social Investment Review, Root Capital discusses it's evolving tools for tackling these challenges. If you're interested in these questions, you should check out the Video of the Week, below.

The Centre for European Research in Microfinance at ULB has just launched a MOOC on the commercialization of social enterprise, which draws on the lessons of the microfinance industry. It's free and begins February 27th. Contributors include Paul Collier, Johanna Mair, Dan Rozas and FAI's own Jonathan Morduch. Register here.

Week of January 23, 2017

1. Cash Crisis (India): India's demonetization "adjustment" continues. IMTFI has begun a special series on their blog focused on demonetization; the first post has an overview of the issues with links to work from many researchers from many disciplines, and the promise of more to come. The New York Times takes a look at the knock-on effects three months after the announcement--my only quibble is the headline which implies that demonetization only now "begins to bite." 

2. Cash Crisis (US): It's certainly not sudden demonetization that's the cause of US household's troubles managing cash and cash flows. But there are struggles none-the-less. Diana Elliott of the Urban Institute looks at the budgetary effect on cities of residents who don't have $2000 in liquid savings, finding that 10 large US cities incur (via missed property tax payments, managing evictions, etc.) costs that amount to .3 to 4.6 percent of their annual budgets (the data can be found here). Lisa Servon has a new book, The Unbanking of America, which looks at how much of the traditional financial services industry has turned its back on customers who need help managing their day-to-day cash flow and short-term needs. Here's Lisa discussing her research, which included working at a check casher, a payday lender, and a debt crisis hotline, on Fresh Air, and a review from The Atlantic.

3. Policy Influence: Every week I link to new (at least to me) research--but does any of it matter? ODI has a new report on "10 Things to Know About How to Influence Policy with Research." It's also a question I ask everyone in my book on the use of randomized trials in development economics (hint, hint, nudge, nudge). Sometimes it's hard to draw the lines between basic research, research designed to inform or influence policy, and advocacy masquerading as research. Other times not so much. That particular instance from Justin Sandefur and colleagues as they respond to critics about their RCT evaluating Liberia's new charter school policy, and consider whether the research will change anyone's mind

4. QTWTAIN: For those of you with better things to do than spend hours on social media, that's "Questions To Which the Answer is No." In this case, the question seems to be "Is behavioral economics dead?" which I had no idea was even a thing people were asking. In the course of answering "no," Noah Smith provides lots of links to interesting work connecting behavioral findings to macro questions. I think the far greater challenge is the on-going roll back of confidence in behavioral/social psych findings, but I don't think anyone really thinks even that is fatal.

5. Microfinance IPOs: While I've been worrying (and continue to worry) about a move away from social investment in microcredit innovation, it's true that there have been a couple of microfinance IPOs recently. Next Billion has an interview with Dan Rozas and Anna Kanze about the new IPOs in India and what they mean for the industry. Next Billion is also hosting a Twitter chat on Microfinance IPOs on Monday the 30th, at 10:00am (GMT-5) on the topic, using #mfichat if that's your sort of thing.

A Brookings study of the relationship between being a good researcher and being a good teacher at Northwestern University, finds a precise "none." Now we just need to find a way to measure "policy influence" instead of "instructor value added." Source: Brookings

A Brookings study of the relationship between being a good researcher and being a good teacher at Northwestern University, finds a precise "none." Now we just need to find a way to measure "policy influence" instead of "instructor value added."
Source: Brookings

Week of January 16, 2017

Editor's Note: I've been traveling so much at the beginning of the year that I literally forgot that last Friday was Friday. Rather than publish a few days late, I decided to save up for an extra large faiV this Friday, figuring that many of you will appreciate lots of fodder to distract from the events of the day.

1. In Memoriam: In the last edition, I linked to some remembrances of Tony Atkinson. The philosopher Derek Parfit died the same day as Atkinson, and was equally concerned with inequality though in a quite different way. Here's a 2011 profile in the New Yorker by Larissa MacFarquhar that provides a very good overview of Parfit's thinking (by the way, if you haven't read MacFarquhar's Strangers Drowning, it is probably the ne plus ultra of counterprogramming today). Here's Dylan Matthews remembrance and explainer at Vox--with the truly remarkable note that a volume of essays discussing his work On What Matters was published before the book itself came out. Here is a review of Reasons and Persons from 1984 and Parfit's essay "Why Anything? Why This?" both from LRB.

2. Reproduceability, Replication and Meta-Analysis: There are all sorts of arguments about what the defining features of science are, but I think most of them include reproduceability and the ability to make accurate predictions. At the ASSA meetings there were a number of sessions on these issues in economics. Here's a look at published replications in development economics and an overview of the state of replication in the field in general. Here is Eva Vivalt's review of the dispersion of estimates of impact in development impact evaluations (in lieu of the in progress paper she presented on the rate of false positives and false negatives that builds on her earlier work). And here's Rachael Meager's job market paper on using Bayesian Hierarchical Analysis to understand and predict heterogeneity in treatment effects using the microcredit impact literature. And here's Ioannidis et al. on the limited power of most economics papers

3. Household Finance and Cashflow: Expect to hear a lot in this space about cashflow and how it affects households (hey did you know you can pre-order The Financial Diaries, the book about the US Financial Diaries work?). Here's a paper looking at how changing minimum payments affects how much people pay on their credit cards finding a large but not exclusive role for liquidity constraints, estimating that US consumers would save $570 million a year (or credit card companies would lose $570 million a year in earnings) if all companies used the most conservative minimum payment calculation. Here's a look at excessive sensitivity to payday in Iceland--people spend a lot more when they receive paychecks and it's not explained by illiquidity. Here's recent work in Malawi varying timing of paydays (weekly vs. monthly, Friday vs. Saturday) finding that monthly payments helped recipients save more. And here's a video of Meiping Sun discussing the very large effects of the New York City MTA imposing a $1 fee on the purchase of fare cards

4. Cash and Cashlessness: Two big questions remain in cash transfers (whether recipients use them well is settled as far as I'm concerned): when and where do conditions help, and what are the long-term effects of cash. Here's a study from Lesotho on soft conditions--a clear message that the cash should be spent on the "interest and needs of children" yields significant changes in how the funds are spent. Here's work by Baird, et. al. building on their earlier work examining the impact of conditions in cash transfers, finding that the benefits of cash transfers fade out after two years with interesting implications for the role and application of conditions. And while we're talking about cash (albeit in a very different application of the term), here's a Guardian piece on the exclusionary impact of moving away from cash in developed countries. Very soon we're going to have to develop new vocabulary to distinguish between "fully liquid" aid and literal, physical cash.

5. Microfinance Innovation: NextBillion is moving to a new editorial approach by focusing it's coverage on a different topic each month. January is about microfinance and features three pieces by me on innovation in microcredit. The latest is considers the implications of thinking about microcredit as a vaccine or as an antibiotic. All three of the pieces are extensions of my recent paper The Case for Social Investment in Microcredit, which if you haven't read it yet, you should. And sticking at NextBillion (and setting up the next item) here is Graham Wright's take on five ways microfinance needs to innovate in response to digital finance.

6. Tech and FinTech: I confess that this most recent paper on the impact of One Laptop per Child in Peru made me giggle: Getting a laptop makes it less likely that teachers use a more effective approach, less likely that kids do homework, and less likely that they do chores. The effect sizes are huge so I'm skeptical but I don't recall seeing so comprehensive a set of bad news in a long time. The news isn't nearly so bad for FinTech of course, but that doesn't mean that all signs are positive. Here's Graham Wright reflecting on some areas of concern, particularly the troubling statistics on digital credit out of Kenya. Bangladesh is lowering the ceilings on mobile money transactions (both amount and frequency) due to unspecified suggestions of "abuse." And to illustrate the huge gap in thinking about FinTech in the US and in developing contexts here are 10 fairly ridiculous predictions for FinTech in 2017.    

7. Algorithms: Wrapping up on the tech front: In contrast to the late '90s thinking about how the internet was going to a massive boon to consumers, this piece suggests that algorithms could dramatically reduce price competition.

8. Microenterprise: Have I mentioned that my book is out? Yeah, I guess I have. One of the interviewees is David McKenzie--we spend a lot of time talking about his experiments, with de Mel and Woodruff, to understand microenterprises, in particular work in Sri Lanka on whether it's possible to help microenterprises "level-up" or to change their growth trajectory. David's most recent paper on the issue is now out as well, finding that subsidies to employ workers don't have a lasting impact on employment, profitability or sales. The search for ways to help microenterprises continues.

9. Parsimony: Behavioral economics has illustrated the many, many impediments to "rational" and consistent behavior but it some ways those many, many ways inhibit our ability to study and understand specific issues: does each study need to do extensive work to understand each participants risk aversion, hyperbolic preferences, limited attention, etc. etc.? A new paper by Stango, Yoong and Zinman attempts to make such work a bit easier by looking for simpler ways to measure and model behavioral phenomena, with some success and some failure.

10. Deworming: No, there will never be a last word. Owen Ozier has a new paper on long-term effects of deworming that sheds a lot of light on the reasons why long-term effects can be large while short-term effects are small or negligible. And in case you haven't taken the time yet, here's David Roodman's two long posts (one and two) on the deworming literature--a great useful distraction if there ever was one.

Video: Esther Duflo's Ely Lecture on "The Economist as Plumber"

Video: Esther Duflo's Ely Lecture on "The Economist as Plumber"

Week of January 2, 2017

Pre-AEA/ASSA Edition

1. In Memoriam: The new year began with news of the deaths of two important thinkers on development, economist Tony Atkinson and philosopher Derek Parfit. Here's Tony Atkinson's view of his most important work. Here's a celebratory post from the World Bank's Let's Talk Development blog, here's Beatrice Cherrier's overview of his work as the "founder of modern public economics," and here's a Foreign Affairs piece of Tony's from late 2015, as always focused on inequality and what can practically be done about it. I'll save links for Parfit until next week.

2. Microcredit: I have a new post at Next Billion on what I consider to be one of the most important new research papers on microcredit, an examination of the size and prevalence of subsidy by Cull, Demirguc-Kunt and Morduch. It documents that subsidy is widespread but small--in other words, that delivering pro-poor financial services isn't free, but that it is cheap. Over at CGAP, Greta Bull offers her thoughts on the four drivers of change for financial inclusion in 2017. And here are the most influential posts of 2016 at Next Billion.

3. Cash Aid and Basic IncomeI'm trying not to turn the faiV into a cash and basic income newsletter, but it is a topic that is drawing a lot of attention lately. In the UK, one of the tabloids attacked aid for giving cash to poor people (as opposed to giving cash to rich people?). The Atlantic ran a piece about the history of cash aid in philanthropy and how it is changing current practice. Here's a short history of the idea of basic cash income and here's a round up of both history and current things going on. If you're at #ASSA2017, there's a reception Saturday night to learn more about the Y Combinator basic income experiment in Oakland.  

4. Kahneman and Tversky and Lewis: You've probably seen that Michael Lewis has a new book about Kahneman and Tversky. In case you haven't, here's Sunstein and Thaler's review of the book. Here's a piece by Walter Isaacson about Michael Lewis. And here's a piece from Slate about the irony of Kahneman, our teacher about how easy it is to be wrong, and his faith in results that depended on small samples and have ultimately not held up to replication.

5. Savings: On a more prosaic level, how and why people save remains an important question. Here's Guerin, Kumar and Venkatasubramanian on the use of ceremonial expenditures as a means of informal saving at the IMTFI blog. In related news, Bill Maurer of IMTFI has a book coming out this year on the artifacts of money and transactions (via Diane Coyle's round up of the spring catalogs from econ publishers)

Bonus Ad: Today is the official release date of my book Experimental Conversations: Perspectives on Randomized Trials in Development Economics. Check it out at the MIT Press booth at #ASSA2017 or order one from Amazon (though it now says temporarily out of stock. Is that good news or bad news?)

The second post in David Roodman's epic review of the evidence for deworming is now up at GiveWell. The first post looked specifically at some of the worms papers; this post looks at whether results from those papers can be reasonably applied to other contexts. It's a long read but thoroughly worth it. Source: David Roodman/GiveWell

The second post in David Roodman's epic review of the evidence for deworming is now up at GiveWell. The first post looked specifically at some of the worms papers; this post looks at whether results from those papers can be reasonably applied to other contexts. It's a long read but thoroughly worth it. Source: David Roodman/GiveWell

Week of December 12, 2016

1. Effective Altruism: It's the right time of year to be talking about charitable giving--most US-based charities take in about 50 percent of their annual revenue during the month of December. Here is GiveWell's list of recommended charities this year (NB: I'm on the board of GiveWell). Jennifer Rubinstein has a new essay about the "hidden curriculum" of effective altruism, as seen in Peter Singer's and Will MacAskill's books. There's always a hidden curriculum isn't there?

2. Evidence-Based Policy: Effective Altruism shares a curriculum, hidden or not, with evidence-based policy. At Stanford Social Innovation Review, Jennifer Brooks of the Gates Foundation has a post making the case for evidence-based decision-making. I suspect that prior to November 8th most readers of this newsletter wouldn't have thought the case needed to be made. One of Brooks' key points is the need for better data from rigorous evaluations so that there is evidence not just on effectiveness of a particular program, but information on how to improve other programs' performance. That just so happens to be one of the points in the conclusion to my shortly to be available book on the use of RCTs in development economics. You're running out of time to buy a copy for a holiday gift. It won't arrive until January regardless, but it's the thought that counts right? Oh wait--the whole point of effective altruism and evidence-based policy is that it's not the thought that counts. 

3. African Bank FailuresIt doesn't make the global news, but there have been a number of bank failures in sub-Saharan Africa in the last few months: Kenya, Mozambique, Zambia, and Uganda have all closed banks since the beginning of October. At FSDAfrica, Mark Napier looks at whether there's a trend to be concerned about. He forecasts a "rocky ride" for African banks, and lots of work for bank regulators, in 2017.  

4. Cash, Cash, Cash (and Targeting): I've been trying to keep away from basic income and cash transfers for a few weeks. But some things are starting to build up. There's this new thing called the Economic Security Project (I'm not quite sure what it is) that seems to be organizing support for testing basic income in the US (but also making grants?). Here's their "Statement of Belief" with some notable signatories. Here's Rachel Schneider and Jennifer Tescher explaining their support, in part drawing on the US Financial Diaries research (yes, I'm biased to any argument from USFD research). And completely independently, here's Brown, Ravallion and de Walle looking at proxy-means testing approaches to target assistance to poor households. They find there are some methodological tweaks to standard approaches that would improve targeting, but that basic income performs as well at reducing poverty as any of the improved targeting approaches (but note that even still the best outcome is reducing poverty by 25%). And here's an Evansian review of Health CCTs if you haven't seen it yet--lots of good takeaways on program and study design.

5. Machine Learning: Back to evidence-based policy making. Well, perhaps I should say data-based policy implementation. Kleinberg, Ludwig, and the elusive Sendhil Mullainathan have a piece in Harvard Business Review--essentially a guide for policy makers on the possibilities and pitfalls of using machine learning for things like targeting. They discuss examples like setting bail and hiring police officers, but also how easy it is to be misguided by an algorithm if you don't understand it. I'm reminded of Matt Levine's phrase about algorithms being like genies, always taking instructions just a bit too literally. I've seen Sendhil present some of this work on how machine learning can be useful in improving targeting, but also dangerous by directing attention away from existing, undetected errors in the targeting process. Hopefully there will be papers available soon.

Bonus Follow-Up: Last week I included some links to pieces that were widely circulating and getting a lot of attention with the idea that you didn't need such links from the faiV. I thought some of you might be interested in some data on that topic: David Roodman's blog on Worm Wars was 4th, Raj Chetty's data on mobility was 6th, and Gabriel Zucman's data on wages was 11th out of 20 links. 

There's a crisis of opioid addiction in the US, mostly concentrated in rural areas, serious enough that it's showing up in life expectancy statistics. But it's also affecting newborns, with cases of addicted newborns increasing rapidly enough to strain hospital budgets. Of note, in the coverage of this issue there is no mention of "super predators." I'm not sure whether to be encouraged or discouraged by that. Source: JAMA Pediatrics

There's a crisis of opioid addiction in the US, mostly concentrated in rural areas, serious enough that it's showing up in life expectancy statistics. But it's also affecting newborns, with cases of addicted newborns increasing rapidly enough to strain hospital budgets. Of note, in the coverage of this issue there is no mention of "super predators." I'm not sure whether to be encouraged or discouraged by that. Source: JAMA Pediatrics

Week of December 5, 2016

Samaritans, Eugenics, Poverty Traps and Poverty Escapes!

1. Poverty Traps: Every year the Development Impact blog selects a few interesting job market papers and invites the authors to blog the papers (you have to believe that there is some randomization going on in the background and at some point David McKenzie et al. are going to publish something about the causal impact on citations and job offers). The most interesting to me so far this year is a paper by Arun Advani attempting to explain why, given that there's lots of inter-household lending in poor communities, and at least some opportunities for productive investment, so little informal lending seems to flow into productive investments and households stay poor.

Using theory and data from one of the Targeting the Ultra-Poor studies, Advani shows how lenders can be reluctant to help their peers make profitable investments because success will weaken the bonds that keep them in mutual support relationships. It's a useful lens to think about the limitations of informal finance and where the relative advantage of formal financial services may lie.

2. Pro-Poor Digital Finance: Last week, I posited this topic as a question. This week, in strong contrast to the piece I linked about Safaircom preying on poor women, a new paper from Tavneet Suri and Billy Jack argues that access to mPesa moved 194,000 households in Kenya above the $1.25 poverty line. They write, "Thus, although mobile phone use correlates well with economic development, mobile money causes it," which seems to me to be a remarkably strong causal claim. Meanwhile, the UNCDF has published the first in a series of toolkits for financial services providers hoping to develop pro-poor digital finance. And the Aspen Institute's Financial Services Program has launched the Non-Profit Leaders in Financial Technology (nLIFT) group to link groups working on pro-poor digital finance in the United States.

3. Agricultural FinanceAgricultural finance is hard and it always has been (see David Graeber's Debt for an intro to agricultural finance debt crises in ancient Mesopotamia). So it's not surprising how little use of formal or informal agricultural credit there is in sub-Saharan Africa despite the spread of microfinance and increasing use of modern inputs. This new paper finds that the only form of "credit" in wide use is output-labor arrangements, which fits nicely with the poverty trap model in Bangladesh noted above. Agricultural finance isn't all about credit--insurance is a big issue too. Here's a new paper looking at the "Samaritan's Dilemma" (moral hazard arising from the expectation of a bail-out by private charity or public aid) in agricultural insurance markets in the US which finds the dilemma exists and leads to farmers underinvesting in insurance and inputs. Like I said, agricultural finance is hard.

4. Social Investing: Last week I highlighted the case for social investment in microcredit. How will I know if the paper makes any difference? Well, there are a couple of new surveys trying to bring a bit more regular measurement to the social investing space: one from GIIN and the other called Toniic. Yes, really. Of course, the amount of investing and the returns they are reporting should generate a great deal of skepticism that we've nailed the measurement of social investment activity.

5. Slavery, Eugenics and Economics: Economic historians and historian historians are having a running battle about how to understand the economics of slavery in the American South and it's relation to industrial development and capitalism. I have a sneaking suspicion which side most of my readers will gravitate to, especially after reading the historians' takes on counterfactuals. Speaking of economic history, here's the "take your breath away" story of the beliefs of the founders' of the American Economic Association. As Justin Wolfers notes, perhaps it's time to change the name of the Ely Lecture (to be given this year by Esther Duflo).

You didn't really think I was going to skip over David Roodman's adjudication of the Worm Wars? Or the new look at wage stagnation in the US? Or the big new Raj Chetty look at economic mobility? Of course I wouldn't--but I am assuming that you already have an open tab for each of those. Whether or not you click on these links will tell me whether I need to keep such high profile things in the first 5 (or 10) links.

There is some good news on the income front--from Pew, data on household incomes finally climbing after years of stagnation, especially for Hispanic households. Source: Pew

There is some good news on the income front--from Pew, data on household incomes finally climbing after years of stagnation, especially for Hispanic households. Source: Pew

Week of November 28, 2016

1. The Case For Social Investment in Microcredit: Four years ago, at the suggestion of Alex Counts, I started working on a review of operationally relevant academic research specifically for practitioners. I finally finished it this month [sad trombone]. One of the reasons for the long delay was that the world kept shifting. Over the last 18 months it became clear that the need was not just to document the opportunities for innovation in microfinance but to specifically address whether additional social investment in microcredit was justified given the published impact evaluations.
So I ended up making the case for social investment in microcredit. I believe the case for additional social investment is strong—not despite, but because of, what we’ve learned from impact evaluations. Obviously there’s much more in the paper, but here’s the one sentence summary (there’s a one-page summary in the paper): Microcredit is a cheap intervention with modest but generally positive effects with a great deal of scope for evidence-based innovation that could materially improve impact. The kicker, though, is that the innovation required to boost microcredit’s impact is unlikely to happen without targeted social investment.

Please take a look and argue with me, publicly or privately, about it.

2. Digital Finance and Household Behavior: I lied, I admit it. A few weeks ago the faiV featured "the most interesting" papers from NEUDC. But the most interesting paper wasn't ready for circulation so I couldn't include it. It is now. Tomoko Harigaya studied what happened when savings groups in the Philippines were transitioned to digital finance tools--in other words, group leaders stopped taking cash deposits, instead directing members to make deposits themselves using mobile money. Members could now also make withdrawals without traveling to a bank branch. The result was a significant drop in savings deposits and savings balances and an increased reliance on informal loans. In other words, "convenience" went up and usage went down. The effects seem to be driven by those closest to bank branches ex ante, by the loss of positive peer effects and by increased salience of fees for transactions. Now there are some obvious ways to potentially counteract these effects but it is an important cautionary insight into how little we know about how digital stores of value and transactions affect household financial behaviors--and an especially important finding for the bank itself which would have seen it's funding costs rise from a program designed to reduce operational costs since it relied on deposits as a cheap source of capital.

3. Pro-Poor Digital Finance?One of my long-standing concerns about the move toward digital finance is that unlike the microfinance movement, the leading players in the mobile money world have never had any pretensions of being pro-poor. Don't get me wrong, there's value in poor households being treated as customers. But it's also concerning if the companies treating them as customers don't have reasons to care about the households' well-being. Wayan Vota cuts to the core of the question: Are You Guilty of Helping Safaricom Prey on Rural Women? At the European Microfinance Week recently Graham Wright exclaimed that fintech's primary current use is "rapacious consumer lending...and I'm tired of it, I'm fed up." That's the central dilemma of digital finance: pro-poor organizations can't afford to build out their own infrastructure (and that wouldn't work even if they could) but an open infrastructure is agnostic to the motives of the people using it.

Bonus Update: Some news on the Indian demonetization.

4. Reconsidering the Elephant Graph: Branko Milanovic's elephant chart showing rapid gains in income for the world's wealthiest and most of the rest, with stagnating incomes for the middle classes in developed economies has become one of the signal economic explanations for growing populism in wealthier countries. Caroline Freund of the Petersen Institute of International Economics dives into the data to show that the majority of the apparent stagnation is attributable to the aging of Japan and the slump after the collapse Soviet Union. Her charts suggest that things haven't been as bad for the middle classes in developed countries as the elephant chart implies. Of course, if you look at the national level data on incomes in say, the United States, it's clear that there's been 20+ years of wage stagnation. Here's Milanovic's and Lakner's formal response to an critique similar to Freund's.

On a related note, given what we're seeing in the political realm, I'm truly baffled that Benjamin Friedman's Moral Consequences of Economic Growth and Hirschman's Tunnel Effect are not the dominant frame for discussion.

5. Intergenerational Poverty and Safety Nets: Generational poverty is a problem even when average incomes are growing, but it's an even bigger problem in eras of wage stagnation. Philadelphia magazine profiles a grandmother who grew up in poverty, her poor grandparents and the grandchildren she is now raising in poverty through the lens of a program specifically focused on intergenerational poverty. And here's a new paper on the household response to SNAP benefit increase in 2009 finding that the additional funds increased spending on housing, transportation and education.  And here's an Evansian review of the spending on cash transfers on temptation goods finding that if anything, cash lowers spending on alcohol and tobacco.

Shameless Screen Shot of the Week: My book of interviews about RCTs in Development Economics is now available for pre-order. And because pre-orders for economics books is a thin market, a single purchase can radically change it's sales rank. So pre-order now. It makes a great holiday gift--even Guido Imbens thinks so.

Shameless Screen Shot of the Week: My book of interviews about RCTs in Development Economics is now available for pre-order. And because pre-orders for economics books is a thin market, a single purchase can radically change it's sales rank. So pre-order now. It makes a great holiday gift--even Guido Imbens thinks so.

Week of November 11, 2016

1. Demonetization in India: It doesn't seem like I'm the only one who's a bit confused by exactly what's happening in India and why this particular set of steps will yield the stated outcomes. Here's my current understanding: Last week, the government declared that 500 and 1000 Rupee notes would no longer be legal tender, effective immediately. Except that those notes could be exchanged for new notes until December 31 at banks and post offices. But only by people with official government ID. The purpose is to drive more of the economy into the formal sector and to clamp down on black market activity and corruption. Usually advocates of this sort of step talk about high denomination bills (which they say facilitates corruption by making it relatively easy--in terms of size and weight--to transport large sums) like $100 bills. But 1000 Rupees is roughly $15 and a new 500 Rupee note will be in use and other large denominations like 2000 Rupees will also continue to exist.

As you can imagine, when 86% of the currency in circulation by value has to be immediately exchanged, there are some problems. Of particular interest to faiV readers might be the effect on microfinance banks, which are not allowed (as of now) to accept or exchange the old notes. That apparently has caused repayment to plummet since people can't get their hands on legal notes to make their payments. There's also a surge in use of ATMs and people signing up digital finance systems. Of course, then there's the problem that roughly 30 percent of the population (a mere 300 million people) doesn't have official ID (not counting the additional millions who are short-term migrants and don't have their ID with them where they currently are). Lot's more to come on this story I'm sure.

2. Digital Payments and State Capacity: Dan Radcliffe of the Gates Foundation has a new paper (published by CGD) on the knock-on benefits of government-to-citizen digital payments infrastructure. Direct transfers have already shown significant benefits in terms of efficiency and effectiveness of social welfare programs. Radcliffe argues that other benefits also deserve attention, specifically "strengthening energy policy, food security, government transparency" and overall state capacity.    

3. Financial Inclusion for RefugeesCFI has been running a series on financial inclusion for refugees. The fourth and final installment is here, looking at the future of financial inclusion for refugees with specific advice for how donors, practitioners and governments can do better.

4. Goldman Sachs and Consumer Debt: I'm old enough to remember when Goldman Sachs was a "vampire squid" sucking the life out of the global economy. As of this week, GS is also your friendly (digital) neighborhood lender, here to help you manage life's demands and escape from credit card debt with low-interest loans. Beginning this week, GS is running ads for it's consumer lending business on Facebook and YouTube that "depict debt as an unavoidable nuisance of modern life." Given the amount of income and expense volatility documented in the US Financial Diaries, that sounds about right actually. The Goldman tagline is "Debt happens. It's how you get out that counts." I wonder if the Goldman loans will come with a "Don't Swipe the Small Stuff" sticker for credit cards?

In other consumer debt news, the former CEO of Lending Club, fired for potentially misleading investors, is already opening a new lending storefront. And here's an Urban report on how the overhang of bad credit scores from the Great Recession is continuing to hold back consumers and the US economy.

5. Obey the Evidence!: This week I happened across a review of the Milgram obedience experiments, which were conducted about 50 years ago. That led me to some more reading and research--there's a lot of recent material. Much of it is about what has been discovered by a close review of the Milgram archives and the difference between what actually happened in the experiments and what was reported--and what that means about how we should think about the results and the conclusions. It's interesting and thought-provoking reading, not only because it's about one of the foundational findings of behavioral science, but also because it should lead us to reflection on the conclusions we draw about the current generation of studies.

David Evans and Birte Snilstveit review what your paper should include so that it can be included in systematic reviews, including enough methodological details so that risks of bias can be assessed. Many papers don't. Source: Development Impact Blog

David Evans and Birte Snilstveit review what your paper should include so that it can be included in systematic reviews, including enough methodological details so that risks of bias can be assessed. Many papers don't. Source: Development Impact Blog

NEUDC 2016 Special Edition

Editor's Note: The Northeastern Universities Development Consortium (NEUDC) conference was hosted at MIT this weekend. Over two days you get to see an enormous amount of new development research by mostly younger researchers. I held back on faiV this past week, to bring you this special edition--featuring the five papers I found most interesting (of those that are shareable) and since there are far more papers presented than any one person can take in, I recruited Jessica Goldberg, a development economist at Maryland (responsible for interesting papers like this); she in turn recruited Emily Breza (responsible for interesting papers like this) of Columbia GSB and soon of Harvard to contribute; and Lee Crawfurd (also known as Roving Bandit in the glory days of the development blogosphere) of CGD and a PhD candidate at Sussex to weigh in with their own favorites.

Here's my list of the 5 most interesting papers from the weekend:

1. Mentors for Microenterprises in Kenya: Brooks, Donovan and Johnson assign high profit microentrepreneurs to mentor newer entrants. That's a particularly interesting way to potentially change the trajectories of microfirms. The mentored firms see a significant jump in profits driven by learning how to cut costs but don't maintain the gains once mentorship stops.

2. Grants and Plans for Senegalese Farmers: Ambler, de Brauw and Godlonton give $200 grants and develop a farm management plan for smallholders. The grants boost production (by more than $200), but the gains seem to fade out, though higher stock of assets remains. Farm management plans don't have a measurable impact. I find this interesting for many of the same reasons as #1: figuring out how to boost profits of small enterprises is near the top of my list of urgent program/policy questions.    

3. Seasonal Migration in India:  Imbert and Papp use NREGA and choices about short-term migration to better understand why the large gap in earnings between rural and urban migration doesn't lead to more seasonal migration. They estimate that more than half of the income gap is consumed with higher living costs in urban areas, with the rest due to non-economic costs--like being away from home and "hard-living", (e.g. sleeping on the street). There are some interesting policy applications for the design of rural public works/income programs and the development of migration finance and support programs. 

4. Crop insurance contracts in Kenya: There's a general consensus that insurance is one of the most promising margins to help poor households, but we're a long way from figuring out to efficiently and effectively deliver an insurance product that people will take up. Casaburi and Willis study an insurance program in Kenya where farmers can delay the premium payment--noting that premia are usually due at the point where farmers are most liquidity constrained (they can delay payments because the crop is sugarcane farmed under contract so premia can be collected from harvest proceeds). They find a 67 percentage point boost in take-up, with take-up highest among poorest farmers.

5. Saving and Smoothing: One of the ways that financial services should help poor households the most is by boosting their ability to smooth consumption and to absorb shocks. But access alone isn't enough if other constraints prevent households from using the tools like savings and insurance effectively. Aker et al. look at savings nudges to help Senegalese households save and budget. They find that lockboxes and reminders don't influence spending (particularly spending on festivals) but do seem to help households plan ahead and therefore be less susceptible to other shocks. There is a lot of heterogeneity in results though.

Jessica Goldberg's, with an assist from Emily Breza, list of 5 most interesting papers:

1. Gambling and Saving in Uganda: Betting on sports events is common among urban Ugandan men and, for those who partake, a substantial expenditure. This paper by Sylvan Herskovitz uses variation in bet outcomes and lab-in-the-field experiments to build a case that betting is a rational strategy for asset management in an environment with low perceived returns to savings.  It’s a novel topic — while we are learning a lot about savings, credit, and even mobile money, I haven’t read anything else about sports betting in developing countries.  But neither the topic nor the approach are trivial, and taking seriously the model that would rationalize the bets is commendable.

2. Workfare and Welfare: This paper from Bhanot, Han, and Jang uses a lab-in-the-field experiment in Kenya to test various attributes of common cash transfer or public works programs, and therefore contributes to the design of such programs. While many evaluations of cash transfer or public works programs focus on outcomes like employment, income, or consumption, this paper also measures subjective wellbeing, which is improved by requiring participants to exert effort in exchange for payment. This adds an additional justification for work requirements rather than cash transfer schemes, which is important since public works can be more expensive to administer and do not always achieve self-targeting.

3. Seasonal Migration in India: [Ed. Note: same paper as above] There’s a lot written about NREGA, but it’s a massive program that not only shares features with workfare programs in many other countries, but also operates at a scale that lets us understand what might happen programs that were rationed were instead made available to more people or for longer durations. Clement and John already have one really important paper about the equilibrium effects of NREGA on private sector wages.  Now, they show that NREGA reduces seasonal migration from rural areas to the cities

4. Crop insurance contracts in Kenya: [Ed Note: same paper as above]: This paper is a nice insight into understanding the demand for insurance, even though the specific pricing structure may be hard to implement outside of a closed marketing chain.  It’s also a contribution to the literature about how the timing of financial access affects outcomes.

5. Economics of Foot Binding: Fan and Wu look at the rise and fall of foot binding in China from an economic lens, particularly noting how the practice interacted with a gender-biased meritocracy and the physical demands of women's labor.

Lee Crawfurd's list of 5 most interesting papers:

1. Football and ethnicity in Africa: When their national football teams win, Chauvin and Durante find, Africans report weaker ethnic identity. [Ed. note: I'm sure Sepp Blatter is emailing this to the Nobel committee as I write]

2. Teaching at the right level in India: Second coolest paper--Muralidharan, Singh, and Ganimian find huge effect sizes from a computer system that gives kids tests, adapts to their level, and gives feedback.

3. Vote-buying in India: Green and Vasudevan are pretty modest about reducing vote-buying by 2 *million* votes with a radio campaign.

4. Aid, hospitals, schools and violence in Afghanistan: Child finds that US health projects reduced conflict, but education projects increased conflict.

5. Trader costs in Nigeria: Startz documents and explains trade costs for market traders in Lagos. We usually focus on how developing countries can export more, but there are also big welfare gains to be had from making importing easier so consumers get cheaper and better goods.

Andreyanov, Davidson and Korovkin find suspicious bidding patterns in Russian sealed-bid electronic procurement auctions, estimating that up to 10% are affected by corruption and up to 30% by collusion among bidders. According to Jessica Goldberg, their presentation has an even more striking chart showing winning bids occurring in the last minute. Source.

Andreyanov, Davidson and Korovkin find suspicious bidding patterns in Russian sealed-bid electronic procurement auctions, estimating that up to 10% are affected by corruption and up to 30% by collusion among bidders. According to Jessica Goldberg, their presentation has an even more striking chart showing winning bids occurring in the last minute. Source.

Week of October 24, 2016

Editor's Note: It seems like our topics this week are all perennial, the all-star topics you might say. You can always count on these topics for interesting stories.

1. The Future of Microfinance: The big news this week is the merger of two giants in the field--Grameen Foundation and Freedom from Hunger. The merger follows the relatively recent retirement of two giants of the field--the former leaders of Grameen and FFH, Alex Counts and Chris Dunford, respectively. As the announcement states there are clear ways that combining the two organizations may improve their impact, but it's also clear that consolidation is a result of the maturing of the microfinance industry, and I mean that in the Silicon Valley sense, not in the childhood development sense. Where is the industry headed? Reading between the lines of the announcement makes it clear that the combined organization sees the future as one where microfinance is just a utility, or perhaps one of a set of tools, not the center piece of anti-poverty interventions. That's probably right. 

One reason why: it's easy for microcredit to go off the rails when it is the centerpiece. Here's an update on overindebtedness in Cambodia.

2. Household Finance: How should households be managing their finances? I don't mean the basics, like choosing a lower-cost over a higher-cost loan, but managing their finances over their lifetime to achieve their goals. Almost all of the the ideas and advice we have for households in developed countries is built on the life cycle model--a household's earning power starts out low but steadily grows, peaks in late middle-age and then declines. Households then should use financial services and tools to shift their income and smooth their lifetime consumption. This piece from the WSJ about what mistakes households in the US make at each phase of their life is particularly explicit about using the life cycle model and it's implications as a standard for whether households are managing their finances correctly or not. The problem with that view, of course, is that it's increasingly clear from financial diaries and other work that the life cycle model isn't an accurate representation of the many households' situation. And we don't have good advice for households' where volatility is the norm, not a blip, and where slow and steady doesn't win the race, or even work at all.   

3. MigrationOne way households have always managed their finances and achieving their long-term goals is by migrating to better opportunities. Lant Pritchett has a new rant about the relative cost-effectiveness of development interventions versus migration: the NPV of gains from ultra-poor programs are significantly less than the gains from one year of labor in the United States for a low-skilled male migrant from any of the countries where the ultra-poor programs were evaluated. Here's Eduardo Porter reviewing a plan for reforming migration policy between the US and Mexico. Here's a piece that argues that Trump's Wall is not meaningfully different, morally, than current immigration restrictions (so why doesn't the latter produce the revulsion or incredulity that the former does?). And here's a piece from the Economist on Uganda as a model for policy toward refugees.

4. Basic Income, Cash Transfers (and not-so-cash transfers): Migration is one of the reasons that Tyler Cowen gives in this column on why he has rethought the benefits of universal basic income--he thinks adoption of UBI would lead to restrictions on immigration and naturalization, and the loss from those restrictions would more than offset the gains fro UBI. Here's an older interview of Robert Greenstein on why he thinks that universal basic income won't work in the US (for very different reasons). And here, just as a reminder, is Wydick et al's paper on the not-so-significant effects of the alternative to cash transfers--giving stuff. (Even though it looks like it, no, I'm not conflating UBI with cash transfers).

5. Behavioral Science: The UK government's Behavioral Insights Team has a new report on how behavioral science can be used to "improve opportunity" in the UK. As a reminder, here's the US government's Social and Behavioral Sciences Team's similar report from last month. Both the US and UK government have new reports on the use of behavioral science for policy. And Cass Sunstein has a new book (of course, he does; it's been at least six months since the last one) on The Ethics of Influence.

Bonus Update: A few weeks ago we featured some work on education interventions. Here's a new paper on Pratham's iterative attempts to scale up "teaching at the right level" and how they adjusted their approach through on-going testing and evaluation of impact. And here's David Evans with short descriptions of 30+ recent papers on education interventions. Remember when David Roodman's consistency in thoroughly evaluating some issue related to microfinance yielded the eponym Roodmanesque. I feel like we need a name for David's research summaries: Evansonian?

Pew's new report on the state of American jobs, as always, has lots of data to think about and puzzle over. Source: Pew.

Pew's new report on the state of American jobs, as always, has lots of data to think about and puzzle over. Source: Pew.

Week of October 17, 2016

Editor's Note: I'm writing this week's faiV from Kigali and the MasterCard Foundation Symposium on Financial Inclusion. Last week's edition was supposed to be called "The Doha Round" which would make the name of this week's edition make much more sense.

1. News from Rwanda: An evaluation of the use of small-scale household solar panels in Rwanda finds that there are benefits but those are small and diffuse enough that subsidies will be needed to scale adoption. At the conference itself I learned that while 89% of Rwandans are "financially included" only 6% are "adequately served" according to recent FinScope data--a healthy reminder that heavy caveats are required when setting inclusion goals. The next step is to recognize (with a nod to James Scott) that in markets with high "inlcusion," under-served is a strategy not a condition. And while this isn't news about Rwanda, I learned about it in Rwanda: MFO is conducting garment worker financial diaries in southeast Asia which should help us understand a bit more of the difference between Blattman and Dercon's results in Ethiopia and Heath and Mobarak's results in Bangladesh. 

2. The Cost of Volatility: One of the common findings from financial diaries work around the world is the prevalence of income volatility, perhaps most surprisingly among US households. In the US Diaries data we see a lot of the volatility coming from variations in amount earned per week in the same job. There are lots of reasons to suspect that volatile schedules and the income volatility that flows from it is bad for households, but how bad? A new field experiment hints that it's really bad. Mas and Pallais randomize wage offers to potential staff for a national call center and find that workers aren't willing to sacrifice pay for a flexible schedule, but are willing to give up 20% of their wage to avoid having a schedule set by the employer with a week's notice.  

3. Measuring Poverty (over time):  Measuring poverty is tough and it's even harder to generate global estimates or cross-country comparisons. Some countries have official poverty lines, but use different methodologies to set them. Should those lines just be accepted? Should they be adjusted for purchasing power parity? If so, what data should be used to set the PPP? The World Bank's new report (commonly called the Atkinson report) with recommendations on how to handle these questions is out. Justin Sandefur interprets the recommendations as moving away from a global poverty line.

One of the reasons the World Bank cares about global poverty measures is to track poverty over time. Here's a new paper on the long-term (10 years) effects of cash transfers for households with children in Ecuador finding no improvement in test scores and only a 2% increase in school completion rates, which the authors say suggests that the cash transfers are not likely to affect intergenerational poverty (which seems a shockingly narrow channel for impact).

4. Reforming (Indian) Banking: Also in the realm of reports that may have an impact on more than a billion people, IFMR Trust has recommendations on modernizing India's banking system, primarily focused on changing how banks manage risk. Among the recommendations are allowing regional banks to use credit default swaps to hedge agricultural/commodity price risk and pushing the banking sector to use formal insurance against catastrophic weather risks rather than counting on the government to step in when large scale defaults occur.

5. Reform through Labor: Well, not quite. A few weeks ago we highlighted the Muralidharan and Niehaus work on NREGA. Here's a new paper on the effects of a public works jobs program for youth in Sierra Leone, finding big boosts in household income (e.g. not crowding out other income strategies), little increase in temptation goods and that many households use the increased income to set-up businesses. Reminds me a bit of Blattman et al in Uganda. Here's a new paper evaluating the effect of unemployment insurance requirements to be actively looking for new work on labor supply. It finds the requirements don't push people into lower wage jobs but do have a positive effect on lower-income workers speed to re-employment. 

Single papers shouldn't move your priors much, though. Here's a new systematic review of youth employment programs. It finds that about a third of programs succeed at helping youth get into the labor market, and that programs in middle- and low-income countries have a better success rate.

Bonus Update: Last week we had a piece on how hard it is to get people to buy insurance. Here's a new paper on pricing agricultural microinsurance. My tongue-in-cheek summary: Economists find that insurance companies and governments will need to hire economists ever year to figure out optimal pricing and subsidy.

In the midst of travel, conferencing and slow internet connections this week, I didn't come across any compelling graphics. So here's a picture of a mountain gorilla I took this weekend in Volcanoes National Park. I can highly recommend gorilla trekking. Source: Me.

In the midst of travel, conferencing and slow internet connections this week, I didn't come across any compelling graphics. So here's a picture of a mountain gorilla I took this weekend in Volcanoes National Park. I can highly recommend gorilla trekking. Source: Me.

Week of October 10, 2016

1. Digital Identity: A few weeks ago we featured a paper on the general equilibrium effects of NREGA in India, which depends on a universal ID system. Next Billion takes a look at India's digital ID system and compares it with Pakistan's program.

2. Insurance (Is Hard All Over): When you read about attempts to launch microinsurance programs for developing countries, it can often seem like insurance markets work very well in developed countries. But insurance is hard no matter where you are, and may be getting harder due to climate risks and our human failings in thinking about large but rare risks. Here's a new brief from the Penn Wharton Public Policy Institute looking at how under-insured many American homeowners are and proposing some steps to get those people to buy insurance

3. Shocks and External ValidityTypically conversations about the external validity of an impact evaluation focus on whether a finding in one place applies to a finding in another place. Here's a new paper by Rosenzweig and Udry looking at external validity issues in the same place but in different times, specifically at how important aggregate shocks can be when impact is likely to vary over time (as with agriculture or schooling). I'm not sure how big a problem not considering time variance is, but it is a good reminder to examine assumptions when applying findings from impact evaluations.

4. Crops, Volatility, Saving and Malnutrition: There's been a lot of progress around the world in reducing childhood malnutrition and stunting, but rates are still shockingly high in India, given the economic development in the last few decades. Here's some new research that establishes that households "save" to deal with volatile prices of pulses by stockpiling wheat (which is less nutritious). In part, saving in wheat is driven by the cost of formal accounts to save in cash.

5. C-C-Ts in the USA: Doesn't quite roll off the tongue like R-O-C-K does it? MDRC, which ran the evaluation of the Family Rewards CCT program in New York, has a new cost-benefit analysis of the program (of note, taking Rozenzweig and Udry seriously, the program was run in 2007, and depending on the exact timing there was an aggregate shock during the program or shortly thereafter). They find that on average it cost $1.07 to deliver $1.00 of value to households, and the program "did not produce positive net present value for taxpayers."

A new way to represent funding needs and overhead costs for non-profits and social enterprises. Source: Nonprofit Assistance Fund

A new way to represent funding needs and overhead costs for non-profits and social enterprises. Source: Nonprofit Assistance Fund

Week of October 3, 2016

1. The End of Cash?: Ken Rogoff has a new(ish) book arguing for the end of paper currency. In the New Yorker, Nathan Heller explores Stockholm, one of the most cashless cities on the planet. The move away from cash in Sweden was strongly influenced by high profile robberies of cash depots, making the insecurity and anonymity (for criminals) of cash much more salient. In Heller's piece, there are a few references to issues of privacy, regulation and insecurity of digital tools, but surprisingly little reference to digital payments in less developed countries, or issues in countries where government is less trusted and less trustworthy than Sweden.

2. Cashless in the USA: The US is a very long way away from cashlessness, but one of the primary mechanisms for movement in that direction is prepaid cards. In the last decade they have become increasingly popular alternatives to bank accounts, and as a mechanism for delivering government benefits like food stamps and unemployment and pay to workers without accounts. The Consumer Financial Protection Bureau has released new regulations for prepaid cards to increase consumer protections and bring prepaid cards more in line with credit cards. The regulations include limited liability for lost or stolen cards and new requirements that cards that allow overdrafts have to evaluate customers' ability to repay.

3. Cashless Benefits and Financial InclusionWhile the federal and state governments use prepaid cards to deliver benefits in the US, even to people with bank accounts, there has been a lot of advocacy for making "government-to-person" or G2P payments digitally in other countries to drive financial inclusion. At Next Billiion, Beth Rhyne and Sonja Kelly of CFI, write that G2P as a mechanism for inclusion just isn't working, citing recent work by Guy Stuart in Colombia and Pakistan. The type of "inclusion" that G2P enables doesn't do much for poor households, in part because the banks still have little interest in serving low-income account holders.

Of course, this is a problem not just with G2P as a means to inclusion, but with inclusion itself as a goal. More than 90% of US households are "included" if you define that as having a bank account, but it's tough to argue that lower-income consumers in the US are getting what they need from financial services. I'm often surprised there isn't more attention paid to the US financial services market as a picture, and a warning, of what is to come in the near future for middle-income countries when it comes to financial access and quality services for lower-income households.

Meanwhile, in the world of G2P, Arvind Subramanian, the chief economic advisor to the Indian government, is making an argument for basic income in India.

4. The (Cashless?) Future of Microfinance: In a new paper, and a summary piece in Harvard Business Review, researchers and Karlan, Pande, Suri and Zinman, with Rebecca Mann from the Gates Foundation and Jake Kendall from Caribou Digital, lay out a vision for the future of microfinance, emphasizing the need to return to the underlying market failures--asymmetric information, high transaction costs, barriers to entry--to chart a course for more effective delivery of financial services to poor households. They highlight the potential for digital tools to overcome some of those market failures.

5. Profits Matter: Whether they are counted in paper or digital currency, profits (or the lack thereof) matter for businesses, be they banks serving low-income customers or small businesses in South Africa. That's the subject of a new paper from Anderson, Chandy and Zia based on a trial of marketing versus finance training. They find that both approaches can lead to higher profits through different channels. Marketing training is more useful to younger and narrower businesses by helping them grow, while finance training is more helpful to more established businesses by helping them trim costs. The fact that profits can be increased is perhaps the most surprising finding of all, given the mixed evidence on other efforts in business training.

A new MicroSave report looks at various models for cross-border remittances in Indonesia. Source: MicroSave

A new MicroSave report looks at various models for cross-border remittances in Indonesia. Source: MicroSave

Week of September 26, 2016

1. Jobs! Jobs! Jobs!: For quite a few years now, my mental model has been that most poor households are "frustrated employees, not frustrated entrepreneurs." In other words, most people aren't held back from their entrepreneurial dreams by lack of access to credit, but they are held back in their dreams of having a job by the lack of jobs. That view is tied heavily to the fact that most microenterprises don't grow at least in part because the owners don't appear to be trying to grow them. This week Chris Blattman and Stefan Dercon released a new working paper about an experiment in Ethiopia where they were able to compare factory jobs to grants for self-employment. They find, among many other details, that those who randomly receive factory employment leave the jobs quickly and those who receive grants for self-employment tended to stay in self-employment and out of the industrial sector. There is a lot going on in this paper so it requires careful reading and some thinking, but it will definitely alter at least my confidence level in my priors.

But the discussion of the new Blattman and Dercon paper revived my memory (hat tips to Rachel Glennerster and Asif Dowla) of this Heath and Mobarak paper on the positive impact of factory work in Bangladesh so there's multiple updating going on for me this week.

I discuss this experiment with Chris Blattman a good bit in my upcoming book--it will be available on January 2nd, 2017. Sign up here to get notified when it's available for order.

2. But Wait, There's More Jobs! Jobs! Jobs!: Karthik Muralidharan and Paul Niehaus have a new paper based off of one of the world's largest RCTs, the roll-out of the new and improved NREGA guaranteed work scheme in India. They find that the program raised incomes of poor households dramatically, but that most of the gains comes from pushing up private sector wage rates, not from income from the program itself. Jonathan Morduch notes that the jump in wages was a factor in the ultra-poor program he studied in Andhra Pradesh not having much impact (many participants left the program to take jobs).

The Muralidharan and Niehaus paper also brings to mind this earlier paper from Breza and Kinnan looking at something similar--how the availability or unavailability of microcredit in India to fund self-employment had generalized effects by altering wage rates. That paper is one of the reasons I believe in the "frustrated employees, not frustrated entrepreneurs" thesis, so now my brain hurts.

3. Even more on Jobs and Wage RatesThe New York Times has a new "Room for Debate" with several perspectives on whether the rising minimum wage in the US is raising incomes and how much of a role minimum wage hikes had in the reduction in poverty reported in the latest census report.

4. FinTech and Intrahousehold Bargaining: Simple, a US FinTech company announced this week a new product that tackles the age-old problem of intrahousehold bargaining head on: a hybrid shared account. In the new Simple account, two people have separate accounts, but each can see the other's activity and they can mutually contribute to and track shared goals (like savings). It's an interesting product for a variety of situations beyond traditional romantic partnerships like parent/child or child/parent in situations of aging parents, or in situations where disability requires something less than complete guardianship. I really hope someone is doing something randomized on this to test effects.
In other US FinTech news, D2D Fund has changed it's name to Commonwealth and EARN has a new version of its Starter Savings Program.

5. And Now For Something Completely Different: Some non-financial but definitely interesting and thought-provoking things from this week: Maria Konnikova has a lengthy article pushing back on the "practice makes perfect" conventional wisdom, and particularly the 10,000 hours hypothesis. Tyler Cowen "doesn't believe in progress, and he wishes you didn't either."  Duncan Green on "Why is it so hard for academics and NGOs to work together?" NYU Law has launched what it says is the first center on law and social entrepreneurship at a law school. Cass Sunstein on "the real reasons so many Americans oppose immigration reform." Having five things in the fifth point of the faiV just seemed right.

Masquerading as a video, here's Paul Niehaus talking about the logistics of GiveDirectly and delivering cash transfers.

Masquerading as a video, here's Paul Niehaus talking about the logistics of GiveDirectly and delivering cash transfers.

Week of September 19, 2016

1. Microfinance Subsidy: Back before there were impact evaluations the heated discussions in microfinance were about costs and subsidies (and business model, which is really a conversation about cost and subsidy). Those conversations have died down as the focus shifted to impact evaluations--appropriately!--but cost and impact are equally important when it comes to policy choices. Cull, Demirguc-Kunt, and (our very own) Morduch have a new paper that does the painstaking work to accurately measure subsidy in microfinance. They find that subsidy is pervasive and long-lasting, but small: meaning the modest impact of microfinance has to be viewed in terms of even more modest cost. I could write the whole faiV this week just on findings from the paper which is another way of saying: read it! Bob Cull has a short overview of the findings here for those with short attention spans, or a day full of meetings.

2. But Wait, There's More Microfinance: While most eyes have been turned to tracking the growth of digital financial services, the microfinance industry in India is growing rapidly again. The industry association reports 60% year-over-year growth, with the majority coming from the large incumbents like SKS and Ujjivan. Apparently the banking correspondent model is playing a significant role in growth. Let me pause for a moment to roll my eyes at the finding that clients say that 94% of loans are for "income generating activities."
Meanwhile, Jonathan Morduch has a review of Lesley Sheratt's new book on achieving an ethical balance in microfinance, a balance that a 60 percent growth rate calls into question.  

3. Financial InclusionBack in August I noted a paper about low-take up of no-frills savings accounts in a number of countries. A new paper from Brune et al. using the Malawi commitment savings experiment data to look at what happens with account usage and spending composition when funds are direct deposited into accounts or delivered in cash, and the delay between when the household learns the deposit is coming and when it is delivered. Higher account balances for direct deposit persist for only a few weeks, and there is no meaningful effect on the composition of spending, which, they say, suggests "that households manage cash effectively without the use of formal financial products."
And in a connection that perhaps only my brain makes, here's a new paper about a job training program in Argentina that tracks effects on employment for 4 years. Gains are large in the short run but fade out over time. The effect seems to come from "persistence of employment." In case you're wondering here's the connection I make: financial inclusion matters most to those with income, and the benefits of financial inclusion are related to the volatility of income in the short- and long-term, which, of course, is affected by the persistence of employment.

4. Education: Like financial inclusion, education is about more than access. Liberia, where 60% of children aren't in school, and only 20% of women who reached fifth grade can read a sentence, is experimenting with turning over some schools to Bridge International Academies (not unlike charter schools in the US). Here's a story about an ActionAid visit to one of the schools and the aftermath. There is an external impact evaluation underway of Liberia's experiment. As Justin Sandefur notes in describing the situation and the evaluation, "when the status quo is unacceptable, experimentation is an obligation." But which educational experiments are obligated? 3ie is about to release a systematic review of education intervention evaluations. Here's a paper from David Evans from earlier this year where he notes there are a lot of "systematic reviews" that have little overlap in their systems and come to very different conclusions about which experiments to implement.

5. Evidence-Based PolicyIt always comes back to policy eventually, even among anarcho-capitalists. The Liberia situation makes me think of my interview with Angus Deaton where he talks about the issues of where, on whom and what types of experiments are conducted. Here's Deaton's and Cartwright's newest paper on RCTs. Here's the new second edition of Impact Evaluation in Practice (free!). And the Urban Institute is launching a new Evidence-Based Policymaking Collaborative (with Brookings, AEI and the Pew-MacArthur Results First-Initiative) "to create tools to inform evidence-based policymaking at all levels of government." I wonder if a primer on Deaton & Cartwright will be one of those tools? 

The JP Morgan Chase Institute has a new report tracking cash flows of small businesses in the US. This is a look at daily inflows and outflows of these businesses by industry.

The JP Morgan Chase Institute has a new report tracking cash flows of small businesses in the US. This is a look at daily inflows and outflows of these businesses by industry.

Week of September 12, 2016

Editor’s Note: I’ve been 'away' for a while finishing up two books: Experimental Conversations, a collection of interviews about RCTs in development economics and evidence-based policy (pub date January 2017) and The Financial Diaries, based on the US Financial Diaries project (pub date March 2017). I briefly entertained the idea of a “catch-up” faiV, but that might have become the faiVhundred so herewith we’re back to (sort of) five items from (mostly) this week.

1. Income, Poverty and Volatility: The big news of the week in the US was the release of the US Census Bureau’s report on income, showing strong gains across the board (but best for lower income groups) and the largest drop in the poverty rate since 1999. As always, the story is more complicated than the headline statistics. Annual income measures hide year-to-year and month-to-month volatility. And volatility seems to be rising. That means that even though the poverty rate is falling based on annual income, the number of households that spend part of a year in poverty or bounce in and out of poverty from year to year may be increasing.

Aspen EPIC has a wealth of new materials on the topic of volatility including videos, interviews and blog posts.

2. Measurement: Also prominent in US news was the announcement that Wells Fargo, one of the country’s largest banks, had fired 5300 employees and paid a $185 million fine for creating millions of accounts without customer consent (to hit management metrics). Matt Levine has the most useful reporting on the issues and the problem of measurement, calling it an “evil grants your wishes, but it takes them just a bit too literally." Case in point, Indian banks have apparently been doing essentially the same thing as Wells Fargo, depositing 1 rupee into dormant accounts, so they don't appear dormant. I won’t miss the opportunity to plug Dan Rozas’ work on the large gap between savings accounts and savings account usage in microfinance banks around the world, not just in India.

3. Digital Finance: Visa announced the roll-out of mVisa in Kenya with near-term expansion into Uganda, Tanzania and Rwanda and possibly Nigeria. I must admit I’m a bit confused as mVisa ran a pilot in Rwanda beginning back in 2013. Did that shut down? In any case, mVisa is a significant challenge to m-Pesa, perhaps the first significant challenge, because it works differently—it’s cross-bank and makes customer-to-merchant payment (as opposed to p2p transfers) easier, though it does require smart phones. In other digital finance news, while mVisa is attempting to expand in east Africa, mobile money has now disappeared from South Africa as MTN followed mPesa by shutting down the service in the country because of lack of use. I’ve also seen reports that mobile money use is falling in Nigeria but not sure about how reputable the source is. Anyone know more?   

4. Behavioral Finance (and more): The Urban Institute released a report on a test of a behavioral intervention to help consumers reduce credit card debt. Working with a credit union they tested "rules of thumb" messages to discourage use of credit cards and found the message “Don’t Swipe the Small Stuff”, encouraging people to use cash for small transactions rather than a card, reduced their balances by $104 in six months. To put the result in context, the gains to households (reduced debt/increased savings) were equivalent to 60% of the matched savings incentive in the SaveUSA program, for less than 1% of the cost. On the other hand, the finding that encouraging people to use cash reduces their spending in helpful ways presents something of a problem for boosting the use of mobile money.

In related news, here’s the White House’s Behavioral Sciences Team’s 2016 report.

5. Poverty Measurement: Sort of tying all our topics for the week together, the Grameen Foundation and Innovations for Poverty Action just announced that the Progress Out of Poverty Index will be moving to IPA with funding from several institutions, so that this particular measure of poverty, designed to be operationally useful for MFIs, will continue to be developed and, hopefully, improved.      

Since we're on the topic of poverty measures and volatility and net savings, here's an infographic from the US Financial Diaries, on exactly those issues. (Click on image to see entire infographic on US Financial Diaries website.)

Since we're on the topic of poverty measures and volatility and net savings, here's an infographic from the US Financial Diaries, on exactly those issues. (Click on image to see entire infographic on US Financial Diaries website.)