Low Demand

1. Strategies to Increase Adoption of Welfare-Improving Products and BehaviorsA. Mushfiq Mobarak Professor of EconomicsYale University

2. Low Demand • Inexpensive welfare-improving technologies are often not adopted by poor households • Examples span health, agriculture, finance • Insecticide treated bed-nets, new varieties of seeds, improved cook-stoves, migration, insurance, toilets • Why? • Lack of (reliable) information • Lack of money (liquidity, credit, savings constraints) • Intra-household divergence in preferences • Risk Aversion • Traditional solutions crowd out new markets • Low returns to the new technology

3. Understanding the Low Demand • Approach: • Market the product or behavior to several thousand households in a developing country • Randomly vary different aspects of the marketing strategy to understand what works best, and to identify the key aversions to take-up

4. Concept behind project design • Are households already making the right choices for themselves? • Or is there a role for policy intervention? • Are there externalities/complementarities? • Is there an identifiable constraint preventing households from making the socially optimal choice? • Understanding the constraint is important for cost-effective policy. • e.g. If there’s an information failure, subsidies are costly. If there are credit market failures, information programs are wasteful

5. Examples

6. Project 1 seasonal migration in bangladesh

7. Seasonal Migration • Seasonality in agricultural crop cycles • A pre-harvest lean season with limited job opportunities, low wages, high prices • Takes the form of a seasonal famine in North Bengal • “Hungry seasons” affect hundreds of millions around the world (Bangladesh, Malawi, Madagascar, Indonesia,…) • Why isn’t there more seasonal out-migration?

8. Randomly assigned incentives to migrate during the 2008 Monga 1900 households in 100 monga-affected villages Cash (37 villages): 600 Taka ($8.50) Credit (31 villages): Loan of same amount Information / endorsement (16 villages) Control (16 villages) $8.50 = Round-trip bus ticket + couple of days food Tracked households in the short run, and in the long-run, after inducements were removed. The Experiments in Bangladesh

9. Program Evaluation Results 1. 24% of households induced to send a seasonal migrant

10. Income, Consumption Effects • Seasonal out-migration has large benefits • Migrants earn $110 on average at destination (70-90% successful) Effects on Induced Migrants: • Families of migrants consume 600 calories more per person per day • Per-capita Expenditures increase 30% • Protein consumption increases 35% • Switch to more desirable protein (fish, meat from veggies, lentils)

11. Ongoing Migration 87% of migrants go back and work for the same employer 3. Treatment households continue to re-migrate a year later and 3 years later…absent any further incentives

12. Where do we go from here? Why did we have to run this program? Why weren’t households migrating to begin with? • Imagine if you were asked to buy this (very attractive) lottery ticket • Extreme risk aversion close to subsistence Evidence: • Our incentive induces those close to subsistence and those not comfortable migrating. • Strong response to “migration insurance” offers in 2011

13. Conclusions • If there is a clearly identified constraint preventing people from taking advantage of a profitable opportunity, an intervention to alleviate the constraint may increase efficiency: • People find work elsewhere during a lean season • Employers get access to workers, lowering the cost of business • There is a spatial mismatch between where people are and where the jobs are, only during a certain season • An intervention can address this inefficiency • Now replicating and scaling up in Malawi, Indonesia, Bangladesh through Evidence Action

14. Conclusions • Put together the partnerships to scale this program up to 166,700 people over 5 years • What are the spillover effects on the village? • What are the spillover effects in cities? • Track unanticipated consequences

15. Leveraging Social Learning to Improve Agricultural Extension:Research Program in Malawi and Nepal Mushfiq Mobarak Yale University

16. Motivation • Low agricultural yield and productivity growth in Africa Source: World Bank World Development Report

17. Why Don’t People Adopt? • Beyond credit constraints, risk aversion… • Information failures • Do rural farmers know about the technology? • Do they believe the official message about the benefits of the new technology? • Are they convinced to adopt? (relevance, credibility, proximity of information source may matter) • Policy Response? • Extension workers • …strange because the literature suggests social learning is the way to go…

18. Peer farmer (PF) Extension worker (AEDO) Lead farmer (LF) Added Incentives No Incentives Incentives No Incentives Incentives No Incentives Control RCT Promoting New Agricultural Technologies Across 168 Villages in Malawi • Treatments designed to be budget neutral from the perspective of the government • Policy Focus: we know there is social learning. Now, how do we use it?

19. The theory in one slide • Farmers on a line choosing between old and new technology • Uncertainty about returns to new technology. Bayesian updating • Informed ‘communicator’ can send a signal. Signal more persuasive if communicaor is closer • With a single-peaked distribution, centrally located farmers will respond more strongly to target incentives • They can win the incentive at lower cost (sending less precise signals)

20. Technologies Pit Planting Photo credit: August Basson Composting (specifically, “Chinese composting”) Photo credit: Mike Burns

21. Results • Without incentives, • PFs do not bother learning about the technology themselves • They do not put in much effort communicating with others • Others don’t adopt • Indistinguishable from ‘pure control’ villages where we never introduced the technology!

22. Incentive Results • With a small incentive (bag of legume seeds), PF strategy jumps from #6 to #1 • 11.5 pp increase in pit planting, and 26.8 pp increase in composting. • Large increases in yields make the communication treatment highly cost-effective.

23. Implications • Find some cheap ways to leverage the “freely available” social learning to improve agricultural extension services • Implication for behavioral theory: • That incentives matter suggests that the transmission of information is not automatic. We need to understand communication dynamics • Monitoring is costly. Can we be more cost-effective? • Who are the optimal peer farmers?

24. Can Network Theory Optimize Peer Farmer Selection?

25. Experimental Design in Nepal T1 T2 • Will Flat Payments to PFs (without monitoring) suffice? • PF effect due to scale or identity?

26. Maize Intercropping with Beans • Two lines of beans between two lines of maize • Specific line distance, plant distance, sowing time

27. Improved Cookstoves

28. Experiments

29. Policy Implications • Can’t really market to men, or to women. • Solution: bundle an attribute that men want with the stove.

30. Impactful Sanitation Policy Raymond Guiteras, MarylandJim Levinsohn, YaleA. Mushfiq Mobarak, Yale

31. Policy Issue • Over half of all Indians practice open defecation (Census, 2011) • Poor sanitation is estimated to cause 280,000 deaths per year • UNICEF spent $380 million on WSH programs for children in 2012. • World Bank WSP directed US $200 million for sanitation for 50 million people in 2011-2015 • Organizations pursuing different strategies • Sensible to spend a little bit to evaluate the effectiveness of alternative strategies

32. Debates in the Sector • Supply-side strategies or Behavior Change? • India’s NBA (or TSC) used the language of demand-driven, but criticized for top-down supply-driven implementation • Both Supply and Demand constraints need to be addressed? • Within Demand strategies, should we subsidize? • Causes dependencies, kills markets? • I am agnostic.

33. Theory Building: Interdependencies in Household Decisions • Latrine adoption decisions may be interdependent • Epidemiological Complementarity • Social spillovers – learning/shame/status • If these interdependencies are significant, how can we use them to improve interventions? • e.g. what’s the threshold to push over to the “good equilibrium”? • Should we subsidize? • How should subsidies be targeted?

35. Experimental Design

37. Effects of Proportion of Community Subsidized on Latrine Ownership