Publication: Changing Households’ Investments and Aspirations through Social Interactions : Evidence from a Randomized Transfer Program
Loading...
Published
2009-11-01
ISSN
Date
2012-03-19
Author(s)
Macours, Karen
Editor(s)
Abstract
Low aspirations can limit households investments and contribute to sustained poverty. Vice versa, increased aspirations can lead to investment and upward mobility. Yet how aspirations are formed is not always well understood. This paper analyzes the role of social interactions in determining aspirations in the context of a program aimed at increasing households' investments. The causal effect of social interactions is identified through the randomized assignment of leaders and other beneficiaries to three different interventions within each treatment community. Social interactions are found to affect households attitudes toward the future and to amplify program impacts on investments in human capital and productive activities. The empirical evidence indicates that communication with motivated and successful nearby leaders can lead to higher aspirations and corresponding investment behavior.
Link to Data Set
Citation
“Macours, Karen; Vakis, Renos. 2009. Changing Households’ Investments and Aspirations through Social Interactions : Evidence from a Randomized Transfer Program. Impact Evaluation series ; no. IE 41,Policy Research working paper ; no. WPS 5137. © World Bank. http://hdl.handle.net/10986/4330 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Error: Could not load results for '/discover/search/objects?query=relation.isSeriesOfPublication%3A26e071dc-b0bf-409c-b982-df2970295c87&f.resourceid=e15ce7b8-479c-56fb-945e-d1bb121396fd,notequals'.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Cash Transfers, Behavioral Changes, and Cognitive Development in Early Childhood : Evidence from a Randomized Experiment(World Bank, Washington, DC, 2008-10)A variety of theories of skill formation suggest that investments in schooling and other dimensions of human capital will have lower returns if children do not have adequate levels of cognitive and social skills at an early age. This paper analyzes the impact of a randomized cash transfer program on cognitive development in early childhood in rural Nicaragua. It shows that the program had significant effects on cognitive outcomes, especially language. Impacts are larger for older pre-school age children, who are also more likely to be delayed. The program increased intake of nutrient-rich foods, early stimulation, and use of preventive health care-all of which have been identified as risk factors for development in early childhood. Households increased expenditures on these inputs more than can be accounted for by the increases in cash income only, suggesting that the program changed parents' behavior. The findings suggest that gains in early childhood development outcomes should be taken into account when assessing the benefits of cash transfer programs in developing countries. More broadly, the paper illustrates that gains in early childhood development can result from interventions that facilitate investments made by parents to reduce risk factors for cognitive development.Publication Demand versus Returns? Pro-Poor Targeting of Business Grants and Vocational Skills Training(World Bank, Washington, DC, 2013-03)Interventions aimed at increasing the income generating capacity of the poor, such as vocational training, micro-finance or business grants, are widespread in the developing world. How to target such interventions is an open question. Many programs are self-targeted, but if perceived returns differ from actual returns, those self-selecting to participate may not be those for whom the program is the most effective. The authors analyze an unusual experiment with very high take-up of business grants and vocational skills training, randomly assigned among nearly all households in selected poor rural communities in Nicaragua. On average, the interventions resulted in increased participation in non-agricultural employment and higher income from related activities. The paper investigates whether targeting could have resulted in higher returns by analyzing heterogeneity in impacts by stated baseline demand, prior participation in non-agricultural activities, and a wide range of complementary asset endowments. The results reveal little heterogeneity along observed baseline characteristics. However, the poorest households are more likely to enter and have higher profits in non-agricultural self-employment, while less poor households assigned to the training have higher non-agricultural wages. This heterogeneity appears related to unobserved characteristics that are not revealed by stated baseline demand, and more difficult to target. In this context, self-targeting may reduce the poverty-reduction potential of income generating interventions, possibly because low aspirations limit the poor's ex-ante demand for productive interventions while the interventions have the potential to increase those aspirations. Overall, targeting productive interventions to poor households would not have come at the cost of reducing their effectiveness. By contrast, self-targeting would have limited poverty reduction by excluding the poorest.Publication Improving Gender and Development Outcomes through Agency : Policy Lessons from Three Peruvian Experiences(Lima: World Bank, 2013-07)Peruvian public policy is currently focused on economic growth with social inclusion. The Ministry of Development and Social Inclusion (MIDIS)-created in October 2011-leads the sector and promotes evidence-based public policy using three strategic guidelines: 1) matching criteria and mechanisms for the selection of areas and target population, 2) generation of instruments for inter-sectorial and inter-governmental result-based coordination, and 3) activation of monitoring and evaluation procedures to measure interventions' progress and results. This study is about the incredible and frequently underestimated role of agency-the ability to make choices to achieve desired outcomes-in economic development. The authors share the view that agency has inherent value for development: it is an attribute and manifestation of development, or using Sen's words, it is constituent to development. This study however, focuses on the instrumental role of agency for more tangible manifestations of development, such as, poverty reduction and economic growth. It attempts to show that expanding individual agency is a powerful catalyst for improving welfare, as measured by these concrete and widely used metrics of policy success. Moreover, it argues that in many cases, improving development outcomes through agency is highly cost-effective. This study centers on several policy initiatives in Peru, which as will be subsequently shown, have improved the agency of their beneficiaries. The purpose of this study is twofold. First, it aims at bridging this information gap, providing a review of evidence that shows how the psychological components of agency, such as aspirations and self-esteem, can effectively contribute to more traditional development objectives-ranging from higher investments in human capital to increased income. Second, the study reviews and synthesizes research on several policy interventions in Peru, which have empowered their beneficiaries. In this way, the study aims to derive practical recommendations on how to incorporate psychological elements of agency into policy interventions in order to achieve better development outcomes. The study is structured as follows: the next section discusses the concept of agency, providing examples of its broad role in achieving development objectives. The following section reviews the quantitative and qualitative research that served as the basis for this study and elaborates on the methodologies used to derive the conclusions presented in the ensuing section. The last section synthesizes the conclusions of the review of different interventions in Peru into six practical 'policy lessons'.Publication Transfers, Diversification and Household Risk Strategies : Experimental Evidence with Lessons for Climate Change Adaptation(World Bank, Washington, DC, 2012-04)While climate change is likely to increase weather risks in many developing countries, there is little evidence on effective policies to facilitate adaptation. This paper presents experimental evidence on a program in rural Nicaragua aimed at improving households' risk-management through income diversification. The intervention targeted agricultural households exposed to weather shocks related to changes in rainfall and temperature patterns. It combined a conditional cash transfer with vocational training or a productive investment grant. The authors identify the relative impact of each complementary package based on randomized assignment, and analyze how impacts vary by exposure to exogenous drought shocks. The results show that both complementary interventions provide full protection against drought shocks two years after the end of the intervention. Households that received the productive investment grant also had higher average consumption levels. The complementary interventions led to diversification of economic activities and better protection from shocks compared to beneficiaries of the basic conditional cash transfer and control households. These results show that combining safety nets with productive interventions can help households manage future weather risks and promote longer-term program impacts.Publication Wealth Gradients in Early Childhood Cognitive Development in Five Latin American Countries(World Bank, Washington, DC, 2014-02)Research from the United States shows that gaps in early cognitive and noncognitive abilities appear early in the life cycle. Little is known about this important question for developing countries. This paper provides new evidence of sharp differences in cognitive development by socioeconomic status in early childhood for five Latin American countries. To help with comparability, the paper uses the same measure of receptive language ability for all five countries. It finds important differences in development in early childhood across countries, and steep socioeconomic gradients within every country. For the three countries where panel data to follow children over time exists, there are few substantive changes in scores once children enter school. These results are robust to different ways of defining socioeconomic status, to different ways of standardizing outcomes, and to selective non-response on the measure of cognitive development.
Users also downloaded
Showing related downloaded files
Publication Government Matters III : Governance Indicators for 1996-2002(World Bank, Washington, DC, 2003-08)The authors present estimates of six dimensions of governance covering 199 countries and territories for four time periods: 1996, 1998, 2000, and 2002. These indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. The authors assign these individual measures of governance to categories capturing key dimensions of governance and use an unobserved components model to construct six aggregate governance indicators in each of the four periods. They present the point estimates of the dimensions of governance as well as the margins of errors for each country for the four periods. The governance indicators reported here are an update and expansion of previous research work on indicators initiated in 1998 (Kaufmann, Kraay, and Zoido-Lobat 1999a,b and 2002). The authors also address various methodological issues, including the interpretation and use of the data given the estimated margins of errors.Publication Governance Matters IV : Governance Indicators for 1996-2004(World Bank, Washington, DC, 2005-06)The authors present the latest update of their aggregate governance indicators, together with new analysis of several issues related to the use of these measures. The governance indicators measure the following six dimensions of governance: (1) voice and accountability; (2) political instability and violence; (3) government effectiveness; (4) regulatory quality; (5) rule of law, and (6) control of corruption. They cover 209 countries and territories for 1996, 1998, 2000, 2002, and 2004. They are based on several hundred individual variables measuring perceptions of governance, drawn from 37 separate data sources constructed by 31 organizations. The authors present estimates of the six dimensions of governance for each period, as well as margins of error capturing the range of likely values for each country. These margins of error are not unique to perceptions-based measures of governance, but are an important feature of all efforts to measure governance, including objective indicators. In fact, the authors give examples of how individual objective measures provide an incomplete picture of even the quite particular dimensions of governance that they are intended to measure. The authors also analyze in detail changes over time in their estimates of governance; provide a framework for assessing the statistical significance of changes in governance; and suggest a simple rule of thumb for identifying statistically significant changes in country governance over time. The ability to identify significant changes in governance over time is much higher for aggregate indicators than for any individual indicator. While the authors find that the quality of governance in a number of countries has changed significantly (in both directions), they also provide evidence suggesting that there are no trends, for better or worse, in global averages of governance. Finally, they interpret the strong observed correlation between income and governance, and argue against recent efforts to apply a discount to governance performance in low-income countries.Publication Breaking the Conflict Trap : Civil War and Development Policy(Washington, DC: World Bank and Oxford University Press, 2003)Most wars are now civil wars. Even though international wars attract enormous global attention, they have become infrequent and brief. Civil wars usually attract less attention, but they have become increasingly common and typically go on for years. This report argues that civil war is now an important issue for development. War retards development, but conversely, development retards war. This double causation gives rise to virtuous and vicious circles. Where development succeeds, countries become progressively safer from violent conflict, making subsequent development easier. Where development fails, countries are at high risk of becoming caught in a conflict trap in which war wrecks the economy and increases the risk of further war. The global incidence of civil war is high because the international community has done little to avert it. Inertia is rooted in two beliefs: that we can safely 'let them fight it out among themselves' and that 'nothing can be done' because civil war is driven by ancestral ethnic and religious hatreds. The purpose of this report is to challenge these beliefs.Publication Design Thinking for Social Innovation(2010-07)Designers have traditionally focused on enchancing the look and functionality of products.Publication Governance Matters VIII : Aggregate and Individual Governance Indicators 1996–2008(2009-06-01)This paper reports on the 2009 update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2008: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. These aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 33 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. They find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. The aggregate indicators, together with the disaggregated underlying indicators, are available at www.govindicators.org.