Abhijit Banerjee

Massachusetts Institute of Technology | MIT · The Abdul Latif Jameel Poverty Action Lab

Two years prior to elections, two-thirds of Delhi municipal councillors learned they had been randomly chosen for a preelection newspaper report card. Treated councillors in high-slum areas increased pro-poor spending, relative both to control counterparts and treated counterparts from low-slum areas. Treated incumbents ineligible to rerun in home...

We combine data from longitudinal surveys in seven low- and middle-income countries (plus the United States for comparison) to document that depressive symptoms among those aged 55 and above are prevalent in those countries and, unlike in the United States, increase sharply with age. Depressive symptoms in one survey wave are associated with a grea...

Background: A growing number of older persons in developing countries live entirely alone and are physically, mentally, and financially vulnerable. Objective: To determine whether phone-based cognitive behavioral therapy (CBT) or a cash transfer reduce functional impairment, depression, or food insecurity in this population. Design: Randomized...

This paper studies the long-run effects of a “ big-push” program providing a large asset transfer to the poorest Indian households. In a randomized controlled trial that follows these households over ten years, we find positive effects on consumption (0.6 SD), food security (0.1 SD), income (0.3 SD), and health (0.2 SD). These effects grow for the...

During the Coronavirus Disease 2019 (COVID-19) epidemic, many health professionals used social media to promote preventative health behaviors. We conducted a randomized controlled trial of the effect of a Facebook advertising campaign consisting of short videos recorded by doctors and nurses to encourage users to stay at home for the Thanksgiving a...

During the COVID-19 epidemic, many health professionals started using mass communication on social media to relay critical information and persuade individuals to adopt preventative health behaviors. Our group of clinicians and nurses developed and recorded short video messages to encourage viewers to stay home for the Thanksgiving and Christmas Ho...

Many developing country governments determine eligibility for anti-poverty programs using censuses of household assets. Does this distort subsequent reporting of, or actual purchases of, those assets? We ran a nationwide experiment in Indonesia where, in randomly selected provinces, the government added questions on flat-screen televisions and cell...

Should developing countries give all of their citizens enough money to live on? Interest in this idea has grown enormously in recent years, reflecting both positive results from a number of existing cash transfer programs and dissatisfaction with the perceived limitations of piecemeal, targeted approaches to reducing extreme poverty. We discuss wha...

This paper investigates how elite capture affects the welfare gains from targeted government transfer programs in Indonesia, using both a high-stakes field experiment that varied the extent of elite influence and nonexperimental data on a variety of existing government programs. While the relatives of those holding formal leadership positions are m...

We explore the impact of allowing for outsourcing service delivery to the private sector within Indonesia’s largest targeted transfer program. In a field experiment across 572 municipalities, we find that allowing for outsourcing the last mile of food delivery reduced operating costs without sacrificing quality. However, the prices citizens paid we...

Randomized controlled trials have found only modest effects of microfinance, but these studies focus on new clients. Existing estimates may thus understate ongoing gains for more experienced borrowers and the longer‐run potential of microfinance. We estimate impacts of microfinance on experienced borrowers, using an episode when a microfinance inst...

This thesis consists of three chapters. The first two chapters explore how different organizational forms, and in particular different hiring and firing practices, affect bureaucracies. In the first chapter, I study how the introduction of merit systems reducing politicians' control over police officers' hiring and firing affected police performanc...

This paper shows that adding a small application cost to a transfer program can substantially improve targeting through self-selection. Our village-level experiment in Indonesia finds that requiring beneficiaries to apply for benefits results in substantially poorer beneficiaries than automatic enrollment using the same asset test. Marginally incre...

A key challenge for political and economic development lies in generating broad coali-tions that span economic and ethnic divisions. We measure the effects of a particular mechanism—shocks to trade—in mobilizing the Indian subcontinent's remarkably di-verse population into one of the world's first mass political movements in favour of Independence....

Outsourcing government service provision to private firms can improve efficiency and reduce rents, but there are risks that non-contractible quality will decline and that reform could be blocked by vested interests exactly where potential gains are greatest. We examine these issues by conducting a randomized field experiment in 572 Indonesian local...

A wide range of interventions, from subsidized grains all the way to conditions on nutrition in conditional cash transfers, have either been tried or put in place in different countries in order to fight under-nutrition. A number of important policy experiments in recent years, directly or indirectly, offer important insights into how best to desig...

Causal evidence on microcredit impacts informs theory, practice, and debates about its effectiveness as a development tool. The six randomized evaluations in this volume use a variety of sampling, data collection, experimental design, and econometric strategies to identify causal effects of expanded access to microcredit on borrowers and/or communi...

Targeted transfer programs for poor citizens have become increasingly common in the developing world. Yet, a common concern among policy makers - both in developing as well as developed countries - is that such programs tend to discourage work. We re-analyze the data from 7 randomized controlled trials of government-run cash transfer programs in si...

Microfinance institutions have started to bundle their basic loans with other financial services, such as health insurance. Using a randomized control trial in Karnataka, India, we evaluate the impact on loan renewal from mandating the purchase of actuarially-fair health insurance covering hospitalization and maternity expenses. Bundling loans with...

Massive Online Open Courses (MOOCs) present the potential to deliver high quality education to a large number of students. But they suffer from low completion rates. This paper identifies disorganization as a factor behind failure to complete a MOOC. Students who enroll one day late are 17 percentage points less likely to earn a certificate than st...

This paper reports on the first randomized evaluation of the impact of introducing the standard microcredit group-based lending product in a new market. In 2005, half of 104 slums in Hyderabad, India were randomly selected for opening of a branch of a particular microfinance institution (Spandana) while the remainder were not, although other MFIs w...

This paper investigates the impact of elite capture on the allocation of targeted government welfare programs in Indonesia, using both a high-stakes field experiment that varied the extent of elite influence and non-experimental data on a variety of existing government transfer programs. Conditional on their consumption level, there is little evide...

This paper reports an experiment in 640 Indonesian villages on three approaches to target the poor: proxy means tests (PMT), where assets are used to predict consumption; community targeting, where villagers rank everyone from richest to poorest; and a hybrid. Defining poverty based on PPP$2 per capita consumption, community targeting and the hybri...

Research on microfinance is now two decades old. There has been enormous progress in understanding both what it does and why. However a lot of we have learnt has raised new and often quite fundamental questions about the nature of microfinance: Is it primarily about investment, consumption or savings? Why don’t the investments financed by microcred...

A unique data-set from Indonesia is analysed to understand what individuals know about the income distribution in their village to test theories such as Jackson and Rogers (2007) that link information aggregation in networks to the structure of the network. The observed patterns are consistent with a basic diffusion model: more central individuals...

In the run-up to elections in a large Indian city, residents in a random sample of slums received newspapers containing report cards on politicians. The report card for a jurisdiction presented information, obtained under India’s disclosure laws, on performance of the incumbent legislator and qualifications of the incumbent and two main challengers...

In this paper, we provide a new framework for analyzing corruption in public bureaucracies. The standard way to model corruption is as an example of moral hazard, which then leads to a focus on better monitoring and stricter penalties with the eradication of corruption as the final goal. We propose an alternative approach which emphasizes why corru...

We examine how participation in a microfinance program diffuses through social networks. We collected detailed demographic and social network data in 43 villages in South India before microfinance was introduced in those villages and then tracked eventual participation. We exploit exogenous variation in the importance (in a network sense) of the pe...

No abstract available.

Drug trade-related violence has escalated dramatically in Mexico during the past five years, claiming 40,000 lives and raising concerns about the capacity of the Mexican state to monopolize violence. This study examines how drug traffickers' economic objectives influence the direct and spillover effects of Mexican policy towards the drug trade. By...

This paper endogenizes …nancial contagion and …nancial crises from …nancial institutions. Financial crises can emanate from …nancial institutions which gen-erate soft-budget constraints (SBC). The prevailing SBC in an economy distorts information such that the interbank lending market faces a "lemon" problem. The lemon problem in the lending market...

The way you grow up in India, it has long been known, depends on where you grow up. The average child growing up in Orissa in the 1980s was seven times more likely to die in infancy than his or her equivalent in Kerala. 2 His or her mother is four and half times more likely to die in giving birth if she were in Assam than she would be had she been...

Efficiency wages have been proposed as a means to increase productivity by paying people higher than their outside option. In development economics, this means that paying workers higher wages will make them stronger and work harder. However, this theory has been criticized for being unrealistic, in part because it is not clear whether short-term s...

We explore which financial constraints matter the most in the choice of becoming an entrepreneur. We consider a randomly assigned welfare program in rural Mexico and show that cash transfers significantly increase entry into entrepreneurship. We then exploit the cross-household variation in the timing of these transfers and find that current occupa...

We present a legislative bargaining model of the provision of a durable public good over an innnite horizion. In each period, there is a societal endowment which can either be invested in the public good or consumed. We characterize the optimal public policy, deened by the time path of investment and consumption. In each period, a legislature with...

"Billions of government dollars, and thousands of charitable organizations and NGOs, are dedicated to helping the world's poor. But much of the work they do is based on assumptions that are untested generalizations at best, flat out harmful misperceptions at worst. Banerjee and Duflo have pioneered the use of randomized control trials in developmen...

This study investigates the extent to which China's high household savings rates can be explained by the life cycle theory. First, we document that Chinese parents depend on their children for support when elderly and that sons provide more sup-port than daughters. Second, we test the two predictions of a simple life-cycle model that account for th...

In the last few years, field experiments have emerged as an attractive new tool in the effort to elaborate our understanding of economic issues relevant to poor countries and poor people. By enabling the researcher to precisely control the variation in the data, field experiments allow the estimation of parameters and testing of hypotheses that wou...

Appendix 2: Cost effectiveness analysis

Appendix 1: Validation of self reported data on immunisation status

To assess the efficacy of modest non-financial incentives on immunisation rates in children aged 1-3 and to compare it with the effect of only improving the reliability of the supply of services. Clustered randomised controlled study. Rural Rajasthan, India. 1640 children aged 1-3 at end point. 134 villages were randomised to one of three groups: a...

This paper presents novel empirical evidence on the impact of access to abortion on sex ratios at birth (SRB), excess female mortality (EFM) and fertility in Taiwan. For identification, we exploit plausibly exogenous variation in the availability of sex-selective abortion caused by the legalization of abortion. Our results show that the legalizatio...

This paper examines the impact of attending a magnet school on student achievement using school admissions lotteries in China. Although lottery winners were more likely to attend mag-net schools that appear better in many dimensions, including peer achievement, we …nd little evidence that winning a lottery improved students'performance on the High...

In developing countries, identifying the poor for redistribution or social insurance is challenging because the government lacks information about people’s incomes. This paper reports the results of a field experiment conducted in 640 Indonesian villages that investigated two main approaches to solving this problem: proxy-means tests, where a censu...

This paper argues that the relation between temptations and the level of consumption plays a key role in explaining the observed behaviors of the poor. Temptation goods are defined to be the set of goods that generate positive utility for the self that consumes them, but not for any previous self that anticipates that they will be consumed in the f...

Recent papers argue that the misallocation of resources can explain large cross-country TFP differences. This argument is underpinned by empirical evidence documenting substantial dispersion in the marginal products of resources, particularly capital, in developing countries. But why does misallocation persists? That is, why don't distortions disap...

The experimental approach to development economics Randomized experiments have become a popular tool in development economics research and have been the subject of a number of criticisms. This paper reviews the recent literature and discusses the strengths and limitations of this approach in theory and in practise. We argue that the main virtue of...

This paper studies the role played by caste, education and other social and economic attributes in arranged marriages among middle-class Indians. We use a unique data set on individuals who placed matrimonial advertisements in a major newspaper, the responses they received, how they ranked them, and the eventual matches. We estimate the preferences...

We study the role of caste and religion in India s new economy sectors software and call- centers by sending 3160 ctitious resumes in response to 371 job openings in and around Delhi (India) that were advertised in major city papers and online job sites. We randomly allocate caste-linked surnames across resumes in order to isolate the e¤ect of cast...

This paper analyzes the impact of the 1930's American Dust Bowl and, in par-ticular, investigates how much the short-term costs from erosion were mitigated by long-term adjustments. Exploiting new data collected to identify low, medium, and high erosion counties, estimates indicate that the Dust Bowl led to substantial im-mediate decreases in agric...

I estimate the economic impact of the construction of colonial India's railroad network from 1861-1930. Using newly collected district-level data on annual output, prices and internal trade flows I find that the railroad network had the following effects: (1) Railroads caused transport costs along optimal routes to fall by 73 per-cent for an averag...

The current trend in antipoverty policy emphasizes mandated empowerment: the poor are being handed the responsibility for making things better for themselves, largely without being asked whether this is what they want. Beneficiary control is now being built into public service delivery, while microcredit and small business promotion are seen as bet...

Participation of beneficiaries in the monitoring of public services is increasingly seen as a key to improving their quality. We conducted a randomized evaluation of three interventions to encourage beneficiaries' participation to India: providing information on existing institutions, training community members in a testing tool for children, and t...

The public Indian health care system is plagued by high staff absence, low effort by providers, and limited use by potential beneficiaries who prefer private alternatives. This artice reports the results of an experiment carried out with a district administration and a nongovernmental organization (NGO). The presence of government nurses in governm...

In the past century, more people have perished from famine than from both world wars combined. Yet we know little about why the intensity of famines can vary so much geo-graphically or what the long run e¤ects of exposure are to survivors. This paper addresses both of these questions in the context of China's Great Famine. We …rst show a novel sour...

Economists have long been interested in the idea that there is a direct circular relation between poverty and low productivity, and not just one that is mediated by market failures, usually in asset markets. The nutrition-based efficiency wage model (Partha Dasgupta and Debraj Ray, 1987) is the canonical example of models where this happens: Howeve...

We document the rise in unemployment in South Africa since the transition in 1994. We describe how changes in labour supply interacted with stagnant labour demand to produce unemployment rates that peaked between 2001 and 2003. Meanwhile, compositional changes in employment at the sectoral level widened the gap between the skill-level of the employ...

The current trend in antipoverty policy emphasizes mandated empowerment: the poor are being handed the responsibility for making things better for themselves, largely without being asked whether this is what they want. Beneficiary control is now being built into public service delivery, while microcredit and small business promotion are seen as bet...

We exploit random assignment of gender quotas for leadership positions on Indian village councils to show that prior exposure to a female leader is associated with electoral gains for women. After ten years of quotas, women are more likely to stand for, and win, elected positions in councils required to have a female chief councilor in the previous...

We document the rise in unemployment in South Africa since the transition in 1994. We describe the likely causes of this increase and analyze whether the increase in unemployment is due to structural changes in the economy (resulting in a new equilibrium unemployment rate) or to negative shocks (that temporarily have increased unemployment.) We con...

This paper studies many-to-one matching problems such as between students and colleges, and workers and firms in the general case, in which both peer effects and complementarities are allowed. In a matching, an agent on one side, say a firm, employs a subset of agents from the other side (workers), thus forming a coalition. The paper interprets an...

If we are to learn the right lessons from the tragedy of Nandigram, then we must ensure that the government is involved in the land acquisition process and that we correctly deal with three sets of issues: the size and form of compensation, the eligibility for compensation and the credibility of the process.

This paper uses the introduction of barbed wire fences to the American Midwest in the late 19 th century to estimate the effects of property rights on farmers' production decisions. Farmers were both formally and informally required to build fences to secure exclusive land-use rights, yet preferred wooden fences had been prohibitively expensive in...

This paper presents the results of two randomized experiments conducted in schools in urban India. A remedial education program hired young women to teach students lagging behind in basic literacy and numeracy skills. It increased average test scores of all children in treatment schools by 0.28 standard deviation, mostly due to large gains experien...

With more than a billion people now living on less than a dollar a day, and with eight million dying each year because they are simply too poor to live, most would agree that the problem of global poverty is our greatest moral challenge. The large and pressing practical question is how best to address that challenge. Although millions of dollars fl...

This paper presents new evidence of causal effects of health shocks on consumption smoothing, household assets and debt using a novel study design. The identification strategy relies on random exogenous health shocks suffered as passengers injured in a bus accident, with appropriately matched controls. Using household survey data, I find evidence o...

The aim of this paper is to measure the returns to migration using non-experimental data taking both observed and unobserved characteristics into account. A significant challenge related to migration research and the issues of unobserved heterogeneity is that the standard 2stage least squares estimator (2SLS) is strictly only applicable to situatio...

We propose a model in which an optimal dynamic financing contract for a cash-constrained entrepreneur is a credit line with a growing credit limit. This simple contract, which resembles those used in practice, presents a good benchmark to understand dynamic moral hazard and adverse selection. In our setting the moral hazard problem is that the agen...

This paper provides a su¢ cient condition for the non-emptiness of the core in coalition for-mation such as the formation of clubs, partnerships, …rms, business alliances, and jurisdictions voting on public goods. The condition is formulated for settings in which agents …rst form coalitions and then each coalition realizes a payo¤ pro…le from the s...

This volume presents 28 essays on poverty by some of the leading experts in the field of economics. The book is divided into three sections, beginning with an essay about how poverty is measured. The first section is about the causes of poverty and its persistence, and the ideas range from the impact of colonialism and globalization to the problems...

This essay begins with a discussion of the Samuelson-Stolper Theorem, which states that if a labor-abundant country is opened to trade with a laborscarce country, laborers in the first country and the employers in the second will profit at the expense of the workers in the second country and the employers in the first. It then looks at the trade fo...

Many efforts to improve school quality by adding school resources have proven to be ineffective. This paper presents the results of two experiments conducted in Mumbai and Vadodara, India, designed to evaluate ways to improve the quality of education in urban slums. A remedial education programme hired young women from the community to teach basic...