Summary

Taking Stock of the Evidence on Micro-Financial Interventions
Author(s):
Francisco J. Buera, Washington University in St. Louis and NBER
Joseph P. Kaboski, University of Notre Dame and NBER
Yongseok Shin, Washington University in St. Louis and NBER
Summary:

Buera, Kaboski, and Shin review the empirical evidence on microfinance and asset grants to the ultra poor or microentrepreneurs, and assess their ability to account for this evidence using quantitative theory. Properly executed, these interventions can help segments of the population increase their income and consumption, but neither literature gives much reason to believe that such interventions can lead to wide-scale, transformative impacts akin to escaping aggregate poverty traps.

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In addition to the conference paper, the research was distributed as NBER Working Paper w22674, which may be a more recent version.

Poverty and Cognitive Function
Author(s):
Emma Boswell Dean, University of Pennsylvania
Frank Schilbach, Massachusetts Institute of Technology and NBER
Heather Schofield, University of Pennsylvania
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Poverty, Aspirations, and the Economics of Hope: A Framework for Study with Preliminary Results from the Oaxaca Hope Project
Author(s):
Travis Lybbert, University of California at Davis
Bruce Wydick, University of San Francisco
Summary:

Lybbert and Wydick create a framework for understanding the role of hope and aspirations in economic development and give preliminary experimental results from a field project in Oaxaca, Mexico carried out in this framework. They review the literature on hope from philosophy, theology, psychology, and its relationship to emerging work on aspirations in development economics. The researchers create an economic model of hope based on recent psychology literature that understands hope as a function of aspirations, agency, and pathways. Their model illustrates the role hope can play in the realization of positive effects from development interventions and how these effects emerge from interactions with the three constituent elements of hope. By clarifying definitions and relationships among these concepts and by leveraging relevant work from other disciplines, the researchers aim to create a framework within which economists can engage in rigorous empirical and experimental work that seeks to better understand the role of hope in economic development. The early experimental results suggest that a hope intervention among 601 microfinance borrowers raised aspirations approximately a quarter of a standard deviation, significantly raised a hope index among the treated subjects, and had positive but statistically insignificant results on enterprise performance.

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Depression for Economists
Author(s):
Jonathan de Quidt, Institute for International Economic Studies
Johannes Haushofer, Stockholm University and NBER
Summary:

Major depressive disorder (MDD) is one of the most prevalent mental illnesses worldwide. Existing evidence suggests that it has both economic causes and consequences, such as unemployment. However, depression has not received significant attention in the economics literature. In this paper, de Quidt and Haushofer present a simple model which predicts the core symptoms of depression from economic primitives, i.e. beliefs. Specifically, they show that when exogenous shocks cause an agent to have pessimistic beliefs about the returns to effort, this agent will exhibit depressive symptoms such undereating or overeating, insomnia or hypersomnia, and a decrease in labor supply. The researchers conclude by illustrating how depression might generate a poverty trap.

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In addition to the conference paper, the research was distributed as NBER Working Paper w22973, which may be a more recent version.

Medium-term Impacts of a Productive Safety Net on Aspirations and Investments
Author(s):
Karen Macours, Paris School of Economics
Renos Vakis, The World Bank
Medium-term Impacts of a Productive Safetey Net on Aspirations and Human Capital Investments
Author(s):
Karen Macours, Paris School of Economics
Summary:

Macours and Vakis analyse the medium-term impacts of a productive safety net program and focus on the role of interactions with local leaders in sustaining poor households’ investment response after the end of the program. The causal effect of social interactions is identified through the randomized assignment of leaders and other beneficiaries to three different interventions aimed at increasing human capital and productive investments. Social interactions were found to augment program impacts on households’ investments in education and nutrition, and to affect households’ attitudes towards the future during the intervention. This paper shows the social multiplier effects are instrumental in sustaining the shift in households’ human capital investments even after the end of the program.

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Shocks and Nutrition, Health and Human Capital
Author(s):
Duncan Thomas, Duke University and NBER
Elizabeth Frankenberg, University of North Carolina Chapel Hill and NBER
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Agro-Ecosystem Productivity and the Dynamic Response to Shocks
Author(s):
Jean-Paul Chavas, University of Wisconsin
Summary:

This paper investigates the nonlinear dynamic response to shocks, relying on a threshold quantile autoregression (TQAR) model as a flexible representation of stochastic dynamics. The TQAR model can identify zones of stability/instability and characterize resilience and traps. Resilience means high odds of escaping from undesirable zones of instability toward zones that are more desirable and stable. Traps mean low odds of escaping from zones that are both undesirable and stable. The approach is illustrated in an application to the dynamics of productivity applied to historical data on wheat yield in Kansas over the period 1885-2012. The dynamics of this agroecosystem and its response to shocks are of interest as Kansas agriculture faced major droughts, including the catastrophic Dust Bowl of the 1930’s. The analysis identifies a zone of instability in the presence of successive adverse shocks. It also finds evidence of resilience. Chavas associates the resilience with induced innovations in management and policy in response to adverse shocks.

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In addition to the conference paper, the research was distributed as NBER Working Paper w22624, which may be a more recent version.

Poverty Traps and the Social Protection Paradox
Author(s):
Michael Carter, University of California, Davis and NBER
Munenobu Ikegami, Hosei University
Christopher B. Barrett, Cornell University
Summary:

Progressively targeted food aid and cash transfers to the poorest of the poor remain the dominant responses to chronic poverty in developing countries. This paper uses a dynamic stochastic programming model of households that confront a non-convex production technology and missing financial markets to demonstrate the potentially large returns to an augmented social protection policy that establishes a productive safety net below vulnerable, but not indigent, households that keeps them from slipping into a poverty trap in the wake of a shock that would otherwise rob them of key productive assets. By mitigating the ex ante effects of risk and crowding in additional investment by vulnerable households, the productive safety net reduces the rate of unnecessary deprivation that occurs when agents able to attain a high-level equilibrium fail to do so for want of adequate capital. But if there simultaneously exists a subpopulation that is inevitably poor, then a tradeoff arises between allocating resources to progressively-targeted versus vulnerability-targeted social protection. Carter, Ikegami, and Barrett use this model to illustrate the tradeoffs among subpopulations and over time that arise from the use of different social protection mechanisms in societies where multiple poverty trap mechanisms co-exist.

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Cash Transfers and Poverty Traps: A Tale of Two Generations
Author(s):
Norbert Schady, Inter-American Development Bank
Francisco Ferreira, London School of Economics
Heterogeneous Wealth Dynamics: The Role ofRisk and Ability
Author(s):
Paulo Santos, Monash University
Christopher B. Barrett, Cornell University
Summary:

This paper studies the causal mechanisms behind persistent poverty. Using original data on Boran pastoralists of southern Ethiopia, Santos and Barrett find that heterogeneous and nonlinear wealth dynamics arise purely in adverse states of nature. In favorable states, expected herd grow is quasi-linear and universal. The researchers further show that those with lower herding ability, as reflected in past herd growth data, converge to a unique equilibrium at a small herd size while those with higher ability exhibit multiple stable dynamic wealth equilibria.

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Cognitive Poverty Traps
Author(s):
Heather Schofield, University of Pennsylvania
Frank Schilbach, Massachusetts Institute of Technology and NBER
Labor Markets and Poverty in Village Economies
Author(s):
Oriana Bandiera, London School of Economics
Robin Burgess, London School of Economics
Narayan Das, BRAC University
Selim Gulesci, Bocconi University
Imran Rasul, University College London
Munshi Sulaiman, IPA
Summary:

Bandiera, Burgess, Das, Gulesci, Rasul, and Sulaiman study how women’s choices over labor activities in village economies correlate with poverty and whether enabling the poorest women to take on the activities of their richer counterparts can set them on a sustainable trajectory out of poverty. To do this the researchers conduct a large-scale randomized control trial, covering over 21,000 households in 1,309 villages surveyed four times over a seven year period, to evaluate a nationwide program in Bangladesh that transfers livestock assets and skills to the poorest women. At baseline, the poorest women mostly engage in low return and seasonal casual wage labor while wealthier women solely engage in livestock rearing. The program enables poor women to start engaging in livestock rearing, increasing their aggregate labor supply and earnings. This leads to asset accumulation (livestock, land and business assets) and poverty reduction, both accelerating after four and seven years. These gains do not come at the expense of others: non-eligibles’ livestock rearing businesses are not crowded out and wages received for casual jobs increase as the poor reduce their labor supply in such labor activities. The authors' results show that: (i) the poor are able to take on the work activities of the non-poor but face barriers to doing so, and, (ii) one-off interventions that remove these barriers lead to sustainable poverty reduction.

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Participants

Below is a list of conference attendees.
Mansur Ahmed, The World Bank
Harold Alderman, CGIAR
Mo Alloush, University of California at Davis
Elizabeth Bageant, Cornell University
Tania Barham, University of Colorado at Boulder
Kaushik Basu, Cornell University
Julia Berazneva, Middlebury College
Amadou Boly, African Development Bank
Gilbert J. Chin, American Association for the Advancement of Science
Paul J. Christian, The World Bank
Jenn Cisse, Cornell University
Greg Collins, USAID
Juan Sebastian Correa, University of California at Davis
Andrew Dabalen, The World Bank
Michael Delgado, Purdue University
Makhtar Diop, The World Bank
Tiffany Griffin, USAID
Lena Heron, US Angency for International Development
Melissa Hidrobo, CGIAR
Kalle Hirvonen, I nternational F ood P olicy R esearch Institute (IFPRI)
Viju Ipe, US Angency for International Development
Sophie Javers, University of California at Davis
Nathan Jensen, Cornell University
Berber Kramer, International Food Policy Research Institute
El-Hadj Mamadou Bah, African Development Bank
Linden McBride, St. Mary's College of Maryland
Hope C. Michelson, University of Illinois-Urbana-Champaign
Jennifer Moyo, African Development Bank
James Oehmke, US Angency for International Development
Marcos Robles, Inter-American Development Bank
Shalini Roy, CGIAR
Abebe Shimeles, African Development Bank
Stephen Smith, George Washington University
Brian Stacy, Economic Research Service, USDA
Marco Stampini, Inter-American Development Bank
Kibrom Tafere, Cornell University
Joanna Upton, Cornell University
Kira Villa, University of New Mexico
Ayala Wineman, Michigan State University

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