Dean Karlan and Jacob Appel, “To Buy: Doubling the Number of Families with a Safety Net.” Chapter 3, pages 39-54, in More than Good Intentions: Improving the Ways the World's Poor Borrow, Save, Farm, Learn, and Stay Healthy, New York: Dutton, 2011. [Also see this Q&A with the authors at the Freakonomics blog.]
• For a successful anti-poverty policy, you need an intervention that reduces poverty, of course; but further, you need your intervention to be taken up by the targeted poor people. Many policies that “work” do not achieve high levels of take-up, including oral rehydration therapy (for protection against the effects of diarrhea), and ant-malarial mosquito nets.
• Behavioral economist Sendhil Mullainathan talks about “The Last Mile Problem,” the relative neglect of take-up after the intervention has been designed.
• Decisions to borrow money are influenced by far more factors than the interest rate. Randomized controlled experiments indicate that a photo of a pretty woman on loan informational material makes it more likely that men will borrow, and providing but one instead of four sample loans helps, too. In-person meetings, especially when introduced by a trusted acquaintance, doubles take-up.
• In another randomized controlled experiment, a cell phone giveaway did not increase borrowing; indeed, that promotion had a perverse impact.
• Choice overload leads to “I’ll think about it tomorrow”- type responses.
• Rainfall insurance for poor farmers in India is woefully undersubscribed, although (so Karlan and Appel assert) very beneficial.
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