Philanthropy Action News and Commentary

IPA/CEGA Education Event: Does More Education Empower Women

2012-03-09T01:08:08-05:00

This post summarizes findings from a study in education presented on March 2, 2012 at a half day event hosted by Innovations for Poverty Action (IPA) and the University of California’s Center for Evaluation for Global Action (CEGA). Please forgive any errors or omissions.

Michael Kremer from Harvard University presented in the second half of the morning on the results of a study he conducted to assess whether empowerment and political engagement increase for girls who stay in school longer.

The results were part of a ten-year follow up on merit scholar recipients from a study Kremer conducted in 2001. In the original study, Kremer and his colleagues Edward Miguel and Rebecca Thornton found that offering merit scholarships to the top performing girls in poor rural schools increased school attendance and performance across the board—even among those girls and boys who were well outside the range of achievement (to say nothing of gender) to receive a scholarship. In sum, scholarships help girls do better in school and they go to school longer. This is particularly important for this population, which is extremely poor, socially marginalized, and resident in a part of Kenya that is not politically empowered. But does the extra schooling also make the young women more empowered and more actively engaged in their communities and society, as many have suggested?

The evidence in favor is muted to nonexistent. Ten years later, the girls in treatment schools did have more progressive views about their rights. They were less likely to agree that it was okay for a man to beat his wife, and less likely to have had their parents choose their spouse. They were much more likely to read a newspaper regularly and their political knowledge was much higher than that of their peers. Yet that knowledge did not necessarily translate into action or engagement. These more educated women did not have different feelings about democracy or their ability to affect change within a democratic system.

These results fail to provide strong support for the theory that education empowers marginalized groups and replaces assigned identities (caste, tribe, gender) with a self-empowered identity based on personal achievement. But in many ways this study is more interesting for its long-term outlook. Kremer is one of the pioneering researchers applying randomized techniques to the social sciences. Just last year he and Edward Miguel published another paper offering a ten-year look at young adults who had been the first cohort to receive deworming pills in Kenya’s schools. That he is able to look back ten years later to assess the long-term impact of certain programs is itself a huge achievement.

IPA/CEGA Education Event: Findings on Computer-Aided Instruction

2012-03-06T20:43:46-05:00

This post summarizes findings from a group of studies in education that were presented on March 2, 2012 at a half day event hosted by Innovations for Poverty Action (IPA) and the University of California’s Center for Evaluation for Global Action (CEGA). Please forgive any errors or omissions.

Leigh Linden from the University of Texas at Austin open the second session of the IPA/CEGA event on education with the promise of results from two studies he conducted in India on the impact of computer-aided instruction. Computer-aided instruction refers to the use of computers in the classroom for a range of purposes, from self-directed lessons to practice in core skills.

Linden first summarized what is already known about the impact of computer-aided instruction. In brief, the research results have been mixed. In one study, computer-aided instruction led to a significant decrease in skills; in another to a significant increase. On balance, Linden says that the evidence has shown positive, if muted, increases in reading and math skills from computer aided instruction, but that it is difficult to generalize since existing studies vary dramatically in the programs they test, the students they assess, the teaching environments and other highly variable factors.

On to the evidence: Linden first presented findings from a project he conducted with Gyan Shala, a network of private schools in India. These schools were well-structured with a highly specified curriculum. In a baseline test intended to assess math skills, Gyan Shala students massively outscored their peers attending other local schools.

Gyan Shala students in this project were randomly selected to receive an hour of special computer-aided instruction for the purposes of practicing math skills. Students were divided into two groups: a “pull out” group that received computer time during school hours; and a second group that received computer time after school hours.

Linden found that the pull out program resulted in a significant average decline in skills over the study period. The pull out group saw a .7 standard deviation decrease in skills compared with their peers who did not receive computer time. The effect varied depending on the ability of the student at the beginning of the project. The best students in the school saw some decrease in skills, but far less than the least successful students, whose skill loss was dramatic. The children who received computer-aided instruction after school hours saw the reverse effect. The best-performing students did not benefit much, but the worse performing students benefited significantly.

These results may cause many teachers unions to celebrate, as they suggest that instruction really matters, especially for struggling students. Computers cannot replace instructional time, even in India, where teacher and student absenteeism is high.

Linden’s second study measured the impact of computer-aided instruction in English language learning. In this second study, Indian public schools were given tablet computers similar to the LeapFrog. The tablets had an English language application that children could follow at their own pace. Some schools also received flashcard activities that the teachers did with the children. Linden divided the students into four randomly assigned cohorts. One got to use the tablets only; one got to do the flashcard activities only; some got to use both tablets and flashcards; some got nothing.

Linden’s results again varied depending on the skill level of the child. All three cohorts showed average improvements. But the best performing students did much better using the tablet computers at their own pace, and gained nothing from the flashcard activities. In contrast, the less successful students saw the greatest benefit from doing flashcard activities led by the teacher, and gained nothing from the tablets. Again, for the lowest performers teachers really matter.

Curiously, students also showed improvements in math—a subject not addressed by the computer-aided technology. Linden concludes from interviewing students that the technology and/or the flashcard activities allowed the students to finish their English-language lessons faster, so the teachers were using the extra time for other instructional areas.

These findings reinforce an important idea for social interventions: context matters. Linden expressed his concern that many social interventions are planned with the assumption that they might help and won’t hurt, but the evidence shows that they can hurt. All the students who had their instructional time limited in order to take advantage of computer-aided instruction saw their skills decline.

Someone should tell Nicolas Negroponte.

IPA/CEGA Education Event: Affecting Student Learning

2012-03-05T17:06:51-05:00

Karthik Muralidharan from UC San Diego opened the event by presenting findings from a large randomized controlled trial in which he tested four different approaches to improving student learning. In the last decade, student enrollment has improved significantly in primary schools in the developing world, but student learning has not seen a corresponding jump: In India, only eight percent of first graders can read at grade level. Muralidharan’s four approaches correspond to existing theories about why poor children do not learn. His studies tested the theories by seeing what happens when:

1) Teachers have better information about where students are failing
2) Schools have more money to buy supplies
3) Schools gain a low-paid, minimally trained contract teacher from the community
4) Teachers have better incentive to perform, either through performance pay based on how all students do in the school overall; or providing individual performance payments based on how their students do

The findings, in brief, show that better information for teachers had no effect on student learning, and providing money for supplies had only a tiny effect, with diminishing impact over time (the decrease in impact corresponded to a decrease in parents investing household funds in school supplies for their children).

The third approach of providing a contract teacher, in contrast, resulted in significant improvements for students. Though Muralidharan’s data was not precise enough to know for sure, he cannot rule out that contract teachers were ultimately more effective than their better-trained, better paid counterparts, due in large part to a 40 percent lower absentee rate (recall that the contract teachers live in the community, so it is easier to get to school, and if they don’t show up their neighbors won’t have to go to far to complain).

Last, providing incentives through performance pay had the greatest effect on student learning, and individual incentives worked better than group incentives. Interestingly, teacher absence did not change at all, but when teachers were there it seems they more actively applied their skills, so that teachers who had the most training produced the best results in student achievement.

Muralidharan concludes that providing additional instruction in the early schooling years particularly to disadvantaged kids can make a huge difference, and that educators with less training can be an effective resource. His findings support earlier IPA/JPAL evidence from India and Kenya that quantify the positive impact of additional teaching resources on student outcomes.

Excerpt from Interview with David McKenzie, Part II

2012-02-13T07:25:01-05:00

For my upcoming book, Experimental Conversations, I’m interviewing a variety of economists conducting field experiments on poverty interventions. Here’s the second excerpt from my interview with David McKenzie, an economist at the World Bank (and now prolific blogger at the World Bank’s Development Impact blog) who has been studying the dynamics of microenterprises. David’s goal is to better understand how profitable these firms are, why they don’t grow, and how we may be able to help put them onto a growth path.

Tim Ogden: Let’s talk about microenterprise profits. You’ve written a paper on how to measure profits of microenterprises. You found a lot of these small operations are profitable, but there’s a lot of question about that. Why is it so hard to measure profits?

David McKenzie: There’s a couple of things going on there. The first is how you value the time of the people participating in these enterprises. Our measure of profits includes any return to the labor of these enterprises. If you worked on this business and your business earned 3000 rupees this month, that includes a return to your own hours of work. If you start trying to value the opportunity cost of that labor and you calculate it at some sort of market wage rate quickly you’ll find that many of these businesses look unprofitable.
I think this is one of the key questions about how to think about microenterprises and what we should do to help them, especially when you are looking at women in these businesses. For these women there usually is no outside option to generate cash.

TO: The labor markets are so thin how do you assess the opportunity cost? Is that it?

DM: That’s one part of it. The second part of it, and that’s something that comes up in this profits paper, is that if you ask people detailed questions on revenues and detailed questions on expenses, there’s a lot of noise on each of those numbers. A small shopkeeper is buying stuff in one period and selling it in another period and you’re trying to match all those things together. When you do that, you’re going to find that revenue minus expenses is really, really, really noisy and a bunch of studies have found negative values on that measure.

Now what we do in the profits paper is try and better match expenses and revenue. Rob Townsend has done some work with his Thailand data to better understand whether you should you use accrual or cash methods for measuring these enterprises. Especially when you’re looking at a short time horizon [like how the business has done in the last month, or last three months] the mismatch between when things are bought and sold can make a lot of firms look unprofitable. But under a longer run view they would be profitable.

But when you start to ask people to recall lots of small transactions over six months or a year, that’s pretty hard to do. So in these studies of microenterprise profits we usually ask for recall over just a month span. But that’s where you get the mismatch between revenues and expenses. I think that’s why when you directly ask people about profits most of them say they are profitable.

TO: As long as you don’t factor in the cost of labor.

DM: Right. There’s this really nice paper by Shahe Emran and Joe Stiglitz on why it is that microfinance can get a woman to run somewhat profitable businesses with chickens and things but they never get those businesses to grow into something greater. And the whole thing is that the women in these Asian countries have no other options. When their time value is 0 they can do this but as soon as they have to hire somebody at market wage it becomes unprofitable to expand.

TO: In the profits study you asked people to use ledgers to record their costs and revenues, presumably to aid recall. But that seems like that would be a very helpful tool to the average small enterprise—it’s certainly part of the standard advice to new business owners: keep careful records. But you found that people didn’t typically use the ledger for very long and use didn’t seem to have much impact. Greg Fischer and Antoinette Schoar’s work in the Dominican Republic found not much impact from formal accounting training but some notable positive effects from teaching simple “rules of thumb.” How do you match up those findings?

DM: There’s a couple of themes there. One is that our study is from a general pool of microenterprise owners and not those who have already self-selected themselves or been selected by MFIs. So when we found that 50% of people will only keep up these ledgers, if all those people happen to also be microfinance clients then maybe the MFIs are doing a good job selecting for clients more inclined to do that. Secondly we weren’t giving them any training, we were just giving them these sheets of paper with five columns and asking them to write things down each day. Some people did and kept doing it, and others said there’s no real value to me and so they quit doing it.

With the rules of thumb, Greg and Antoinette are not finding it has much impact on ultimate business outcomes. They tell a nice story but if you look closely they have a bunch of sales measures. One of the six sales measures is significant at the 10% level—sales in a bad month. So it’s not clear that it’s really having a huge impact, even that training. What they’re pointing out is that it has more impact than formal training.

I think this is an issue with a lot of these experiments. The power these studies have to answer some questions is really low. And these profit measurement issues sort of feed into that. So if you look at the Banerjee and Duflo Spandana paper, for instance, there’s a huge amount of noise in their profits data. I did some calculations and I think it came out that they would need 2 million people to find an increase of 10% in profits given the take-up of microfinance and the noise in profit measurements Measuring these profits is crucial for our understanding for figuring out what makes sense but it’s incredibly hard to measure.

We have this other paper following up on measuring profits based on the work we’re doing in Ghana. There we used PDAs to do our measurements. Each wave after the first wave we put in the previous wave’s data and we checked their profits relative to last month and if the change was too large we would challenge them. So we would see that a business’s profits were 100 Cedi 3 months ago but this month the owner is reporting it’s 1000 Cedi. So we ask them, “Did we get things wrong?” Not implying that they’re lying to us, but that we made a data entry error. The remarkable thing to us is that in 85% of the cases they did confirm that their profits did change that much from one month to the next.

Part of it is just seasonality, but part of it is one of the things that comes up in Portfolios of the Poor. There’s a huge variation of incomes on a day-to-day and a month-to-month basis. You have good months and bad months. Some months you get sick and you don’t earn much, other months something else happens. It’s a huge challenge for trying to look at some of the impacts of our programs on profits if profits are jumping around this much. It’s not just all measurement error, some of it is general challenges that are facing the business.

So our solution to that is we can try to measure things more times. The current work in Sri Lanka has 11 waves of data on these firms so if we get one or two bad months we can average that out. In Ghana we have 6 waves. I’ve got a paper called “Beyond Baseline and Follow-up” where I’m trying to say that more people should be doing this. The standard approach to doing these experiments is to measure the baseline, run the program and then come back and do one more survey a year later or two years later. That works really nicely for things like health and education where the outcomes are highly correlated but it doesn’t work so well for things like business profits or consumption or things like that. The standard methodology needs to change.

Excerpt from Interview with David McKenzie, Part I

2012-02-08T17:14:12-05:00

For my upcoming book, Experimental Conversations, I’m interviewing a variety of economists conducting field experiments on poverty interventions. Here’s Part 1 of 2 excerpts of my interview with David McKenzie, an economist at the World Bank (and now prolific blogger at the World Bank’s Development Impact blog) who has been studying the dynamics of microenterprises. David’s goal is to better understand how profitable these firms are, why they don’t grow, and how we may be able to help put them onto a growth path.

Tim Ogden: Tell me about where this research into microenterprises, entrepreneurs and returns to capital started.

David McKenzie: We started in Sri Lanka attempting to test this idea that people may be stuck in poverty because if you invest small amounts of money, the returns on those small amounts of money are just very low. That would help explain why, when there are so many microenterprises, so few of them grow, and so few of their owners seem to climb into the middle class.

So we gathered a sample of microenterprises and randomly assigned some of them to receive a cash grant larger than the lump sum they could typically accumulate on their own, either $100 or $200, and some to not receive a grant. Then we compared them and looked at their performance over the next 2 ½ years. In Sri Lanka we got these very surprising findings. We had very high increases in profits for male-owned businesses when we gave them grants. Their profits showed a real return on capital of about 11% per month which is incredibly high. But there were 0% returns to giving these grants to women.

TO: But returns by gender wasn’t what you started the project to look at it, was it? It came out of data to try to measure returns for microenterprises in general?

DM: Right. In Sri Lanka, we had a sample of men and women, but gender wasn’t the principal focus of it. When we went into Ghana we wanted to see if this finding would hold up in another setting and in particular in a different context. In South Asia we know that women have very low labor participation rates, but in Ghana women are actually the majority of small business owners. We purposely chose Ghana because it’s a country with this long history of women running businesses and is more gender equal than most countries in terms of labor force participation. In Ghana there’s this feeling that women can work and can do things. So that’s why we chose Ghana.

We replicated the experiment there and we gave these grants of about $120. We gave half of the randomly assigned grant recipients the grant in cash and half of them got the grant in-kind. With the in-kind grants we said to the owners, “We’ll go with you and buy you something for your business, you tell us what to buy.” The basic result in Ghana was again big returns on capital. On average for both men and women we find big increases in profits when we give the in-kind grants. Their profits went up about 30 Cedi a month, about a 20% return per month on the grant.

When we gave the women cash though, there was no increase in business profits. And when we look more closely at the data, even for the in-kind grants, the increase is really only happening for the top 40% of women. So women who were starting off in these subsistence businesses earning a $1 a day had no benefit in terms of business outcomes from getting more capital. The grants all seemed to get spent on household needs. For men across the board, with the in-kind grants we see these large effects on profits, and while noisier, there also seem to be some benefits to the men of cash grants. For the top 40% of women we also get big increases in profits if we push them to invest in their businesses via the in-kind grant but not if we just give them cash without any restrictions.

TO: The result that these grants only matter for the top 40%, looking at in hindsight, was that predictable? Were those 40% in industries that one would have expected to see higher returns?

DM: They seemed to not have been differentiated much in terms of the industry they were in from the women in the bottom 60%. The difference was in baseline profit levels.

The bottom 60% averaged about a $1 day in profits but the top 40% were earning about $5 a day in terms of profits. So it’s quite a difference in terms of size of profits. These women were better educated, they were wealthier to start with. They were more likely to have gone into business for business reasons rather than other reasons.

So there’s something different about the types of women who are running those businesses and were able to generate high returns from the grant, but it’s not that they are choosing different industries.

TO: In Sri Lanka there appears to have been a significant industry-related issue. The women were primarily concentrated in industries with low returns to capital like lacemaking.

DM: In Sri Lanka we found there to be two main reasons for the gender difference. The first seemed to be this industry difference, women who were in traditional female industries had the lowest returns. But even when we looked at retail trade where both men and women worked, men were doing better. The second thing, though we could only look at this suggestively because we hadn’t set out to look at this in the first place and our sample sizes became smaller, but it seems there was something to do with intra-household cooperation. Women who said their husbands were more supportive of their businesses seemed to be doing better. The data seem to suggest women perhaps were not investing optimally in their business for fear that the proceeds would just get captured by others. It’s very hard to distinguish how that happens—who is capturing that profit: people inside the household, people outside the household, or even whether it was captured from themselves. Maybe they were thinking, “I don’t trust myself not to spend loose cash,” so they overinvest in equipment and don’t buy enough working capital.

TO: You’re now looking in Sri Lanka at helping women shift industries. How are you randomizing that? Are you trying to judge the issue of intrahousehold cooperation?

DM: What we’ve done there is we’ve taken a group of 600 women who currently have low profit businesses clustered in the types of industries which are mostly female dominated. We’ve used our three years of survey data to find out what type of industries women seem to be earning more in and have more prospects for growth. Then we’ve given them a five day business training course, based on the ILO curriculum, and as part of that training we’ve also provided them with this information about what the opportunities are in different industries in terms of how much money women like them earn. Those tend to be industries where both men and women work but we also tell them about some more female dominated industries that seem to have higher prospects. So for example, bakeries seem to do pretty well in comparison to making lunch packets for neighbors. Baking cakes is something not as many people do—you need a little more capital to be able to do it—but the returns seem to be pretty high. So we’re giving them that information and seeing whether that will push them into higher potential return industries. Some of the sample also received training with additional capital grants to see if you need additional capital in addition to the information and the training to switch industries and start achieving higher levels of profit.

TO: This is particularly interesting because it’s a vexing problem in developed economies too that most people starting small businesses go into industries with low barriers to entry, low capital requirements and low returns.

DM: Exactly. What we’re doing also in Sri Lanka is trying to understand what it really takes to make this jump to hiring employees. That’s the big distinction between being self-employed and starting to grow a business: when they start hiring workers outside of the family. So we’re doing this with men also. We have a sample of just over 1500 men, where we’re trying to—well, if you think about in terms of a production function, we’re trying to hit A [total factor productivity], K [Capital] , and L [Labor] together and separately. But basically what we’re trying to do is look at what the constraint to growth is and do we need combinations of things to overcome those constraints.

So we’re giving some of them business training, we’re using a [commitment] savings program to build capital for some of them and then something we think is really innovative, that we haven’t seen anyone do before, we’re using a wage subsidy program. We subsidize, by giving them a grant of about half the market wage, these sole proprietors to hire their first worker for six months and then we phase the subsidy out. The idea is that this gives you time to learn whether your business has what it takes to support an additional worker and whether you have what it takes to manage a worker. It also sort of subsidizes that training period for both the owner and the employee. So for instance we talked to a guy who runs an aquarium for tropical fish. He says it takes him a month of having somebody work with him before he can be trusted to be left alone with the fish and six months to get him up to level that he can produce at an export standard. So we’re subsidizing that training process, but he’s likely to keep the worker on once the worker is trained—at least we think so.

So we’re trying to learn what is really going on that’s keeping these businesses from growing and hiring. Is it a labor market matching problem and the need to learn about your ability as an employer or is it a credit constraint problem or is it a human capital and business skills gap? So we have people who have been randomly chosen to receive one of these programs—the skills training, the employee subsidy or the savings—or a combination of the three. We’ve been doing this for about 2 years now and because of the possible complementarity of these things—you might need capital and training—we’ve staged the interventions. We had people who had nine months in the matched savings program to build up some savings, and then they got the business training or the wage subsidy treatment, and then the 9 months when they could use the wage subsidy and then you have to wait to see what happens after that. Over six months to a year is when we’ll have data that start to give an answer to whether this worked, and what combinations mattered.

I think a lot of us who have been working on microenterprises think these are the key critical questions. What are the constraints to getting some microenterprises to grow, to have a level increase in profits? With grants and microfinance it seems like you can lift people a little out of poverty; you can raise their incomes a little bit but then they level off. We’ve done these grants and we’ve found they lift profits at least in male businesses and they stay higher for three years at least, so this one off grant does at least semi-permanently raise their incomes but it’s just a level increase. It doesn’t shift their growth patterns. They don’t get better and better over time, they just move up a level and reach a new equilibrium almost.

Can we put them on a growth trajectory? I think its still valuable on a mass scale if we can lift people’s income for a long period of time with these one-off interactions but we’d like to know whether we can alter the growth pattern at least for some of them.

TO: Lots of people in aid would love to find a one-off interaction that has 3 year effects, but it still doesn’t get us where we actually want to be.

DM: Exactly

More on the role of Women in Development

2012-01-04T19:23:18-05:00

Following up on the “debate” I had with Barbara Magnoni on targeting microfinance at women, a review of research on the topic of women and development has appeared. Via Chris Blattman, I just found this review paper by Esther Duflo that surveys research on how economic development affects the status of women and how the changing status of women affects economic development.

I haven’t had a chance to closely read the paper yet, but any of Esther’s papers are, as they say, self-recommending. Here are a few choice bits:

“This paper reviews the literature on both sides of the empowerment-development nexus, and argues that the interrelationships [between empowerment and development]
are probably too weak to be self-sustaining.“

“The conclusion here is a more balanced, somewhat more pessimistic picture of the potential for women’s empowerment and economic development to mutually reinforce each other than that offered by the more strident voices on either side of the debate.“

For the record, my priors, as I hope are documented in the conversation with Barbara, are:
* If your goal is economic development, focusing on women is likely a sub-optimal strategy.
* Rapid economic development may have a greater impact on women’s empowerment than a strategy focused on economically empowering women.

I’m looking forward to having those priors challenged.

Living with the Gates Foundation

2011-12-09T04:48:39-05:00

Describing the Bill and Melinda Gates Foundation as the world’s largest foundation is accurate but a substantial understatement. Its annual giving is more than six times larger than its closest “peer.” There are fewer than 100 US foundations that give more than $50 million annually. The Gates Foundation gives $50 million per week.

But it’s not just the amount of giving that distinguishes the foundation. As Ed Skloot puts it, the foundation “differs from the institutional norm in almost every way: in size, ambition, high-level connections, proactivity, long-term commitment, operational engagement, and public leadership.” The Gates Foundation is treading new ground, changing expectations and the policy environment of philanthropy by its very existence.

That’s why I was pleased to be asked to serve as Guest Editor of a special section in the Fall issue of Alliance Magazine, examining the impact of the Gates Foundation. The goal of the issue was not criticizing the foundation but honestly raising questions and issues that inevitably emerge from such a unique entity. You can read my introduction to the section here, where I provide an overview of the various contributions.

The issue has, I hope, moved some important conversations and discussions out into the open. This week I participated in a panel discussion based on the issue hosted by Bill Schambra at the Hudson Institute—you can see a recorded video of the session here. Caroline Preston has a summary here.

As Ed Skoot and Laura Freschi, contributors to the special section and co-panelists, noted there are many reasons to praise the energy and vitality the Gates Foundation has brought to its areas of interest. But there are also concerns. Some of the behaviors of the foundation while undoubtedly intended to accelerate positive change may have the perverse effect of limiting the foundation’s ability to hear and react to feedback.

Beyond the issues around specific programs, there is the larger question of how not only the approach but the very existence of such a large foundation will affect public policy and beliefs about philanthropy and the role of private foundations in society. As I asked toward the end of the session, how should we balance goals of honoring donor intent with huge institutions capable of affecting policy but only accountable to a few individuals?

If you find these questions vital and interesting, I’d invite you to join a webinar on Living with the Gates Foundation, hosted by Stanford Social Innovation Review next week. I’ll be moderating a panel that includes Ed Skloot, Laura Freschi, Megan Tompkins-Stange and Bruce Sievers as we wrestle further with these issues. The session won’t be a series of presentations but a conversation. I’ll be asking the panelists my own questions but also taking questions and comments from the audience right from the beginning. You can find all the details here—I hope you’ll join us. You’ll not only get access to the special issue of Alliance, but a discounted subscription to both Alliance and SSIR.

A Debate on the Role of Microcredit in Supporting Women and Girls

2011-08-26T21:37:39-05:00

Barbara Magnoni, President of EA Consultants, an international development consulting firm with a specialty in finance, began a debate in the comments of our interview series with Abhijit Banerjee and Esther Duflo. Our conversation was focused on the issues around investing in microcredit focused on women. I asked Barbara to join me in an asynchronous “debate” that would be a bit more accessible than a conversation in the comments. Herewith is our discussion on the subject. Please weigh in with your own thoughts either in the comments or on your own blog of choice (but be sure to tell us where to find your thoughts via the comments or on Twitter).

Barbara: I read your interview with Esther and Abhijit with interest. At one point you comment: “On average women entrepreneurs’ businesses don’t grow. But you dig a layer beneath the headlines and you find that a lot of women entrepreneurs don’t want to grow their businesses. They only want to work a few hours a week, that’s all they have time for and they need a lot of flexibility. Women like that are shut out of traditional labor markets so they start their own home-based business.” That caught my attention.

We worked on a study in Latin America on women entrepreneurs and didn’t find this at all. In “A Business to Call her Own”, we spoke to women throughout the region and found that it isn’t that they didn’t want to grow, but that they were severely constrained by the choice of sector they went into, their limited time, limited savings to use to make capital investments, and low skill levels. If you have a business that is ‘hand to mouth’ you want it to grow. Maybe not to become a huge company, but to become sustainable and offer a decent living for your family.

I would be interested in any further substantiation of your views. The issue of women and business is understudied, and is clearly linked to many of the issues posed in your interview.

Tim: I agree that most microentrepreneurs want their businesses to be self-sustaining and to generate cash flow (though their profitability seems to depend entirely on whether you account for the cost of family labor, see Poor Economics and David McKenzie on this). But there doesn’t seem to be much evidence that microentrepreneurs, women or men, aspire to grow their businesses to the scale that would have a societal impact or push a family into the middle class. When they do have access to fresh capital, they don’t seem to invest much of it in their businesses. Surveys tend to indicate that their aspiration is for a job, not to run a growing business.

Certainly this isn’t true for everyone but it is true for many. And if the evidence from developed nations is any guide, then it is more likely that men aspire to build these larger, truly profitable businesses. For the evidence for this claim, see Scott Shane’s book The Illusions of Entrepreneurship, pp 130 to 133, where he cites more than a dozen studies.

One of the explanations that is consistent, as you note, is that women tend to run businesses in industries that have less profit potential. In some cases this is clearly a societal construct around “appropriate” women’s work (see for instance McKenzie’s work in Sri Lanka), but it’s also likely that it has something to do with the choices women make about what industries to be in—in other words they choose low-profit, low-growth businesses because those are the ones that offer the flexibility they need to be able to meet their other commitments.

This is not an argument for restricting women’s access to capital. But it is an argument to think very differently about the value and purpose of microcredit focused on women. I believe it’s a mistake to think of such a product as entrepreneurial growth capital.

Barbara: I am still skeptical of this evidence. I don’t have the book handy, but it seems to be focused on only developed markets. In many of the developing countries that I work, formal sector wages for similar skilled people are lower than those in the informal sector and many SMEs pay their employees under the table, so they aren’t often in the formal sector, although they are employed rather than independent workers.

While I agree with many of your points, I am concerned that the limited recent research is leading to recommendations that promote lending to men’s business for growth rather than betting on women. Perhaps it depends on your goals, but I think that women’s businesses (some, not all) could be equally if not more successful with some capital, and additional support and mentoring. If we give up on that possibility, we give up on trying to reduce the gender gap, and promote the status quo, of men earning money and women in the household with limited financial resources. I believe development experts over 30 years ago agreed that this economic structure was not ideal in providing families with health, food and education they needed.

Of course another approach would be to work to change men’s role in the household so that they take on greater financial and family responsibilities, and thus prioritize those expenses more, but that may just lead to research saying that people shouldn’t provide men with investment capital, because they won’t put it to work.

I think ultimately, we don’t know enough and more research should be done around these questions.

Tim: We certainly agree that there isn’t enough research on this topic. As is all too common in development circles, the prevailing view seems to have swung from one distortion (ignoring women) to another (“we must focus on women and girls”).

In this case, I think that distortion isn’t exactly harmful but it isn’t helping. Here’s my operating hypothesis: as family incomes rise, families invest more in all their children, boys and girls. That investment often yields much higher levels of schooling for girls which in turn increases their opportunities.

If you accept that hypothesis, it makes sense to focus on raising family incomes in the fastest way possible. That in turn suggests that we should be paying attention to what groups generate the highest returns on capital. Given the status quo, that again implies that it makes a lot of sense to provide working capital to male entrepreneurs—and then work with them to encourage them to invest in all of their children.

For me, that’s as plausible a path to both increasing family welfare and addressing gender imbalances as focusing microcredit outreach on women who, until you change societal norms, will likely earn very low returns on capital and raise family incomes less.

I think you also have to take into account sociological research from around the world that men’s behavior in terms of investing in their families is strongly affected by their ability to be productive and be providers—in other words, to live into the existing societal norms. When men do not have opportunities to work and provide, they tend to abandon a role as investors in their families. By excluding them from access to credit in favor of their wives, we are creating a self-fulfilling prophecy about the behavior of the men.

In sum, I support working to address gender imbalances and creating equality of opportunity for men and women. But I think pursuing that goal via a “preferential option for the poor women” (to paraphrase from the liberation theology movement) isn’t the best way of achieving that goal.

Barbara: Your doubts about development practice focusing on women and girls are justified. That is, there is just as little proof that this is a useful strategy as there is that lending money to men will only drive them to drink and gamble it away (another popular and anecdotally common hypothesis). However, what is extremely real is the discrimination and power inequality of women in many poor households. Family violence, low self-esteem and inaccessibility of land rights are only some of the conditions we run across frequently in women in our work. In your operating hypothesis above, you don’t take into account these issues but look only at financial wellbeing as a sign of development of socio-economic wellbeing. Additionally, you suggest those who currently wield the greatest power in the family should continue to do so, by supporting their earning potential over that of others in the family. I suggest that this is flawed from a humanistic perspective. I believe that we should strive to ensure that women and men have freedom, opportunity and choice. These are critical aspects of a developed society.

A final point about your hypothesis. It assumes that in general, men will prioritize the welfare of their families, and thus their wellbeing will trickle down to that of girls. I think like most trickle-down theory, there is some truth to this, but the practical reality is that it is all too slow and that it often leads to more inequality. I have some suggestive evidence that men don’t re-invest as much of their business profits as women into the family. Without parallel efforts to encourage such investment by men, the “return on capital” for men’s businesses may be quite high in terms of the “math”, but low in terms if you look at the return to the welfare of the family. In the paper I note above, we interviewed male and female merchants in Nicaragua and found that men more often save to reduce their cost of capital while women more often save to plug up gaps in the family economy, pay for schooling, and make up for economic downturns. In the same study, we notice that men’s savings balances went up during economic crises, while women’s fell. In sum, doing the math is useful, but probably not sufficient when thinking about who to support and how.

Tim: There are important questions that remain to be answered on family dynamics (and they may have very different answers based on a variety of cultural, geographic and economic contexts). Your point about women spending relatively more of their income on the family is true as far as I know but I think fails to take into account the dynamics of family dynamics. As I discussed with Esther in the interview, she and Chris Udry have found suggestive evidence that this disparity is a cultural construct. In other words, women spend more on families because caring for families is “women’s work.” As women gain disposable income from growing businesses their spending may end up looking more like that of their husbands. In other words, changing the cultural constructs that limit women’s opportunities may very well erode the basis for the difference in spending patters of men and women.

In terms of the research in Nicaragua, I find it very plausible—but it also underlies the basic point about how to think about investing in women via microcredit. The behavior of men you describe is consistent with what we would expect of entrepreneurs who were focused on growing their businesses and generating increased profits. The behavior of the women is not. Thus, thinking about microcredit focused on women as entrepreneurial capital—e.g. capital designed to foment growing, profitable businesses—may be in part contradictory. So if the goal is increasing the welfare of women and girls, why not look instead to direct cash transfers rather than requiring these women to start businesses with all the attendant demands that takes?

That’s were I return to my basic suspicion that microcredit dressed up as encouraging microenterprise for women is a poor way of achieving the stated goals whether those goals are benefiting women and girls or those goals are creating growing, profitable businesses.

Barbara: Ouch! So women and children at home getting handouts, huh? Well, that may get them better fed, but will it help women achieve more freedom? I look forward to hearing what others say.

An Interview with Banerjee and Duflo, Part 4

2011-07-13T15:35:29-05:00

Abhijit Banerjee and Esther Duflo, co-founders of the Jameel Poverty Action Lab and co-authors of the recent book Poor Economics are at the heart of the movement to seek rigorous evidence about the lives of the poor and programs that aim to help them. As they write in Poor Economics, they believe that “we have to abandon the habit of reducing the poor to cartoon characters and take the time to really understand their lives, in all their complexity and richness.”

Recently I had the opportunity to sit down with Banerjee and Duflo for an extended conversation about the small and big pictures that emerge from their research, their critics and their plan to change the world. In fact, the conversation was so extended that I’ve had to break it up into pieces. We’ll be publishing it in four parts over the next few weeks—the full interview will be available soon via Amazon Kindle.

In Part 4, we discuss Banerjee’s and Duflo’s theory of change, the bad news for optimists and cynics, whether taking responsibility away from the poor aligns with Amartya Sen’s Development as Freedom and the ongoing debate over the usefulness of RCTs. In case you missed them here are Part 1, Part 2, and Part 3 of the interview.

TO: How much have you thought about change among the people who make the small changes in policy. You write a book like this with, I presume, the idea that it will change the way certain people behave and they’ll stop trying to make the big sweeping changes and just make the tweaks.

Have you thought about the mechanism of change? What is your hope that this changes people’s minds that are trapped in ideology and inertia? What are the tweaks that you can make to those people’s lives that can make them willing to hear and do and make changes?

AB: People talk about how hard it is to change policy or influence policy and that the institutions in developing countries are resistant to change. I feel like a lot of what we see as the culture of government is actually in some ways a very mechanical product of the last 50 years. Most countries in the world have created a whole bunch of institutions very very recently.

Developing countries inherited a kind of a state which was not particularly devoted to welfare of the people. So they saw these models of the developmental state elsewhere and decided, “We’re going to have this particular set of people implement this particular set of things.” So the institutions are not the product of a long accretion of incremental changes which made the bureaucracy particularly well suited to a particular kind of policy. This bureaucratic culture we have in so many places is just happenstance.

Most developing countries have only been independent since the late 1960s. So we’re talking about a period of 40 years. Forty years that began with a disaster. It’s hard for me to imagine that what we are observing in developing countries now is a steady state of some complicated process.

Most things are done with such amazing casualness that I feel like that can’t possibly be anybody’s reflective thought on how or what a process should be. People were given lots of power, lots of decision rights, little training, lots of ideology. I don’t feel that there’s a bureaucracy has reached a place, an approach, where it’s snugly sitting and then we’ll never push it out. Lots of bureaucrats and especially their political masters are very sensitive to the fact that somehow they lose a lot of elections and people don’t like them and they get thrown out. My sense is that they’re quite bewildered by that. I think in principle there’s a lot of demand for rethinking government.

When we talk to bureaucrats in India, obviously there are some who know everything and will tell you that they know everything and don’t need any help. But there are a lot who say, “Yes. I think we should do that. Can you help us with the that?” The reaction is often “Why can’t I get many more people like you to come in and help us with how to redesign this whole thing?” They know things are broken, too many programs don’t work, but it’s just too difficult in the middle of the job to fix it.

ED: I think we are reasonably internally consistent. If we want to be internally consistent, then we can’t be calling for a big revolution when one day everybody will start looking only at the evidence before making decisions. That’s not going to happen, let’s face it. There are a lot of reasons why things happen the way they do. So if we were trying to advocate to replace the world the way it is by some fully efficient technocracy that experiments with things before trying them out and then launches them with no error in the process, that would be inconsistent with what we are saying, and crazy. That makes our life easier. If a big change, a revolution is not what you are targeting, if you are targeting improvement at the margin, there’s lots of margin where you can start doing things. Maybe it’s a somewhat opportunistic thing to say. We don’t have a huge reason to fight people who are really resistant because you can always try with someone else. Like Abhijit was saying there are a lot of people who are willing to try things out. In the beginning of JPAL we worked a lot with NGOs because they were more nimble. Even there you have some who are never going to change their ways, and some who are more flexible and we worked the ones who were flexible and eventually the ones who weren’t going to change eventually came to talk to us.

With the government, and with international institutions it’s a bit like that as well. You can start having conversations with people and trying things out with people and trying to improve something somewhere. So we’re really talking about: can we make your school committees work better or something “unambitious” like that and from there you can demonstrate that it can be done and eventually it can become bigger and bigger.

So for example together we started working with the police in Rajasthan. We describe this in the book. It happens to be that at least some people in the police in Rajasthan were interested in improving performance and tried some things and it had some effect. Then we could use that as an example when we went to talk to the government of Gujarat about improving their pollution inspection and their audit business and in the process of that got the attention of the central government who are thinking about should we start a cap and trade scheme for carbon. And now Rohini Pande and Michael Greenstone who were working with me on the pollution issue are now working on cap and trade, which if they manage to do it will be really big. But it didn’t happen by us knocking on the door of the minister and asking, “Can we design your cap and trade system?” It happened by taking the path of least resistance.

Another thing is the example of the experience we had in France where you start by doing one project then another project and eventually the right politician at the right time will see it and say let me put in $250 million. It’s just creating the space and a fund and a technical capacity for anybody to try things out in the poverty space. And if it can happen in France then it can happen anywhere in Europe because people don’t like being left behind.

TO: While I was reading, it occurred to me that your book is bad news for optimists and for cynics.

ED: [Laughs] Who is it good news for?

I think it’s good news for patient people, for people who don’t have a hugely strong view about how anything in particular should work and are willing to apply that mindset but are willing to be proven wrong by the data.

TO: One of the things that you say toward the end of the book that leapt of the page at me is, to quote directly, “The poor bear responsibility for too much of their lives.” I can imagine a lot of people reading that sentence and being taken aback. It seems to be a stark contrast with the Sen idea that escaping poverty means having more freedom, more control of your life.

AB: I think we choose our words carefully. Control is not responsibility. In a sense I think having a lot of responsibility undermines control…

ED: …and freedom.

AB: And freedom. When you want to exercise control you need to have the psychological freedom to actually exercise it actively, rather than passively reacting to many many things. Control is not passively reacting to many many things. It’s agency. I think responsibility, lots of responsibility for very difficult things undermines agency. It’s not that you choose to do those things, it’s that you have to do those things. So it’s not choice, responsibility is not choice. It’s things that are dumped on you that you have to struggle with and in the process I think your agency is undermined because you can’t reflectively decide that this is the life choice that I want and this the life choice that I don’t want. Buffeted by a hundred things that I may or may not have chosen and many of which I don’t want and I somehow need to negotiate through that morass. I wouldn’t call that being in control or being free. I think taking responsibility off people’s hands and giving them a domain of freedom which is uncluttered by that where they can make choices without being constantly frightened by all the things that can happen, all the risks around, just the intellectual challenge of balancing 500 things, I think it is giving them freedom. Maybe it’s a disagreement about the nature of freedom. Prima facie I would not say that responsibility is control

ED: I don’t think that’s against Sen. It’s going further in the Sen path. The whole argument of Sen is that freedom means nothing unless you have the capability to exercise it. There are many examples of that, but one very striking example of that which he cites is the family in Bengal which is completely free to buy grain but they have no money so they can’t do it. The point he is making is that freedom is meaningless unless the possibility to exercise it, the capability to exercise it. We are not saying anything different. I mean, we are not free in the US to drink water that is contaminated with e. coli because it comes to us clean. Is our freedom reduced in comparison to the person in Kenya who is free to do that because if they don’t want to drink the water with e. coli they have to put chlorine in it. I don’t think we are less free, I think we are more free.

TO: Oddly there are people in the US now who are making that argument. [laughter]

ED: I’m not saying that we are not making a political statement on some level on what is the nature of freedom, but I think it’s an argument that’s pretty naturally in the Sen line.

TO: Is the war over Randomized Control Trials (RCTs) in economics being won? Are you having to spend less time explaining, justifying, fighting the internecine battles within the economics profession about the limits of RCTs?

ED: Abhijit and I disagree on that. I think it’s been completely won in that I think it’s just happening. A lot of people are doing it without us. It’s being used. I think it is now understood to be one of the tools. The argument within the economics profession had two main consequences, both good. First it raised the profile. If something was debated, people began to believe it must be significant.

Second, it did force us to answer the challenges. There were a lot of valid points that were raised and it forced us to react to that. We’ve become more intelligent as a result. I think Abhijit somewhat disagrees. I think he sees very prominent people like Angus Deaton who came out so strongly against RCTs have provided cover for people who were against evaluation, to have a very quick answer, “Rigorous evaluation is not all it has cracked up to be.” My view is that if people were not enthusiastic they were not going to be enthusiastic one way or the other. It’s just a front that argument takes.

I think on balance RCTs are a useful tool and people realize that and therefore it will continue its life.

I don’t think you can do something that is important and changes the world without meeting some opposition. I also think that’s a good thing. We wouldn’t want to replicate the microcredit arguments, but our whole view is that things should be questioned and I think that applies to us well.

AB: I am less certain that it has been won. The acid test of whether an idea has come to stay is that it becomes something that no one needs to justify using. This has happened first to game theory and then to behavioral economics during my years in the profession. RCTS aren’t there yet: it is true almost everyone is doing them, but many of them are taking the trouble to explain that what they do is better than a “mere RCT”. We need to get to the point where people take RCTs to be the obvious tool to use when possible to answer a particular class of empirical questions

TO: There are a lot of people, though, still saying things like “The important things can’t be measured” or arguing that too many important things are beyond the reach of scientific study.

ED: Part of the debate has been what is the nature of proof, what is the nature of scientific inquiry. That debate has been had. It was Kant and Hume, why do we need to have it again?

TO: I’ve seen other people make that the point that people can accept that small changes create big changes over time in biology but not that a similar process works in economics. They believe that in economics big changes can only come from big policy initiatives and grand strategies. Do you see that? Why do you think that is? Why do people want to believe that the big levers are the ones that matter?

ED: Maybe because the science in economics is a bit more shaky and it’s younger. We understand a lot less about interactions between small things in a complex system.

TO: I was pretty discouraged about the idea of small changes and making progress when the Opportunity NYC program was canceled and the reaction to Roland Fryer’s experiments. Both showed improvement, but small improvement, and the programs have been abandoned. No one seems to believe that the impact was big enough to invest in.

ED: I think that’s a bit of problem that we encounter as well. We have that problem with the immunization incentive program. That’s something I care deeply about just from a human perspective. I want to get that expanded. But even though we’ve never seen anything better ever in terms of lives saved per dollar spent, there’s a lot of resistance. There are many reasons people are reluctant about things like giving people an incentive for immunization. Some are ideological, you shouldn’t pay people to do something that’s good for them. But some people say, “Oh that’s good you increased the immunization rate from 6% to 38% but there are still 60% who are not immunized.” My response is, “Well yeah, do you have something better?” We published that work in the British Medical Journal. One of the referee responses was, “That’s not enough to guarantee herd immunity, so why do we care?” Well we care because it’s still good even it’s not herd immunity. We care because they 30% of people aren’t going to die. And even if you don’t have herd immunity you still get contagion effects. All of the evidence on vaccinations is that you get effects [of lessening epidemics] at all levels.

Of course if you get to 100% you get the big prize of eradicating a disease like Gates is trying with polio, which is a completely legitimate exercise. But it’s not like that you shouldn’t do it if you can’t fully wipe out a disease. There’s no reason not to improve measles immunization from 6% to 38%. But people don’t get all that excited about it. So it’s very big, it’s still a lot of lives, but it’s not a game changer.

By measuring well and showing what the effects are you get these kind of realistic answers. When you don’t measure you can always claim something big. You can hope that it’s going to be something big and that every child in New York City will be reading at grade level in a few years. But when you actually measure you realize it’s not going to get there, but it’s still something.

Starting from a context where most things are at least a little bit overblown, then the sobriety of measurement puts any program at a bit of a disadvantage. But I think that’s a culture that could change, that people could get used to using a different lens. The honest but modest number that has been established from a trial or in another rigorous way could replace the rosy description of what you wish was happening but that change might take a little longer.

An Interview with Banerjee and Duflo, Part 3

2011-06-29T17:42:41-05:00

In Part 3, we discuss whether focusing on women and girls will yield better development results and the role of food subsidies and cash transfers in India and prospects for reform. In case you missed them here are Part 1 and Part 2 of the interview.

Timothy Ogden: Recently there’s been a lot of people excited about the possibility of India doing away with subsidies for food and fuel and moving to direct cash transfers to the poor instead. I’m certainly no expert on India but I do know that a big part of the attractiveness of some civil service jobs is the ability to skim the subsidies. Do you think the move to direct transfers is really going to happen? Isn’t the whole state apparatus highly incented to not let it happen?

Abhijit Banerjee: Exactly right. I don’t know that there’s any good reason to think it’s going to happen. Here’s the one reason it might happen. The government is actually extraordinarily sensitive to the fact that it’s extremely inept at delivering anything to the people. The only reason it might happen is if one government before one election might realize this is a sure win and if we can somehow make it work it’s going to get to the people at a rate at which nothing else will, and just before elections bureaucrats have less influence and even corrupt members of your own party have less influence than at normal times. That’s because everyone realizes that if you don’t win the election there’s no more pie to dip your fingers into, so I think at those times it could happen.

TO: To extend the cynicism a step further, it seems the perfect time to do it is when a party knows you’re going to lose. So you make this move to limit the next party’s ability to reward the foot soldiers.

AB: The current party [Congress] is actually very frightened that they will lose next election. I think that’s why they think the “right to food” will actually save their prospects but I think the “right to food” will explode in their face because people will soon realize that the food is not showing up. The worst thing for a politician is to promise something like something that’s easy for people to tell whether it’s been delivered or not and then not follow through. You can say anything you want about the quality of education and get away with it, but people will know that they didn’t get the promised food so I actually think the “right to food” approach is going to backfire on them. But they don’t seem to think so.

TO: I was wholly unaware of some pretty frightening nutrition statistics in India that you present in the book. People are eating less and eating less nutritiously even as their income rises and stunting and malnutrition is in some cases growing. From that perspective wouldn’t it be a bad idea to move from food subsidies to cash. Wouldn’t it exacerbate the problem?

AB: The food transfer is entirely voluntary. It’s not the food, the form, that matters. For most people the food aid is marginal to what they’re already consuming. So anything they can get from the government they buy and then they buy extra. It makes no difference whether it’s food or not. That’s part of the problem. If [the Congress Party] actually manage to implement the “right to food” and do it at the level they are predicting, it might stop being marginal for people and that might actually affect their nutrition.

But there are many more things that are more simple than the “right to food” to address the nutrition problem. It’s nutrients more than nutrition, it’s nutrition rather than food. The problem is precisely that people have stopped consuming a lot of the traditional high protein, high nutrition crops. Grain consumption is not the issue. I think the issue is that they’re not consuming pulses. That’s because the Green Revolution had little impact on lentil production. Lentil production has fallen relative to grains. The relative price of pulses has gone in the wrong direction and that has something to do with that there’s been no Green Revolution in lentils. The price of lentils has doubled in relation to grains over the last 20 years.

If the pulse prices came down to where they were in 1975 relative to grains, I think nutrition would change significantly in the right direction.

TO: It’s interesting that Canada is one of the world’s largest producers of pulses now and Canadian public universities are working on improved pulse varieties. Just another example where the Canadian government’s aid budget may be irrelevant but public funding of better growing pulses in Saskatchewan may have a massive positive impact.

Shifting to another topic, let me ask about women and girls. In almost all advertisements for aid and charity these days you see some version of the idea that the focus of aid should be on women and girls. There’s some indication in the text of some disagreement between the two of you on the evidence for that claim and of the need to focus on women and girls.

Esther Duflo: That’s mostly in jest

AB: We both agree that the idea of focusing on women and girls is very intriguing but slightly overblown. We don’t actually know. Men versus women seems to make a huge difference in some places and not in others.

ED: It’s not overblown necessarily. Women do spend money differently than men. The issue is whether women are inherently better people or the differences are the outcome of the social structure.

TO: You write about your fathers. Your fathers weren’t drunkards who cared nothing about their children. I think about the generations of my family and we’re not so far removed from rural farmers or the lower rungs of the working class. We didn’t go to school only because our mothers invested in us. I’m troubled about the whiff of racism in the notion that mostly black and brown men in poor countries don’t care about their families and white men in rich European countries do.

AB: That’s the sense in which I think the evidence is overblown. I think that the evidence is clear that the particular forms of social dysfunctionality that emerge when economies are not working well have very different effects on men and women. That’s partly because of the social roles assigned to them. So when you are a farmer and you you’re your land and you realize that everybody else is making much more money than you, somehow your assigned role as the income earner of the family means you feel that in a different way than your wife who is also feeling the pinch of not being able to afford things. But in a sense it is definitely true that it is not her assigned role, and I think it makes a difference that it’s not her assigned role. She is more able to discharge her assigned role than the man is in difficult economic circumstances. And that’s almost surely one of the reasons why in the US when the urban blue-collar industries went into decline, the traditional working class and particularly African-American working class family got under a lot of stress.

I’m sure this phenomenon exists everywhere in the world. When you lose your job or your job is not up to snuff, it’s difficult for men in traditional societies. I think it has a lot to do with their assigned role of income earner is one that was particularly vulnerable to the shocks that the families were subject to. I do think that it’s exactly what you said, I don’t disagree with that. I think there is an easy essentialization of gender which is clearly dangerous.

TO: Well of course women are better people, it’s just a question of marginally how much better [laughter].

ED: There’s a factor of what I think is called benign sexism. For instance, there are surveys where people ask, “do you feel that women possess an inherent quality of gentleness that men lack?,” something like that. And people say “yes.” That’s also a form of sexism.

TO: There’s some hint of this as I understand the results of the Spandana microcredit study. I think you found that women didn’t spend more in the categories like education or food where people expected that women would spend more of their income than men did.

ED: Yes, we didn’t find any of that [more spending on children or education].

TO: I wonder if there’s a discretionary income issue. Men traditionally have the discretionary income and when they feel they have done the work to earn the income then they have the right to spend some of it on themselves. But in traditional societies women are receiving a portion of the family income for a specific task—to buy food and take care of the children. So that’s what they spend it on. When women become discretionary wage earners, they behave like the men and spend more money on themselves—as is their right.

ED: That’s what Chris Udry and I found in Cote D’Ivoire and we talk a bit about in the book. It is true that when we find that when women do better than men in a particular year that they spend more on food which is their particular job, their social role, but they also spend on themselves. So it’s not that women do not want to spend money on themselves. Their traditional role involved making sure that people are fed. And that’s less the case for men. Why societies evolved like that makes sense.