Dean Karlan discusses some important findings in commitment savings research citing studies in the Phillipines, Malawi, Kenya, and Ghana.
Publications
Dean Karlan and Timothy Ogden discuss microfinance
"What do you do with the households that are so poor that there is no real sustainable livelihood going on?" Professor Dean Karlan and FAI's Managing Director Timothy Ogden discuss some of the recent research into poverty alleviation programs targeting the ultra-poor; questions of internal validity versus external validity; and evaluating economic well-being as well as psychological well-being.
Migration as a Strategy for Household Finance: A Research Agenda on Remittances, Payments, and Development
It is time to fundamentally reframe the research agenda on remittances, payments, and development. We describe many of the research questions that now dominate the literature and why they lead us to uninformative answers. We propose reasons why these questions dominate, the most important of which is that researchers tend to view remittances as states do (as windfall income) rather than as families do (as returns on investment). Migration is, among other things, a strategy for fi- nancial management in poor households: location is an asset, migration an invest- ment. This shift of perspective leads to much more fruitful research questions that have been relatively neglected. We suggest 12 such questions.
Timothy Ogden in Conversation with Nava Ashraf (Part 3)
FAI Managing Director Timothy Ogden and Harvard Business School Associate Professor Nava Ashraf continue their discussion of her commitment savings research. In Part 3 of the conversation, they talk about product design, behavioral psychology, and more.
Timothy Ogden in Conversation with Nava Ashraf (Part 2)
FAI Managing Director Timothy Ogden and Harvard Business School Associate Professor Nava Ashraf discuss her commitment savings research. They talk about inter- and intra-household issues, information asymmetries, and product design to encourage savings.
FAI's Timothy Ogden in Conversation with Harvard's Nava Ashraf (Part 1)
FAI Managing Director Timothy Ogden and Harvard Business School Associate Professor Nava Ashraf discuss her commitment savings research. They also talk about what we currently know about commitment savings and why it works.
FAI 101: Adverse Selection
Clearly, poor households would benefit from access to formal insurance. But why is it so hard to get it to them? One reason is what economists call "adverse selection." Watch the video.
Financial Access 101: Moral Hazard and Microinsurance
Clearly, poor households would benefit from access to formal insurance. But why is it so hard to get it to them? One reason is what economists call "moral hazard." Watch the video.
Big Questions in Credit
“Does microcredit work?” It’s a question we hear a lot. But the answer depends on what the question really is. Does microcredit slash poverty? (Not clearly.) Does microcredit increase micro-enterprise profit? (Some of the time, but capital often gets channeled to other uses and not everyone is a great entrepreneur.) Does microcredit improve the lives of borrowers? (Yes it can, but seldom dramatically and sometimes microcredit can get borrowers into trouble.) Rather than being a single tool used to solve a single problem (like funding a business), microcredit is often one among a set of tools, whose usefulness as a set may be fundamental but whose individual impact is often incremental and thinly spread.
Responsible Consumer Lending
Early pioneers of the microfinance movement touted it as a vehicle to promote entrepreneurship and subsequently provide a pathway for poverty alleviation. However, financial diaries research such as that published in Portfolios of the Poor, shows us that microloans have multiple purposes beyond spurring small‐scale enterprises. The poor have myriad expenses beyond their business endeavors such as health care costs, school fees, housing repairs, and unexpected emergencies. Consumer lending is one possible tool to help the poor cope with their (often unpredictable) consumption financing needs. However, it may not be the appropriate solution in all instances and also carries the risk of encouraging over‐ indebtedness and financing for “bad” consumption, such as to buy aspirational material goods.
Substitution Bias & External Validity: Why an innovative anti-poverty program showed no net impact
The net impact of development interventions can depend on the availability of close substitutes to the intervention. We analyze a randomized trial of an innovative anti-poverty program in South India which provides “ultra-poor” households with inputs to create a new, sustainable livelihood. We find no statistically significant evidence of lasting net impact on consumption, income or asset accumulation. Instead, income from the new livelihood substituted for earnings from wage labor. A very similar intervention made a large difference elsewhere in South Asia, however, where wage labor alternatives were less compelling. The analysis highlights the roles of substitution bias and dropout bias in shaping evaluation results and delimiting external validity.
FAI Video: Shawn Cole Discusses Microinsurance and Factors Affecting Take Up
Economist Shawn Cole discusses findings from several experiments on rainfall insurance in India and index insurance products. In Part 2 of this FAI video conversation, Cole discusses an experiment that was conducted in Gujarat, India. Here the researchers were interested in understanding what were the barriers to adoption of a particular product. The goal of the study is to help farmers manage risks due to failed monsoons when making production decisions.
Shawn Cole Discusses Microinsurance: Investment Impact of Rainfall Insurance
Shawn Cole discusses findings from several experiments on rainfall insurance in India and index insurance products. The goal of the effort is to help farmers manage risks due to failed monsoons when making production decisions.
Impact of Microcredit on the Poor in Bangladesh
We replicate and reanalyse the most influential study of microcredit impacts (Pitt and Khandker, 1998). That study was celebrated for showing that microcredit reduces poverty, a much hoped-for possibility (though one not confirmed by recent randomized controlled trials). We show that the original results on poverty reduction disappear after dropping outliers, or when using a robust linear estimator. Using a new program for estimation of mixed process maximum likelihood models, we show how assumptions critical for the original analysis, such as error normality, are contradicted by the data. We conclude that questions about impact cannot be answered in these data.
FAI's Timothy Ogden and Economist Rohini Pande In Conversation
Ogden and Pande discuss her work and why standard microcredit may undermine business investment, from her recent paper: "Does the Classic Microfinance Model Discourage Entrepreneurship Among the Poor?"
How Microfinance Really Works
About half of the world’s adults lack bank accounts. Most of these “unbanked” are deemed too expensive to serve, or not worth the hassle created by banking regulations. But what may be good business from a banker’s perspective isn’t necessarily what’s best for society. The inequalities that persist in financial access reinforce broader inequalities in the distribution of income and wealth. This is the opening for microfinance – and also its challenge.
FAI Video: Pascaline Dupas of Stanford University
FAI Video: Pascaline Dupas of Stanford University talks to FAI about testing a commitment savings product for health investments.