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.

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