Dangers of a Double-Bottom Line: A Poverty Targeting Experiment Misses Both Targets
Two for-profit Philippine social enterprises, aiming to demonstrate corporate social responsibility by increasing microlending to the poor, incorporated a widely-used poverty measurement tool into their loan applications and tested the tool using randomized training content. Treated loan officers were instructed why and how to use the tool for targeting; control group training merely labelled the tool “additional household information”. The targeting training backfired, leading to no additional poor applicants and lower-performing loans. Descriptive evidence suggests the targeting training exacerbated loan officer misperceptions and multitasking problems. Our results help explain why corporate social responsibility efforts are often siloed from core operations.
Approval from the Yale University Human Subjects Committee, IRB0510000752 and from the Innovations for Poverty Action Human Subjects Committee, IRB #07October-002. For funding we thank the Bill and Melinda Gates Foundation, the Consultative Group for Assistance to the Poor (CGAP), and AusAID. For project management and field support we thank Innovations for Poverty Action; specifically: Kareem Haggag, Megan McGuire, Faith McCollister, Mark Miller, Sarah Oberst and Bernie Seville. For collaboration we thank the senior management and staffs at First Macro Bank, FICO Bank, and Grameen Foundation. The authors retained full intellectual freedom to report and interpret the results throughout the study. All errors and opinions are those of the authors. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.