Highlights of 2011 - Institute for Policy Research - Northwestern ...

Poverty, Race, AND Inequality
Economic Opportunities for Women
About the Program
Beaman is working in the West African nation of Mali to evaluate
the Saving for Change Program, a new form of community
savings program that integrates self-managed saving and lending
groups with education sessions. In the rural regions of Mali, the
economy is mainly based on subsistence agriculture, and a lack
of financial means to hire labor and buy input can put significant
limits on women’s economic opportunities. Locally known as
Épargner pour le Changement, the Saving for Change Program
was implemented to increase women’s ability to save and
create access to credit. It also helps them invest in agricultural,
or other small business, activities. The program was offered to
a random sample of 250 villages in Mali’s Ségou region. Group
members save a set amount each week and can benefit from
short-term loans from the group savings fund. Training group
members who volunteer to start new Saving for Change groups
themselves accelerate the growth of the program. To test the
effectiveness of different implementation strategies, Beaman
and her colleagues are comparing the two methods for training
village replicator agents—one in which replicators receive a
pictorial manual and a formal three-day training session on how
to start and manage groups and another that does not give any
formal training, reducing program costs.
Kinship and Financial Networks
Many risks are present in rural developing economies, yet
for many households in these economies, consumption and
investment are insured against short-term risks to a large
extent, despite limited availability of formal banking and
insurance products. While the importance of kinship networks
and financial access are each increasingly well documented, the
channels through which these effects occur and the relationship
between kinship networks and financial access are not well
understood. Using unique data from rural Thai households,
economist and IPR associate Cynthia Kinnan and co-author
Robert Townsend of MIT examine this interplay. Their results
indicate that access to the formal financial system plays
an important role in smoothing consumption in the face of
income shocks. Strikingly, an indirect connection is as effective
as a direct connection, suggesting that borrowing and lending
among households act to distribute capital from formal financial
institutions. This implies that not every household in a village
needs to use the banking system directly to benefit. The article
was published in the American Economic Review.
Anti-Poverty Policy and Transfers
A central question in anti-poverty policy is whether welfare
transfer programs should be made in kind or as cash, with the
oft-cited rationale for in-kind transfers being to encourage
consumption of certain goods. While both types of transfers
James Rosenbaum, Chair
In the program on Poverty, Race, and Inequality,
IPR researchers look at various causes of poverty,
racism, and inequality and their consequences,
including continuation of an influential research
line on the effects of public housing and
residential policies on child and adult outcomes.
The researchers’examinations often overlap with
other IPR research programs, in particular Urban
Policy and Community Development and Child,
Adolescent, and Family Studies.
increase the demand for normal goods, only in-kind transfers
also increase supply. Hence, in-kind transfers should lead
to lower prices than cash transfers, which help consumers at
the expense of local producers. A recent working paper coauthored
by economist and IPR associate Seema Jayachandran
tests this hypothesis using a large food assistance program for
poor households in Mexico, which randomly assigned villages
to either receive boxes of food trucked into the village, equivalently
valued cash transfers, or no transfers. The study shows
sizeable price effects. The decline in food prices caused by inkind
transfers relative to cash transfers represents an indirect
benefit of in-kind transfers for consumers that is large relative
to the direct transfer itself. The researchers also find that agricultural
profits increase in cash villages, where food prices rose,
more so than in in-kind villages, where prices fell. These price
effects were particularly pronounced for very geographically
isolated villages, where the most impoverished people live.
Positive Interracial Interactions
Although the blatant racism of earlier eras has declined
dramatically in recent decades, contemporary forms of bias
continue to thwart the realization of genuine racial equality. In a
study published in the Journal of Personality and Social Psychology,
a team of researchers including IPR social psychologist Jennifer
Richeson investigated the hypothesis that perspective taking,
actively contemplating others’ psychological experiences, can
17