An Interactive Introduction to Randomized Evaluation

!

!

Cover&Page&

Title: An Interactive Introduction to Randomized Evaluation

Authors:

1. Utteeyo Dasgupta

Contact: Department of Economics, Franklin and Marshall College, PO Box 3003, Lancaster,

PA 17604.

Phone: 717-358-4767

Email: [email protected]

2. Subha Mani

Contact: Department of Economics, Fordham University, 441 East Fordham Road, Bronx, New

York 10458.

Phone: 718-817-3636

Email: [email protected]

1"

"

An Interactive Introduction to Randomized Evaluation

Abstract: We describe an impact evaluation exercise in the classroom. The proposed Classroom

Randomized Control Trial Game can be used to introduce the nuts and bolts of randomized

evaluation such as the Average Treatment Effect (ATE), Intent–to-Treat Effect (ITT), Sub-group

Average Treatment Effect (SATE), and Externality Effect (EE). The game is easy to implement

and provides students experiential learning opportunity through participating in a simple

randomized control trial of their own.

Keywords: program evaluation, experiential learning, classroom experiment, pedagogy

JEL codes: A22, C70

“I hear and I forget; I see and I remember; I do and I understand”

1. Introduction

Pedagogic innovations are necessary for effective teaching (Frank 1997, Dickie, 2006; Emerson

& Taylor, 2004; Gremmen & Potters, 1997). They are in fact integral to the promotion of

experiential learning. Hawtrey (2007) defines experiential learning as an “incorporation of

active, participatory learning opportunities in the course”. Classroom experiments in particular,

are a prominent way to incorporate experiential learning opportunities (Egbert & Mertins, 2010).

Survey results indicate that students have a clear preference for such learning opportunities

(Hawtrey, 2007). This paper introduces impact evaluation in an interactive classroom

experiment. Previous research on suggests that introduction to any topic in this way has the

potential to improve student interest, and improve their eagerness to learn through their active

involvement in the process (Senge, 1994).

The randomized evaluation technique, often referred to as the “gold standard” in social

policy experimentation, has become a critical tool for development economists in the recent

2"

"

years (see Duflo et. al 2008 for a recent review in the Handbook of Development Economics).1

Randomized evaluation technique has the ability to cleanly disentangle treatment effects from

pre-existing differences across groups, making the method highly popular as a measurement tool

for economic policy initiatives (Lalonde, 1986; Smith & Todd 2005). Its strongest proponents,

affiliated faculty at the Abdul Latif Jameel Poverty Action Lab (J-PAL) have more than

333 randomized impact evaluations studies that have either been completed or are ongoing. The

key policy lessons from these impact evaluations are narrated in (Banerjee & Duflo, 2011), and

(Karlan & Appel, 2011).

Even a cursory search for economics course syllabi provides ample evidence of the topic

being taught nationally and internationally at different levels. We include in the Appendix,

outlines from eight publicly available syllabi from top-level national and international schools, as

well as liberal arts teaching institutions (see outlines A-H in Appendix D). The course titles

varied from Development Microeconomics, Public Policy and Economics of Development,

Microeconomics of International Development Policy, Development Economics, Economic

Development and Growth, Econometrics and Impact Evaluation, and Community Economic

Development. The structure of these courses reveal that the instructor has to devote sufficient

time to introduce and explain the technique of Randomized Evaluation to be able to discuss the

research findings of papers included in their syllabus. Our Classroom RCT Game can be just the

pedagogy to provide an experiential introduction to the whole topic. To illustrate this point

further, we have indicated where our Classroom Randomized Control Trial Game fits in the

syllabus outlines A-H (in Appendix D).

Independent of the level at which randomized evaluation is introduced, student

participation in our proposed Classroom RCT Game has the potential to improve comprehension

(Leet & Houser 2003; Hall, Lawson, & Dirk Mateer, 2006). By actual participation in the game,

the students are less likely to be stalled by the different mathematical notations and definitions,

and instead focus on an intuitive understanding of the whole process first. While we do not have

a controlled experiment to evaluate the impact of the Classroom RCT Game on student learning,

"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""1 www.povertyactionlab.org; www.3ieimpact.org.

3"

"

student comments received at the end of the semester provides some indication of its usefulness.2

The student responses included in Appendix C suggest a positive learning experience from the

activity. It is especially encouraging to note that even in our limited student response-data some

indicate that they have understood how to disentangle treatment differences from pre-existing

differences between groups.

The Classroom RCT Game introduced here provides an interactive introduction to the

nuts and bolts in randomized evaluation, such as the Average Treatment Effect, Intent-to-Treat

Effect, Externality Effect, and Sub-group Average Treatment Effect. The concept behind

measures such as the Intent-to-Treat effect and the Externality effect might not be intuitively

obvious when introduced through the standard chalk and talk method only. However, when

students participate in the Classroom RCT Game and compute these measures using their own

choices, they get a first hand insight into how and why different measures are needed in a

randomized program evaluation. To the knowledge of the authors this is the first paper to use

classroom games to introduce the nuts and bolts of randomized evaluation techniques. Recent

research findings on experiential learning, along with student feedback collected by the authors

suggest that this can be an educative and yet entertaining pedagogy for introducing randomized

evaluation in the classroom.

The rest of the paper is organized as follows. Section 2 describes the Classroom RCT

Game; section 3 provides a discussion of possible activities to follow up at the completion of the

experiment. Concluding remarks follow in section 4.

2. The Classroom RCT Game

Preparation

Prepare the following before running the experiments: a) sufficient number of red and white

poker chips in equal proportions to distribute among the students, b) three separate wordlists

containing words and their associated meanings,3 enough copies to hand out to about half the

students in the class, and c) three different quizzes, containing some of the words from the

"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""2 We are grateful to one of the referees for this suggestion. 3 See WORDLIST 1, WORDLIST 2, and WORDLIST 3 in the Appendix. A standard GRE vocabulary list was used to construct them.

4"

"

wordlists constructed earlier. Each quiz presents words with three possible choices next to each

of them.4 We used lists containing 15 words, and quizzes containing 10 words.

Description of the Classroom Activity

In the description below we introduce three modular classroom activities that use slightly

different activities to introduce students to the different measurements used in a randomized field

evaluation. In all the three activities, the intervention/treatment is an exposure to a list of words

with their associated meanings. All students participate in a quiz, post-intervention. The outcome

variable of interest is the post-intervention quiz scores computed for each student.

First, students need to be placed randomly in a Treatment and a Control group. To construct the

treatment and the control group, the poker chips are handed out to the students at the beginning

of the experiment. Students with red chips are assigned to the treatment group and are asked to

sit on the right side of the classroom. Students with white chips are assigned to the control group

and are asked to sit on the left side of the classroom. Handing out the chips provides a useful

depiction of random assignment into groups.

Introducing Average-Treatment Effect

The objective of this activity is to provide students an intuitive understanding behind treatment

differences and how to measure Average Treatment Effect (ATE) using experimental data. The

Average Treatment Effect is the foremost variable of interest in any randomized control trial,

since it captures the impact of the treatment on the outcome-variable of interest. Each student in

the treatment group is given a copy of WORDLIST 1 to review for five minutes. Students in the

control group do not have any task at that time. At the end of the review period, the instructor

collects back the wordlists from the treatment group, distributes QUIZ 1 to all students in the

treatment as well as the control group. They are allowed five minutes to complete the quiz, at the

end of which the instructor reads out the correct answers for students to score their tests. The

students are asked to write their total points on the left hand corner of the test – a point for each

correct answer. The instructor collects the scored quiz sheets and computes the average score for

the treatment group, and the average score for the control group. The difference in the average """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""4 See QUIZ 1, QUIZ 2 and QUIZ 3 in Appendix A.

5"

"

quiz scores of the two groups is the Average Treatment Effect of the intervention (see appendix

B for a definition). At the end of the game simple excel graphs can be used for visual elaboration

(see Post Activity Discussion).5 Behrman, Sengupta & Todd (2005) examine the average

treatment effect of PROGRESA (conditional cash transfer program) on schooling enrollment.

During post activity discussion, the instructor can use this paper to provide a real world

application of the concept of average treatment effect.

Introducing Intent-to-Treat Effect

The intent-to-treat effect captures the impact of the treatment on the target sample and not

necessarily those who get treated. By its very nature, the intent to treat effect is not always

obvious to students who have not been to the field and have not run a randomized evaluation.

However, participating in this activity can provide students an intuitive understanding behind the

source of the Intent-to-treat effect. The next activity introduces students to Intent-to-treat effects

(ITT) and also the method of computing them.

WORDLIST 2 is distributed to everyone in the treatment group. In addition, a sub-set of students

in the control group receives the list as well (for example, the first two rows of students in the

control group).6 The objective here is to expose some individuals from the control group to the

treatment, depicting partial compliance in the field. The rest of the activity is analogous to the

earlier game. Students review the world list and answer QUIZ 2. The instructor announces the

answers and students score them next. The instructor collects the quiz and computes the average

score for the treatment group, and the average score for the control group (which have been

partially treated in this case). The difference in the averages for the two groups gives the Intent-

to-treat effect of the program. As long as the treatment has non-negative effects, under partial

compliance, the Intent-to-treat effects will be smaller than the average treatment effect of the

program. Since, partial compliance is what is normally observed in the field, Attanasio et. al

(2011) and Banerjee et. al (2009) compute the intent-to-treat effects of participating in a

vocational education and microfinance program respectively. During post activity discussion, the """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""5 It might be useful to have an excel-sheet with the appropriate formula written on it already. This can simplify things for the instructor in class. 6 Usually it would be enough to distribute this word list to roughly about 6 students from the Control group where the control group has about 20 students. The instructor can improvise here depending up the size of their Control group.

6"

"

instructor can use these two papers as examples of real world applications of the concept of

intent-to-treat effects.

Introducing Externality Effect

Often in a randomized evaluation program, the treatment gets spilled over to part of the control

group. Again, explaining the spillover becomes easier if one can demonstrate how spillovers

might arise during an intervention. The objective of this game is to provide such a situation to the

students and introduce measures to compute such effects of a program or treatment.

Two sub-groups for each of the treatment and control groups need to be constructed for this

game. The instructor can verbally assign numbers to sitting positions in a sequential manner.

Treatment-group-odd comprises students from the treatment group who are sitting in odd-

numbered positions (i.e., positions 1,3, 5, 7… ); treatment-group-even consists of students sitting

in even sitting positions in the treatment group. A similar sub-grouping is made for the control

group, control-group-even, and control-group-odd. In this version of the exercise, treatment-

group-odd is supposed to receive the treatment (WORDLIST 3). The three other groups are not

supposed to receive the treatment. However, even though treatment-group-even is not supposed

to receive the treatment, there is a good chance that they get exposed to the contents of

WORDLIST 3, and get “treated” (although unintentionally), because each of their immediate

neighbors have received the wordlist. The exact method of exposure can vary. If the instructor

purposefully does not give any explicit rules regarding sharing of the lists, the chance of

exposure to the treatment (i.e., exposure to the wordlist) is even stronger since the even and odd

members in the treatment group can end up discussing or sharing the lists with each other. The

exercise here provides a situation where the impact of the program (exposure to the wordlist) has

the potential to go beyond those who were intended to receive the treatment. The rest of the

procedure is as before; the instructor collects back the wordlists, distributes QUIZ 3 to all

students in the classroom, and reads out the correct answers at the end of the test. After students

have written their scores, and the quizzes have been collected back, the average score for the

treatment group (even) and the average score for the control group (even) need to be calculated.

The difference in the averages for the two subgroups (even) captures the externality effect of the

treatment. For instance, Oster & Thornton (forthcoming) compute the externality effect (peer

7"

"

effect) of technology adoption. During post activity discussion, the instructor can use this paper

to provide a real world application of the concept of externality effect.

3. Post Activity Discussion

Using the results

The natural way one can use the three activities above, is to use excel plots of the computed

results (see Figure 1,2, and 3) when introducing the concepts outlined in Appendix B. The fact

that the students themselves have generated the data allows them to identify with all the

components of the experiment design readily, and allows the instructor to describe and define

different measurements in a convincing manner. Especially when it comes to non-intuitive

concepts such as ITT and externality effects, this process can help students understand more

readily the underlying processes behind the reasons for computing the different measures. In our

classroom sessions at Fordham University, we found that for the Average Treatment Game the

sample mean of the treatment group and the sample mean of the control group were 9.7 and 5.8.

So the average treatment effect was 3.9 (significant at 1%). In the Intent-To-Treat game the

sample mean of the treatment group was 9.63 while the sample mean of the control group had

increased to 7.03. The intent-to-treat effect is then 2.6 (significant at 1%). It is trivially easy to

generate graphs like Figures 1 and 2 in excel to motivate the decline in the average differences in

the two games visually, and discuss the effects of positive spill-overs/contamination/partial

compliance reducing the impact of the treatment.

The computed scores from the Average Treatment Game can also serve to illustrate the Sub-

group Average Treatment Effect (SATE). To illustrate the idea, one can compute the average

scores of male and female students separately. For example, we can now compute the differences

in the quiz scores for the male students belonging to the treatment and the control groups. We

calculate score differences analogously for females belonging to the treatment and the control

groups. In our sessions, SATE for males was 3.25 (standard error = 0.62) and SATE for females

was 4.7 (standard error = 0.42).

Results from the Externality Game should be used to discuss the externality effect of being

exposed to the treatment group. In our classroom session, the average scores for the treatment

8"

"

group (even) was 7.7 and the control group (even) was slightly lower at 7.1 (a difference in the

right direction although not statistically significant). A possible way to strengthen the externality

effects might be through announcements that students in the treatment group (odd) can choose to

share or not to share the list with students sitting next to them.

Further readings

We summarize below a list of prominent policy initiatives whose effectiveness has been

evaluated using a randomized evaluation design. The instructor can use the references provided

here for further details on these studies.

Conditional cash transfer program: In an effort to improve children’s schooling outcomes (test

scores, completed grades, and enrollment), cash transfer payments have been provided as

incentives to parents’ who send their children regularly to school. A randomized control trial

implemented to understand the effectiveness of conditional cash transfers find positive

association between the program and - schooling enrollment, and completed grades of schooling

in Mexico (Parker, Rubalcava, & Teruel, 2008; Behrman, Sengupta & Todd, 2005), attendance

and grades in Nicaragua (Maluccio & Flores, 2005), attendance in Honduras (Morris, Flores,

Olinto, & Medina, 2004), and enrollment in Ecuador (Schady & Araujo, 2006).

Deworming pills program: In an attempt to improve children’s health and schooling, Miguel &

Kremer (2004) and Bobonis, Miguel, & Puri-Sharma (2006) evaluate the effectiveness of

providing deworming pills to school age children using a randomized control trial. Both papers

find positive impact of the intervention on children’s schooling attendance. Bobonis, Miguel, &

Puri-Sharma (2006) also find improvements in the health of children who receive the treatment.

Microfinance program: Banerjee et. al (2009) conduct the first randomized evaluation study to

assess the effectiveness of microcredit on poverty. The authors find that increased access to

microcredit is associated with increased expenditure on durable goods though, not associated

with improvements in average household per capita expenditure – an important measure of well-

being.

9"

"

The conditional cash transfer program implemented in Mexico and the deworming pills program

implemented in Kenya are examples of famous interventions that have been scaled up by country

officials to the National level.

Randomized evaluations have also been used to study a number of other interesting research

questions such as identify the impact of: (a) iron supplements on labor productivity and earnings

among adults in Indonesia (Thomas et. al, 2003), (b) price subsidies on take-up of antimalarial

insecticide treated bed-nets among pregnant women in Kenya (Cohen & Dupas, 2010), (c) non-

monetary incentives on immunization up-take in India (Banerjee et. al, 2010), (d) micronutrient

supplementation on education, and long-term earnings (Hoddinott et. al, 2008, Maluccio et. al,

2009), (e) vocational education programs on labor market earnings (Attanasio et. al, 2011), (f)

peer effects on technology adoption (Oster & Thornton, forthcoming), and (g) teacher incentives

on student learning (Muralidharan & Sundaram, 2011).

4. Conclusion

Randomized evaluation is a topic that is now taught nationally and internationally in different

economics courses. We propose an interactive classroom activity that allows students scopes for

experiential learning. The Classroom RCT Game can be a wholesome introduction to the topic

itself. In the process the students have the opportunity not only to learn some of the core

measures in any evaluation program (Average Treatment Effect, Intent-to-Treat Effect,

Externality Effect, and Sub-group Average Treatment Effect), they also get exposed to an

intuitive understanding of how some of these effects may arise, which might not always be

obvious unless one runs his/her own experiment in the field. The usefulness of the pedagogy can

be aptly described by the old Chinese proverb: I hear and I forget; I see and I remember; I do and

I understand.

The Classroom RCT Game need not be restricted just to undergraduate introductions to

the topic of randomized evaluation. The game is possible to be used in a graduate course as well,

since it can be time-consuming if not impossible to take the whole class to the field to provide a

first-hand exposure to the very process of randomized evaluation. Additionally, the idea of

control and trial is now common enough in courses other than development economics. Courses

10"

"

in behavioral economics and experimental economics routinely have a topic on measurement and

experiment design. Here again, the classroom game can provide a personal experience into the

design and process of an experiment which can make the logic of designing an experiment – to

evaluate and estimate “treatment differentials” more vivid to the participating student. In fact the

game can be used in courses in finance and marketing as well as an introduction to a growing

body of interesting intervention research (See for example Mazar & Ariely (2006), Amir et. al

(2008), Cole et. al (2011), Sarthak et. al (2011), Anagol & Gamble (forthcoming). Finally, our

intervention can also be used to allow students revise concepts where one replaces the regular

wordlists with definitions and concepts that have been just covered in the lectures. We provide

such an example in the Appendix (see pages 18-19).7

Previous research on experiential learning techniques (Hawtrey, 2007), classroom experiments

(Egbert & Mertins, 2010), along with student responses from our own teaching suggest that

students would be open and excited to learn the topic in this dynamic manner.

References

Amir,"O.,"Ariely,"D.,"&"Mazar,"N."(2008)."The"Dishonesty"of"Honest"People:"A"Theory"of"SelfJConcept"Maintanance."Journal(of(Marketing(Research,"vol"45:"633J634."

Anagol,"S."&"Gamble,"K.G."(Forthcoming),"Presenting"Investment"Results"Asset"by"Asset"Lowers"Risk"Taking,"Journal(of(Behavioral(Finance.(

Attanasio,"O.,"Kugler,"A.,"Meghir,"C.,"&"Carneiro,"P."(2011)."Subsidizing"Vocational"Training"for"Disadvantaged"Youth"in"Colombia:"Evidence"from"a"Randomized"Trial."American(Economic(Journal:(Applied(Economics"3(July),"188–220."

Banerjee,"A.V.,"Duflo,"E.,"Glennerster,"R.,"&"Kinnan,"C."(2009)."The"Miracle"of"Microfinance?"Evidence"from"a"Randomized"Evaluation"(available"at:"http://econJwww.mit.edu/files/4161)"

Banerjee,"A.V.,"Duflo,"E.,"Glennerster,"R.,"&"Kothari,"D."(2010)."Improving"immunisation"coverage"in"rural"India:"clustered"randomised"controlled"evaluation"of"immunisation"campaigns"with"and"without"incentives."BMJ2010;"340:c2220."

Banerjee,"A.V.,"&"Duflo,"E."(2011)."Poor(Economics:(A(Radical(Rethinking(of(the(Way(to(Fight(Global(Poverty.""

"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""7 We are particularly grateful to one of the anonymous referees for suggesting this interesting usage of our basic intervention idea.

11"

"

Behrman,"J."R.,"Sengupta,"P.,"&"Todd,"P."(2005)."Progressing"through"PROGRESA:"An"Impact"Assessment"of"a"School"Subsidy"Experiment"in"Rural"Mexico,"Economic(Development(and(Cultural(Change,"University"of"Chicago"Press,"vol."54(1),"pages"237J75,"October.""

Bobonis,"G."J.,"Miguel,"E.,"&"PuriJSharma,"C."(2006)."Anemia"and"School"Participation."J.(Human(Resources,"XLI(4),"692–721.""

Cohen,"J.,"&"Dupas,"P."(2010)."Free"Distribution"or"CostJSharing?"Evidence"from"a"Randomized"Malaria"Prevention"Experiment."The(Quarterly(Journal(of(Economics,"125(1),"1"–"45.""

Cole,"S.A.,"Sampson,"T.,"&"Zia,"B."(2011)."Prices"or"Knowledge?"What"Drives"Demand"for"Financial"Services"in"Emerging"Markets?"Journal(of(Finance"66,"no."6"(December):"1933J1967."

Dickie,"M."(2006)."Do"Classroom"Experiments"Increase"Learning"in"Introductory"Microeconomics?"The(Journal(of(Economic(Education,"37(3),"267–288.""

Duflo," E.," Glennerster," R." and" Kremer," M." (2008)." Using" Randomization" in" Development" Economics"Research:"A"Toolkit,"in"T.P."Schultz"and"J."Strauss"(eds.),"Handbook(of(Development(Economics,"Volume"4,"Amsterdam:"North"Holland"Press"(selected"sections"only)."

Egbert,"H.,"&"Mertins,"V."(2010)."Experiential"Learning"with"Experiments."International(Review(of(Economics(Education,"9(2)."

Emerson,"T."L."N.,"&"Taylor,"B."A."(2004)."Comparing"Student"Achievement"across"Experimental"and"LectureJOriented"Sections"of"a"Principles"of"Microeconomics"Course."Southern(Economic(Journal,"70(3),"672"–"693.""

Frank,"B."(1997)."The"Impact"of"Classroom"Experiments"on"the"Learning"of"Economics:"An"Empirical"Investigation."Economic(Inquiry,"35(4),"763–769.""

Gremmen,"H.,"&"Potters,"J."(1997)."Assessing"the"Efficacy"of"Gaming"in"Economic"Education."The(Journal(of(Economic(Education,"28(4),"291–303.""

Hall,"J."C.,"Lawson,"R."A.,"&"Dirk"Mateer,"G."(2006)."From"ABBA"to"Zeppelin","Led :"A"Web"Resource"for"Teaching"Economics"through"Music."Perspectives(on(Economic(Education(Research,"2(1),"73–83."

Hawtrey,"K."(2007)."Using"Experiential"Learning"Techniques."The(Journal(of(Economic(Education,"38(2),"143–152."doi:10.3200/JECE.38.2.143J152"

Hoddinott,"J.,"Maluccio,"J.A.,"Behrman,"J.R.,"Flores,"R.,"&"Martorell,"R."(2008)."The"Impact"of"Nutrition"During"Early"Childhood"on"Income,"Hours"Worked,"and"Wages"of"Guatemalan"Adults."Lancet(371"(February),"411J416."

Karlan,"D."S.,"&"Appel,"J."(2011)."More(Than(Good(Intentions:(How(a(New(Economics(Is(Helping(to(Solve(Global(Poverty"(p."308)."Dutton.""

12"

"

LaLonde,"R."(1986)."Evaluating"the"econometric"evaluations"of"training"programs"with"experimental"data."The(American(Economic(Review,"76(4),"604–620.""

Leet,"D."&"Houser,"S.(2003)."Economics"Goes"to"Hollywood:"Using"Classic"Films"and"Documentaries"to"Create"an"Undergraduate"Economics"Course."The(Journal(of(Economic(Education,"34(4),"326–332."

Maluccio,"J."A.,"&"Flores,"R."(2005)."Impact"evaluation"of"a"conditional"cash"transfer"program:"the"Nicaraguan"Red"de"Protección"Social.""

Maluccio,"J.A.,"Hoddinott,"J.,"Behrman,"J.R.,"Quisumbing,"A.,"Martorell,"R.,"&"Stein,"A.D."(2009)."The"Impact"of"Nutrition"During"Early"Childhood"on"Education"among"Guatemalan"Adults."Economic(Journal"119"(April),"734–763"

Mazar,"N.,"&"Ariely,"D."(2006)."Dishonesty"in"Everyday"Life"and"its"Policy"Implications."Journal(of(Public(Policy(and(Marketing,"Vol."25"(1):"117J126."

Miguel,"E.,"&"Kremer,"M."(2004)."Worms:"Identifying"Impacts"on"Education"and"Health"in"the"Presence"of"Treatment"Externalities."Econometrica,"72(1),"159–217.""

Morris,"S."S.,"Flores,"R.,"Olinto,"P.,"&"Medina,"J."M."(n.d.)."Monetary"incentives"in"primary"health"care"and"effects"on"use"and"coverage"of"preventive"health"care"interventions"in"rural"Honduras:"cluster"randomised"trial."Lancet,"364(9450),"2030–7.""

Muralidharan,"K.,"&"Sundararaman,"V."(2011)."Teacher"Performance"Pay:"Experimental"Evidence"from"India,"Journal(of(Political(Economy,"University"of"Chicago"Press,"vol."119(1),"pages"39"J"77."

Oster,"E.,"&"Thornton,"R."Determinants"of"Technology"Adoption:"Peer"Effects"in"Menstrual"Cup"TakeJUp."Journal(of(the(European(Economic(Association,"forthcoming."

Parker,"S."W.,"Rubalcava,"L.,"&"Teruel,"G."(2008)."Evaluating"Conditional"Schooling"and"Health"Programs."Handbook(of(Development(Economics.""

Sarthak,"G.,"Cole,"S.A.,"&"Tobacman,"J."(2011)"Marketing"Complex"Financial"Products"in"Emerging"Markets:"Evidence"from"Rainfall"Insurance"in"India."Supplement."Journal(of(Marketing(Research"48"(October"2011):"S150JS162.""

Schady,"N.,"&"Araujo,"M."C."(2006)."Cash"transfers,"conditions,"school"enrollment,"and"child"work :"evidence"from"a"randomized"experiment"in"Ecuador.""

Senge,"P."M."(1994)."The(Fifth(Discipline:(The(Art(&(Practice(of(the(Learning(Organization"(p."424)."Doubleday"Business."

Smith,"J.,"Todd,"P."(2005)."Does"matching"overcome"Lalonde’s"critique"of"nonexperimental"estimators?"Journal"of"Econometrics,"125"(1J2),"pages"305J353."

13"

"

Thomas,"D.,"Frankenberg,"E.,"Friedman,"J.,"Habicht,"J.JP.,"Al"E."(2003)."Iron"deficiency"and"the"well"being"of"older"adults:"Early"results"from"a"randomized"nutrition"intervention."Mimeo,"UCLA."

"

""

14"

"

Figures"

Figure 1: Results from the Average Treatment Game

9.71"

5.81"

0"

2"

4"

6"

8"

10"

Mean"of"Treatment" Mean"of"Control"

Average'Quiz'S

core'

9.63"

7.03"

0"

2"

4"

6"

8"

10"


Average'Quiz'S

core'

15"

"

Figure 2: Results from the Intent-to-treat Game

Figure 3: Results from the Externality Game

7.7"7.1"

0"

2"

4"

6"

8"

10"


Average'Quiz'S

core'

16"

"

Appendix A: Wordlists and Quizzes

WORDLIST 1

1) Antediluvian - Ancient 2) Anomalous - unique 3) Ambrosial - Delicious 4) Emollient - Softening 5) Inchoate – incomplete 6) Dearth - scarcity 7) Nefarious – Evil 8) Efficacy - effectiveness 9) Breach - gap 10) Ossified - Inflexible 11) Perfidious - Dishonest 12) Vex - Irritate 13) Quiescence – Inactivity 14) Erudite – scholarly 15) Sedulous – Diligent

WORDLIST 2

1) Abjure - promise 2) Admonitory – containing warning 3) Baneful – causing harm 4) Cadge – to beg 5) Commodious– plenty of space 6) Contrite-filled with deep sorrow 7) Eschew – avoid 8) Fecund - fertile 9) Garrulous - talkative 10) Halcyon – calm and peaceful 11) Esoteric – difficult to understand 12) Nadir – lowest point 13) Petulant – unreasonably impatient 14) Recant – take back 15) Sanguine - cheerful

17"

"

WORDLIST 3

1) Aplomb – Self-confidence 2) disparate– different 3) Egress – exit 4) Immaculate – faultless 5) Indigenous – Native 6) Contrite-filled with deep sorrow 7) Maladroit – Tactless 8) Mettlesome – Courageous 9) Onerous - burdensome 10) Parley – negotiation 11) Irksome - tiresome 12) Pariah – outcast 13) Taciturn – silent 14) Unscathed– unharmed 15) Guile – cunning

QUIZ 1: Introducing Average-Treatment Effect

1) Antediluvian a. Ancient b. Aggravate c. New

2) Ambrosial a. Ugly b. Delicious c. Similar

3) Emollient a. Softening b. Loud c. Unfortunate

4) Inchoate a. Incomplete b. Complete c. Difficult

5) Nefarious a. Delightful b. Fun c. Evil

6) Ossified a. Inflexible b. Sanguine c. Tractable

7) Perfidious a. Dishonest b. Occlude c. Honest

8) Vex a. Short b. Poor c. Irritate

9) Quiescence a. Inactivity b. Silent c. Sate

10) Sedulous a. Diligent b. Careless c. Impatient

Please circle the closest synonym/meaning for the following words

18"

"

QUIZ 2 : Introducing Intent-to-Treat Effect

1) Abjure a. abhor b. allude c. promise

2) Baneful a. promise b. supportive c. causing harm

3) Cadge a. beg b. candor c. talkative

4) Contrite a. short b. filled with deep sorrow

c. sanguine

5) Eschew a. avoid b. difficult c. painful

6) Fecund a. barren b. recant c. fertile

7) Halcyon a. Irritable b. calm and peaceful c. garrulous

8) Nadir a. highest point b. contrite c. lowest point

9) Petulant a. onerous b. valiant c. unreasonably impatient

10) Sanguine a. cheerful b. taciturn c. mettlesome

QUIZ 3 : Introducing Externality Effect

1) Aplomb a. self-confidence b. brave c. truth

2) Immaculate a. trace b. faultless c. imperfect

3) Indigenous a. native b. volatile c. taut

4) Maladroit a. clever b. versatile c. tactless

5) Onerous a. malign b. burdensome c. mendacity

6) Parley a. miser b. nexus c. negotiation

7) Irksome a. tiresome b. petrify c. sudden

8) Pariah a. rebuff b. rivet c. outcast

9) Taciturn a. talkative b. silent c. funny

10) Unscathed a. unharmed b. untoward c. earth

Please circle the closest synonym/meaning for the following words

19"

"

WORDLIST: REVISING ECONOMICS

1. Scarcity: is a result of limited resources and unlimited wants 2. Positive statement: seeks to understand economic behavior without making

judgments 3. Normative statement: seeks to understand economic behavior using value

judgments 4. Ceteris paribus: means all else equal or holding everything else constant 5. Opportunity cost: is the best alternative that we forgo, or give up 6. Market failure: is when the market cannot efficiently allocate goods and services

freely 7. Law of supply: is the positive relationship between price and quantity supplied 8. Substitutes: are two goods whose demand schedules are related in a way that a

decrease (increase) in the price of one good causes a rightward (leftward) shift in the demand curve of the other good

9. Price elasticity of supply: measures the response of quantity of a good supplied to a chance in price of that good

10. Negative externality: is a cost incurred by an individual who was not directly involved in the transaction causing the cost

QUIZ: REVISING ECONOMICS

1) Scarcity is the result of:

a) government decision making.

b) inappropriate normative judgements.

c) positive economics.

d) wants that exceed the resources necessary to provide them.

2) The term "ceteris paribus" means that:

a) everything is variable.

b) all variables except those specified are constant.

c) no one knows which variables will change and which will remain constant.

d) what is true for the individual is not necessarily true for the whole.

20"

"

e) all variables are held constant.

3) The opportunity cost of an item is:

a) greater during periods of inflation and lower during periods of deflation.

b) the highest valued alternative you give up to get that item.

c) the value of all available alternatives you sacrifice to get that item.

d) always equal to the dollar value of the item.

e) always less than the dollar value of the item.

4) When the Blue Ocean Surfboard Company lowered the price of surfboards by 20%, it sold 10% more surfboards. The price elasticity coefficient for surfboards is:

a) 2.

b) 1/2.

c) 1.

d) 20.

e) indeterminate.

5) Socially inefficient outcomes may occur in markets where there are:

a) free riders.

b) negative externalities present.

c) asymmetric information problems.

d) positive externalities present.

e) any of the above

21"

"

Appendix B: Concepts and Definitions

The focus of this section is to introduce some of the key concepts used in the evaluation

literature. At the end of the classroom exercise, one can use the results from the games to explain

the following concepts. Consider a pool of applicants (N) for a job training program. A randomly

selected subset NT gets assigned to the treatment group (T), and receives the treatment (for

example: the job training program). The remaining sample NC = N- NT gets assigned to the

control (C) group which does not receive the training. In our example we are interested in

measuring the impact of the training program on some measurable outcome variable (Y) such as

wage earnings.

Average Treatment Effect (ATE)

The ATE measures the overall impact of a program on an observable outcome variable. Under

perfect compliance,8 it is defined to be the difference in the empirical means of the outcome

variable (Y collected at the end of the program) between the treatment and the control group.

Thus, under perfect compliance,

, where is the sample mean of the outcome variable for everyone in the

treatment group and is the sample mean of the outcome variable for everyone in the control

group.

In many social experiments, imperfect compliance is a source of concern as it affects the

measured impact of the program. It can come about in two ways - one, where some of the

individuals originally assigned to receive the treatment do not receive the treatment. Two, when

some of the individuals originally chosen not to receive the treatment (i.e., assigned to the

"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""8Under perfect compliance, everyone in the treatment group gets treated and no one from the control group receives the treatment.

cT YYATE −= TY

cY

22"

"

control group) end up receiving the treatment. Consequently, under imperfect compliance, we

are interested in measuring a related effect, that is, the impact of offering the treatment (ITT).

Intent-to-treat effect (ITT)

Program participation is often voluntary in social programs, and as a result, randomization only

affects the probability of being exposed to the treatment. Hence, under voluntary participation

the researcher is interested in measuring the effect of being offered the program, rather than the

actual treatment. ITT measures the average impact of offering a program using the initial random

assignment as a way to avoid the re-introduction of selection bias. Under partial-compliance, the

difference in the sample means of the outcome variable between the treatment group (those

originally assigned to receive the treatment) and the control group (originally assigned not to

receive the treatment) measures the ITT effects of the program. Notice, that under perfect

compliance, the ITT and ATE will be identical. So,

, where is sample mean of the outcome variable for those initially assigned

to the treatment group (T) and is the sample mean of the outcome variable for those assigned

to the control group (C); regardless of the treatment they actually receive. Under partial

compliance as long as the treatment has non-negative effects, the ITT effects will normally be

smaller than the ATE of the program.

Sub-group Average Treatment Effect (SATE)

SATE measures the impact of the treatment for exogenous sub-groups where the formation of

the sub-group (X) is not affected by the treatment. SATE is defined to be the difference in the

sample means of the outcome variable between the treatment and control group with a certain

cT YYITT −= TY

cY

23"

"

identical characteristic X (ex: Bobonis et. al (2006) measure program impacts in the following

sub-categories – gender, age, mother’s schooling and baseline anemia). So,

For example: when X= male, the SATE will be the difference in the sample means of the

outcome variable between all males in the treatment group and all males in the control group.

Externality Effect (EE)

EE measures the impact of the treatment on individuals and groups who are not targeted to

receive the treatment. Let us assume that we have information on the friends of the people who

applied for this job training program and for simplicity, let’s assume that the friends did not

apply for this training program. Let us call the friends of our treatment group, FT and let us call

the friends of our control group, FC. The externality effect of the program/treatment is measured

as the difference in the sample means of the outcome variable between the FT and FC group.

, where is the sample mean of the outcome variable for the FT group

and is the sample mean of the outcome variable for the FC group.

CXTX YYSATE −=

FCFT YYEE −= FTY

FCY

24"

"

Appendix C: Student Responses to the Classroom RCT Game

Student 1:

The experiment was easy to understand and successful within the class as results were very clear and one side of the room (one team) performed significantly better than the other.

Student 2:

I think it was an interesting experiment that helped me remember the concept of randomized evaluation methodology. The words used in the experiment were of a fairly appropriate difficulty level for college students. I learnt that due to the fact that students were put into groups randomly, the differences in results were due to the stimulus provided and not due to pre-existing differences.

Student 3:

I thought it was a good experiment but maybe use more words next time because almost every single kid in my group was able to respond correctly to all 10 definitions. I don't know if that means anything but I think it would be better if we had to see 20 words or something to challenge that section of kids. 10 is too easy to remember. Regardless, the experiment did prove the point that if you have a heads up even for just a few minutes it really helps out.

Student 4:

I thought that the games were a very good way for us to get a sense of the differences in the results of various randomized evaluation techniques. I thought that the process went smoothly, and the games had the desired impact for each technique. I think that it was useful teaching tool when paired with a discussion of empirical challenges and when to use each method.

Student 5:

In all honesty, I found the classroom games to be very useful in assisting me to fully comprehend the various randomized evaluation techniques. While explanations in class were quite useful, observing the techniques practically helped to conceptualize them in a more concrete manner. Additionally, it made a lesson that could perhaps be deemed very academic fun and interactive. Overall, I would say that the classroom games were a useful tool because they helped me conceptualize the techniques and were fun and interactive.

Student 6:

I appreciated the game in that it was a simple representation of how to compute an Average Treatment Effect and Intent to Treat effect and why those are different. It also shows how some of the control may be treated simply due to proximity to the treatment group. As I was in 2 classes where this was presented (one class where we had already discussed randomization, ATE and ITE in detail and one where we had not) I think the exercise was more useful for the uninitiated group. For the class that had already learned about these concepts the game was a good illustration but perhaps could have been a bit more detailed. I think this game would be especially useful for an undergraduate course or a similar group of uninitiated learners.

25"

"

Student 7:

I do remember the word games we played in class and thought they were a clever way to show us how the concepts of random evaluation can be measured. I had learned about ATE, TOT, ITT, etc.. in a few of my undergraduate courses previously but thought your method of presenting the concepts to us in a hands on way were much more effective and showed how useful these simple methods can be for all types of experiments. I had previously only been exposed to these concepts pertaining to field experiments involving medication treatments or other development related interventions and didn't consider how useful these types of measurements could be in other social experiment settings. My only suggestion is regarding our small call size- I think if these games were played in a larger class that was a bit more gender equal (as I remember there were only 2 males in the room) the results would be a bit more clear especially when measuring the externality effect and sub-group average treatment effect. But in general I think this was a worthwhile exercise, as it presented what could be considered confusing information very clearly. I would also argue that it made most students feel more comfortable using these concepts in future work.

26"

"

Appendix D: Syllabus Outlines

We append below outlines from eight publicly available syllabi from top-level national and international schools as well as liberal arts teaching institutions. Course titles varied from Development Microeconomics, Public Policy and Economics of Development, Microeconomics of International Development Policy, Development Economics, Economic Development and Growth, Econometrics and Impact Evaluation and Community Economic Development. The courses vary from their intended audience and instruction level. But all of them share the common feature of focusing entirely or devoting at least partly to the randomized evaluation technique.

Outline A

In outline A one can introduce the game where the instructor plans “Introduction to Part 3 and Part 4”.

Outline B

In outline B one can introduce the game before starting on Section 1 (the big picture).

Outline C

In outline C one can introduce the game before starting on section 2, “Background Ideas and Methods”.

Outline D

In outline D one can introduce the game before starting on “The Evaluation Problem: How Do We Know What Works?”

Outline E

In outline E one can introduce the game before starting on section 3, the “Toolbox”.

Outline F

In outline F can introduce the game before starting off on Chapter 2 of Poor Economics.

Outline G

In outline G one can introduce the game before starting on Lecture 6 on “Randomized experiments, the gold standard of impact evaluation”.

Outline H

In outline H one can introduce the game before starting on Program Evaluation (section 3).

27"

"

OUTLINE A

Part 1: Agricultural household models

• Lecture 1: The canonical model and the separability result

• Lecture 2: Market imperfections and non separability

• Lecture 3: Market imperfections and economic policy

• Lecture 4: Beyond the unitary model: intra-household allocation models

Part 2: Land

• Lecture 5: Land tenure and agricultural productivity

Introduction to Part 3 and Part 4: A reminder on impact evaluation.

Part 3: Human capital accumulation

• Lecture 7: Why don't the poor pick the low-hanging fruit available for better

• health. (1)

• Lecture 8: Why don't the poor pick the low-hanging fruit available for better health. (2)

• Lecture 9: Why is the absentee rate at school so high among the children

• living in developing countries. (1)

• Lecture 10: Why is the absentee rate at school so high among the children

• living in developing countries. (2)

Part 4: Physical capital accumulation

28"

"

• Lecture 11: Why don't the poor save more. (1)

• Lecture 12: Why don't the poor save more. (2)

Introduction to Part 3 and Part 4: A reminder on impact evaluation

Part 3: Human capital accumulation

Lecture 7: Why don't the poor pick the low-hanging fruit available for better health. (1)

Reading material:

Books:

Banerjee A. and E. Duflo, 2011, Poor Economics, PublicAffairs, 320 p.: Chapter 3.

Sachs J., 2005, The end of poverty, Penguin Press, 396 p.

Journal articles:

• Banerjee A., Duflo E. and R. Glennerster, 2008, Putting a band-aid on a corpse: incentives for nurses in the Indian public health care system, Journal of the European Economic Association, 6(2-3), 487-500.

• Bleakley H., 2010, Malaria eradication in the Americas: a retrospective analysis of childhood exposure, American Economic Journal: Applied Economics 2(2), 1-45.

• Das J. and J. Hammer, 2005, Which doctor. Combining vignettes and item response to measure clinical competence, Journal of Development Economics 78(2), 348-383.

Lecture 8: Why don't the poor pick the low-hanging fruit available for better health. (2)

Reading material: see Lecture 7

Lecture 9: Why is the absentee rate at school so high among the children living in developing countries. (1)

Reading material:

Books:


Journal articles:

29"

"

• Jensen R., 2010, Economic opportunities and gender differences in human capital:experimental evidence for India, working paper.

• Edmonds E., 2007, Child labor, Handbook of Development Economics, Vol. 4., 3607-3709.

• Jensen R., 2010, The (perceived) returns to education and the demand for schooling, Quarterly Journal of Economics 125(2), 515-548.

• Betts J., 1996, What do students know about wages. Evidence from a surveyof undergraduates, Journal of Human Resources 31(1), 27-56.

• Nguyen, 2008, Information, role models and perceived returns to education: experimental evidence from Madagascar, working paper.

• Akresh R., Bagby E., de Walque D. and H. Kazianga, 2011, Child ability and household human capital investment decisions in Burkina Faso, working paper.

• Chaudhury N., Hammer J., Kremer M., Muralidharan K. and F. Halsey Rogers, 2006, Missing in action: teacher and health worker absence in developing countries, Journal of Economic Perspectives 20(1), 91–116.

• Duflo E., Hanna R. and S. Ryan, 2010, Incentives work: getting teachers to come to school, MIT working paper.

• Hanna R. and Linden L., 2011, Discrimination in grading, forthcoming in American

• Economic Journal: Economic Policy.

• Duflo E., Dupas P. and Kremer M., 2011, Peer effects, teacher incentives, and the impact of tracking: evidence from a randomized evaluation in Kenya, American Economic Review 101(5): 1739–74.

• Glewwe P., Kremer M, Moulin S., 2009, Many children left behind. Textbooks and test scores in Kenya, American Economic Journal: Applied Economics 1(1): 112–35.

Lecture 10: Why is the absentee rate at school so high among the children living in developing countries. (2)

Part 4: Physical capital accumulation

Lecture 11: Why don't the poor save more. (1)

Reading material:

30"

"

Books:


Journal articles:

• Banerjee A. and Duflo E., 2007, The economic lives of the poor, Journal of Economic Perspectives, 21(1), 141-167.

• Anderson S. and Baland J.-M., 2002, The economics of ROSCAs and intra household resource allocation, Quarterly Journal of Economics 117(3), 963-995.

• Dupas P. and Robinson J., 2011, Savings constraints and microenterprise development: evidence from a field experiment in Kenya, working paper.

• Duflo E., Banerjee A., Glennerster R. and Kinnan C., 2010, The miracle of microfinance. Evidence from a randomized evaluation, working paper.

Lecture 12: Why don't the poor save more. (2)

Reading material: see Lecture 1

31"

"

OUTLINE B

Course Outline

All readings required except * = recommended. UP=Understanding Poverty. DE=Development Economics. PE = Poor Economics. MTGI = More than Good Intentions Note: Lecture notes and all readings not linked below will be made available on blackboard during the term. It is the students own responsibility to manage their printing of any of these documents within any budget for printing they may have.

Also note that the dates given below are subject to change.

0. Statistical Background

You must understand everything in DE Appendix 2 before the course begins; you don’t have to read it if you already know the concepts. You should also read the article titled “Evaluating Empirical Studies” posted on Blackboard. You might also want to read the following article which nicely explains the concept of causality: Freedman, David (1991) “Statistical Models and Shoe Leather,” Sociological Methodology, Vol. 21, pp 291-313.

1. The big picture

1.1 What is poverty? How do we measure it? [3/26]

• Banerjee, A.V. and Duflo, E. (2007). The Economic Lives of the Poor. The Journal of Economic Perspectives. 21(1):141–167

• DE Ch. 2

1.2 History, Growth and Development [3/28] (Causality and instrumental variables)

• UP Ch 1, "Measuring Poverty" 1.2 History, Growth and Development [3/28] (Causality and instrumental variables)

32"

"

• UP Ch 2, "Understanding Prosperity and Poverty: Geography, Institutions, and the Reversal of Fortune"

• *UP Ch 3, "Colonialism, Inequality, and Long-Run Paths of Development" o *DE Ch. 3 & 4.1-4.3

1.3 Globalization and poverty [3/30]

• UP Ch 6, "Globalization and All That"

• UP Ch 7, "The Global Economy and the Poor"

2. Health

2.1 Health and Nutrition: Poverty Traps [4/2]

• DE Ch. 8 (esp. 8.4), Ch 13.4

2.2 Providing health services and medicines in developing countries [4/4]

• PE Chapter 3: “Low-Hanging Fruit for Better (Global) Health”.

• UP Ch 20, "Intellectual Property and Health in Developing Countries”

• UP Ch 21, "Public Policies to Stimulate Development of Vaccines for Neglected Diseases"

• *Kremer, M. (2002). "Pharmaceuticals and the Developing World," Journal of Economic Perspectives 16(4).

• *Michael Kremer and Christopher Snyder, "Why is There No AIDS Vaccine?" NBER Working Paper #9833, July 2003.

2.3 Health externalities and randomized experiments [4/6] PS 1 DUE

• Esther Duflo and Michael Kremer. “Use of Randomization in the Evaluation of Development Effectiveness.” Mimeo, MIT

• *Miguel, Edward, and Michael Kremer. “Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities.’’ Econometrica 72, no. 1 (2004): 159–218.

2.4 HIV & the economics of risky behaviors [4/9]

• Canning, David. “The Economics of HIV/AIDS in Low-Income Countries: the Case for Prevention.” Journal of Economic Perspectives, Vol 20:3 (Summer 2006): 121-142.

33"

"

• *Kremer,Michael(1996)“Integratingbehavioralchoiceintoepidemiologicalmodels of the AIDS epidemic”‚ Quarterly Journal of Economics, May: 549-573

• *Pascaline Dupas, “Do Teenagers Respond to HIV Risk Information? Evidence from a Field Experiment in Kenya,” UCLA Manuscript, February 2010.

3. Education and Human Capital

3.1 Education [4/11] (Difference in differences)

• UP Ch 18, "The Primacy of Education,"

• Glewwe and Kremer, “Schools, Teachers, and Education Outcomes in Developing Countries,” in Handbook on the Economics of Education, Elsevier, 2006.

• *Duflo, Esther (2001), “Schooling and Labor Market Consequences of School

• Construction in Indonesia: Evidence from an Unusual Policy Experiment,” American Economic Review, Vol. 91 (4), pp 795-813.

3.2 Educational Interventions [4/13] PS 2 DUE

• Kremer, Michael, “Randomized Evaluations of Educational Programs in Developing Countries: Some Lessons,” American Economic Review, May 2004.

• *Muralidharan, Karthik and Venkatesh Sundaraman. Contract Teachers: Experimental Evidence from India. Mimeo, UCSD.

3.3 Fertility [4/16]

• DE Ch 9

• UP Ch 9, "Fertility and Income"

• *UP Ch 10, "Fertility in Developing Countries" in UP o *Gary Becker and Gregg Lewis, "On the Interaction between the Quantity and

• Quality of Children," Journal of Political Economy 81(2), March-April 1973, S279-S288.

• Michael Kremer, "Population Growth and Technological Change: 1,000,000 B.C.to 1990," Quarterly Journal of Economics, August, 1993, pp. 681-716.3.4 Child Labor [4/18]

• Edmonds, Eric and Nina Pavcnik (2005), "Child Labor in the Global Economy," Journal of Economic Perspectives, Winter 2005.

34"

"

• UP Ch 17, "Policy Dilemmas for Controlling Child Labor"

4. Land and property rights

4.1 Land [4/20]

• DE 11 & 12

• UP Ch 8, "The Role of Agriculture iaffn Development"

4.2 Land Reform [4/25]

• Banerjee, Abhijit (1999), "Land Reform: Prospects and Strategies," MIT Mimeo.

4.3 Property Rights [4/27]

• Christopher Woodruff, "Review of de Soto's The Mystery of Capital," Journal of Economic Literature, December 2001, 1215-1223.

• *Udry, Christopher and Markus Goldstein. “The Profits of Power: Land Rights and Agricultural Investment in Ghana”. Journal of Political Economy, 2008, vol. 116.

• *Field, Erica, “Entitled to Work: Urban Property Rights and Labor Supply in Peru,"Mimeo, Harvard, 2006.

5. Labor and migration

5.1 Labor markets [4/30]

• DE13

5.2 Migration [5/2]

• DE Ch. 10

• Michael Clemens. “Think Again: Brain Drain”, Foreign Policy, October 22, 2009.

6. Credit

• 6.1 Credit and investment [5/4]

• DE Ch 14

• UP Ch 23, "Credit, Intermediation, and Poverty Reduction"

• *Dean Karlan and Jonathan Zinman, "Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment," Econometrica, Nov 2009.

35"

"

6.2 The microcredit promise [5/7]

• Beatriz Armendariz and Jonathan Morduch, "Microfinance: Where do we stand?" in Charles Goodhart, editor, Financial Development and Economic Growth: Explaining the Links. Basingstoke, Hampshire, UK: Palgrave Macmillan, 2004.

• PE Chapter 9: “Reluctant Entrepreneurs”

7. Savings and Insurance

7.1 Savings and Insurance 1 [5/9]

• DE Ch 15

• UP Ch 14, "Transfers and Safety Nets in Poor Countries: Revisiting the Trade-Offs and Policy Options,"

• MTGI Chapter 7: “To Save: The Unfun Option”

7.2 Insurance Failures [5/11]

• PE Chapter 6: “Barefoot Hedge-Fund Managers”

• UP Ch 22, "Microinsurance: The Next Revolution?"

• *Edward Miguel, "Poverty and Witchkilling," Review of Economic Studies.

8. Public goods, political economy, aid and corruption

8.1 Public Goods [5/21]

• UP Ch 19, "Public Goods and Economic Development,"

• UP Ch 12, "Ethnic Diversity and Poverty Reduction,"

• *Abhijit Banerjee and Rohini Somanathan, "The Political Economy of Public goods: Some evidence from India," MIT Manuscript 2006.

8.2 Do leaders matter? [5/23]

• Esther Duflo, "Why Political Reservations," Journal of the European Economic Association 3(2-3), May 2005, pp.668-678

• *Rohini Pande, “Can Mandated Political Representation Provide Disadvantaged Minorities Policy Influence? Theory and Evidence from India," American Economic Review, Vol. 93(4), pp.1132-1151, September 2003

36"

"

• *Ben Jones and Ben Olken, “Do Leaders Matter? National Leadership and Growth since World War II,” Quarterly Journal of Economics 120 (3), pp. 835-864, August 2005.

8.3 Corruption [5/25] PS 5 DUE

• UP Ch 11, "Corruption and Development"

• Wade, Robert (1982) “The system of administrative and political corruption: Canal irrigation in South India.” Journal of Development Studies, 18(3), 287-328.

• *Ben Olken, "Monitoring Corruption: Evidence from a Field Experiment in

• Indonesia," Journal of Political Economy 115(2), 200-249, April 2007. o *Raymond Fisman and Edward Miguel, "Cultures of Corruption: Evidence from Diplomatic Parking Tickets," BREAD Working Paper #122, May 2006. o *Paul Niehaus and Sandip Sukhtankar, “Corruption Dynamics: The Golden Goose

• Effect”, BREAD Working Paper #223, May 2009

8.4 Aid [5/30] Policy Debate

• Banerjee, Abhijit: "Making Aid Work," Boston Review, July 2006*A fun, well-written book that you should put on your reading list is: Easterly, William (2002), The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics, Cambridge, MA: MIT Press.

37"

"

OUTLINE C

Course Overview

This is a course is about the microeconomics of development. We will thus use the toolkit of applied microeconomics to study the behavior of individuals, households, and firms in developing countries. You are expected to have a good understanding of the basic principles of microeconomics (i.e., PPS128 or higher): utility maximization; profit maximization; risk and uncertainty; public goods and externalities; market power; principal-agent model; etc. Moreover, because the material relies heavily on empirical findings, you should have a good, intuitive grasp of basic applied statistics: linear regression, hypothesis testing, etc. Although we will be going over some theoretical models because they provide a useful framework through which one can analyze the world, the content of the course will largely be empirical. In other words, we will be focusing on what we can and cannot learn, as well as on what we have learned from taking these models to the data. We will also be focusing on the policy implications one can derive from empirical findings. Because this course is a bit mathematical in nature, I will be spending a great deal of time walking you through the models in order for you to gain an intuitive understanding of them. I will never ask you to solve theoretical models or estimate empirical models, but I do expect you to understand their key features and be able to express them in words. To counterbalance the technical aspects of the course, I will have you read studies dealing with specific policies and discuss them at the end of each section of the syllabus, and I provide a set of lighter readings and podcasts to help illustrate the material.

Textbook

There is no textbook for this course, but you should buy the following book, which was written to explain many of the more technical concepts we will discuss in class and emphasize their policy importance to the general public:

Banerjee, A.V., and E. Duflo (2011), Poor Economics, New York: PublicAffairs,

which will hereafter be referred to simply as Banerjee and Duflo (2011).

You are expected to take notes in class. To help you do so, I will post my slides on Blackboard, typically in the hours before lecture, as I tend to work on my slides up until the last minute. I will be putting the compulsory readings on my website as well, on a password-protected page. Email me for the password.

38"

"

Readings

The following list of topics and readings is indicative - I might add or subtract some readings as we go along and as I discover new papers on the following topics. Asterisks (*) denote compulsory reading materials.

1. Introduction (Week of August 29)

• *Banerjee, A.V., and E. Duflo (2007), “The Economic Lives of the Poor,” Journal of Economic Perspectives 21(1): 141-167.

• *Banerjee, A.V., and E. Duflo (2011), chapter 1.

• Collier, P. (2007), The Bottom Billion, Oxford: Oxford University Press.

• Easterly, W. (2006), The White Man’s Burden, New York: Penguin Press.

• MacDonald, L. (2010), “The New Bottom Billion: Andy Sumner,” Global Prosperity Wonkcast,http://blogs.cgdev.org/global_prosperity_wonkcast/2011/02/28/the-new-bottom-billion-andy-sumner/ last accessed August 19, 2011.

• *Roberts, R. (2008), “Collier on the Bottom Billion,” EconTalk,

• http://www.econtalk.org/archives/2008/01/collier_on_the.html last accessed August 19, 2011.

• Roberts, R. (2011), “Banerjee on the Poor and Poor Economics,” EconTalk, http://www.econtalk.org/archives/2011/07/banerjee_on_pov.html last accessed August 19,2011.

• Sachs, J. (2005), The End of Poverty, New York: Penguin Press.

2. Background Ideas and Methods (Week of September 5)

39"

"

• Bardhan, P. (1993), “Economics of Development and the Development of Economics,” Journal of Economic Perspectives 7: 129-142.

• *Bellemare, M.F. (2011), “A Primer on Causality,” http://marcfbellemare.com/wordpress/wp- content/uploads/2011/08/Causality.pdf

• *Bellemare, M.F. (2011), “A Primer on Linear Regression,” http://marcfbellemare.com/wordpress/wp-content/uploads/2011/08/Regression.pdf

• Duflo, E., R. Glennerster, and M. Kremer (2008), “Using Randomization in Development Economics Research: A Toolkit,” in T.P. Schultz and J.A. Strauss, eds., Handbook of Development Economics, Volume 4, Amsterdam: Elsevier.

• Duflo, E. (2010), “Social Experiments to Fight Poverty,” TED Talk, http://tinyurl.com/duflo-ted last accessed August 19, 2011.

• Glennerster, R., and M. Kremer (2011), “Small Changes, Big Results,” Boston Review,http://bostonreview.net/BR36.2/glennerster_kremer_behavioral_economics_global_developme nt.php last accessed August 19, 2011.

• *Manzi, J. (2010), “What Social Sciences Does - and Doesn’t - Know,” City Journal http://www.city-journal.org/2010/20_3_social-science.html last accessed August 19, 2011.

• *Stiglitz, J.E. (1989), “Rational Peasants, Efficient Institutions, and a Theory of Rural Organization: Methodological Remarks for Development Economics,” in P. Bardhan, ed., The Economic Theory of Agrarian Institutions, Oxford: Clarendon Press.

3. Household and Intrahousehold Models (Week of September 12)

• Alderman, H., Chiappori, P.-A., L. Haddad, J. Hoddinott, and R. Kanbur (1995), “Unitary versus Collective Models of the Household: Time to Shift the Burden of the Proof?,” World Bank Research Observer 10: 1-19.


40"

"

• Bardhan, P., and C. Udry (1999), Development Microeconomics, Oxford: Oxford University Press.

• Benjamin D. (1992), “Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models,” Econometrica 60: 287-322.

• Browning, M., and P.-A. Chiappori (1998), “Efficient Intrahousehold Allocations: A General Characterization and Empirical Tests,” Econometrica 66: 1241-1278.

• *Doss, C., (1995), “Testing among Models of Intrahousehold Resource Allocation,” World Development 24: 1597-1609.

• Folbre, N. (1984), “Household Production in the Philippines: A Non-Neoclassical Approach,ΓEconomic Development and Cultural Change 32: 303-330.

• Lee, K., and M.F. Bellemare (2011), “Look Who’s Talking: The Impact of the Intrahousehold Allocation of Mobile Phones on Agricultural Prices,” Working Paper, Duke University.

• *Scott, J.C. (1976), The Moral Economy of the Peasant, New Haven, CT: Yale University Press.

• Singh, I., L. Squire, and J. Strauss (1986), Agricultural Household Models, Baltimore: Johns Hopkins University Press.

• Udry, C. (1996), “Gender, Agricultural Production, and the Theory of the Household,” Journal of Political Economy 104: 1010-1046.

4. Market Participation (Week of September 19)

• *Aker, J., and I. Mbiti (2010), “Mobile Phones and Economic Development in Africa,” Journal of Economic Perspectives 24(3): 207-232.

• *Barrett, C.B., M.E. Bachke, M.F. Bellemare, H. Michelson, S. Narayanan, T.F. Walker (2010), “Smallholder Market Participation in Agricultural Value Chains: Comparative Evidence from Three Continents,” Working Paper, Cornell University.

• Bellemare, M.F. (2010), “As You Sow, So Shall You Reap: The Welfare Impacts of Contract Farming,” Working Paper, Duke University.

41"

"

• Bellemare, M.F., C.B. Barrett (2006), “An Ordered Tobit Model of Market Participation: Evidence from Kenya and Ethiopia,” American Journal of Agricultural Economics 88: 324-337.

• de Janvry, A., M. Fafchamps, and E╠ü. Sadoulet (1991), “Peasant Household Behavior with Missing Markets: Some Paradoxes Explained,” Economic Journal, 101: 1400-1417.

• Fafchamps, M., and R.V. Hill (2005), “Selling at the Farm Gate or Traveling to Market, “American Journal of Agricultural Economics 87: 717-734.

• Grosh, B. (1994), “Contract Farming in Africa: An Application of the New Institutional Economics,” Journal of African Economies 3: 231-261.

• Lee, K., and M.F. Bellemare (2011), “Look Who’s Talking: The Impact of the Intrahousehold Allocation of Mobile Phones on Agricultural Prices,” Working Paper, Duke University.

• *MacDonald, L. (2011), “Mobile Phones for Development’Hope vs. Hype,” Global Prosperity Wonkcast,

http://blogs.cgdev.org/global_prosperity_wonkcast/2011/08/02/jenny-aker-mobile- phones-for-development%E2%80%94hope-vs-hype-2/ last accessed August 19, 2011.

5. Land (Week of September 26)

• *Barrett, C.B., M.F. Bellemare, and J.Y. Hou (2010), “Reconsidering Conventional Explanations of the Inverse Productivity’Size Relationship,” World Development 38: 88-97.

• *Bellemare, M.F. (2012), “Insecure Land Rights and Share Tenancy in Madagascar,” Land Economics forthcoming.

• Besley, T. (1995), “Property Rights and Investment Incentives: Theory and Evidence from Ghana,” Journal of Political Economy 103: 903-937.

• Brasselle, A.-S., F. Gaspart, and J.-P. Platteau (2002), “Land Tenure Security and Investment Incentives: Puzzling Evidence from Burkina Faso,” Journal of Development Economics 67: 373- 418.

42"

"

• de Soto, H. (2003), The Mystery of Capital, New York: Basic Books.

• Field, E. (2005), “Entitled to Work: Urban Property Rights and Labor Supply in Peru,” Quarterly Journal of Economics 122(4): 1561-1602.

• Goldstein, M., and C. Udry (2008), “The Profits of Power: Land Rights and Agricultural Investment in Ghana,” Journal of Political Economy 116: 981-1022.

• *Place, F. (2009), “Land Tenure and Agricultural Productivity in Africa: A Comparative Analysis of the Economics Literature and Recent Policy Strategies and Reforms,” World Development 37:1326-1336.

• Roberts, R. (2011), “Karol Boudreaux on Property Rights and Incentives in Africa,” EconTalk,

http://www.econtalk.org/archives/2007/12/karol_boudreaux.html last accessed August 19,2011.

• Shaban, R.A. (1987), “Testing between Competing Models of Sharecropping,” Journal of Political Economy 95: 893-920.

• Stiglitz, J.E. (1974), “Incentives and Risk Sharing in Sharecropping,” Review of Economic Studies 41: 219-255.

6. Labor

6.1. Food and Nutrition


• *Barrett, C.B., and M.F. Bellemare (2011), “Why Food Price Volatility Doesn’t

Matter,” Foreign Affairs,

http://www.foreignaffairs.com/articles/67981/christopher-b-barrett-and-marc-f-bellemare/why-food-price-volatility-doesnt-matter last accessed August 19, 2011.

• *Bellemare, M.F., (2011), “Rising Food Prices, Food Price Volatility, and Political Unrest,”Working Paper, Duke University.

43"

"

• Bellemare, M.F., C.B. Barrett, and D.R. Just (2010), “The Welfare Impacts of Commodity PriceFluctuations: Evidence from Rural Ethiopia,” Working Paper, Duke University.

• Jensen, R.T., and N.H. Miller (2010), “The Impact of Food Price Increases on Caloric Intake inChina,” Agricultural Economics 39(s1): 465-476. 6

• Jensen, R.T., and N.H. Miller (2010), “Do Consumer Price Subsidies Really Improve Nutrition?,” Review of Economics and Statistics forthcoming.

• *MacDonald, L. (2011a), “Hedging Against Hunger,” Global Prosperity Wonkcast, http://blogs.cgdev.org/global_prosperity_wonkcast/2011/07/05/hedging-against-hunger- connie-veillette-ben-leo/ last accessed August 19, 2011.

• MacDonald, L. (2011b), “Famine in the Horn of Africa,” Global Prosperity Wonkcast, http://blogs.cgdev.org/global_prosperity_wonkcast/2011/08/09/famine-in-the-horn-of-africa- owen-barder/ last accessed August 19, 2011.

• Sahn, D. (1988), “The Effect of Price and Income Changes on Food-Energy Intake in Sri Lanka,” Economic Development and Cultural Change 36: 315-340.

• Strauss, J. and D. Thomas (1997), “Health, Nutrition, and Economic Development,” Journal of Economic Literature 36: 766-817.

6.2. Health

• *Banerjee, A.V., and E. Duflo (2011), chapters 3.

• *Dupas, P. (2009), “Do Teenagers Respond to HIV Risk Information? Evidence from a FieldExperiment in Kenya,” American Economic Journal: Applied Economics forthcoming.

• *Hoffmann, V., C.B. Barrett, and D.R. Just (2009), “Do Free Goods Stick to Poor Households?

• Experimental Evidence on Insecticide Treated Bednets,” World Development 37(3): 607-617.

44"

"

• Kremer, M., and E. Miguel (2004), “Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities,” Econometrica 72(1): 159-217.

• MacDonald, L. (2010), “Turning the Tide through Better Prevention,” Global Prosperity Wonkcast, http://blogs.cgdev.org/global_prosperity_wonkcast/2010/05/25/turning-the-tide-

through-better-prevention-mead-over-on-the-aids-transition/ last accessed August 19, 2011.

• Strauss, J. and D. Thomas (1997), “Health, Nutrition, and Economic Development,” Journal of Economic Literature 36: 766-817.

6.3. Education


• *Chaudhury, N., J. Hammer, M. Kremer, K. Muralidharan, and F.H. Rodgers (2006), “Missing in Action: Teacher and Health Worker Absence in Developing Countries,” Journal of Economic Perspectives 20(1): 91-116.

• *Glewwe, P., M. Kremer, and S. Moulin (2009), “Many Children Left Behind? Textbooks and Test Scores in Kenya,” American Economic Journal: Applied Economics 1(1): 112-135.

• Kremer, M., and E. Miguel (2004), “Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities,” Econometrica 72(1): 159-217.

• Roberts, R. (2011), “Srour on Education, African Schools, and Building Tomorrow,” EconTalk,

http://www.econtalk.org/archives/2008/12/srour_on_educat.html last accessed August 19, 2011.

• Rosenzweig, M.R. (2010), “Microeconomic Approaches to Development: Schooling, Learning,and Growth,” Journal of Economic Perspectives 24(3): 81-96. 7

• Schulz, T.P. (2004), “School Subsidies for the Poor: Evaluating the Mexican PROGRESA Poverty Program,” Journal of Development Economics 74(1): 199-250.

7. Capital (Week of October 31)

45"

"

• Ahlin, C., J.S. Lin, and M. Maio (2010), “Where Does Microfinance Flourish? Microfinance Institution Performance in Macroeconomic Context,” Journal of Development Economics forthcoming.

• Armenda╠üriz de Aghion, B., and J. Morduch (2005), The Economics of Microfinance, Cambridge: MIT Press.

• *Banerjee, A.V., and E. Duflo (2011), chapters 6, 7, and 8.

• Dupas, P., and J. Robinson (2011), “Why Don’t the Poor Save More? Evidence from a Health Savings Experiment,” NBER Working Paper.

• Karlan, D., and J. Zinman (2009), “Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment,” Econometrica 77(6): 1993-2008.

• Kochar, A. (1997), “An Empirical Investigation of Rationing Constraints in Rural Credit Markets in India,” Journal of Development Economics 53: 339-371.

• Mbiti, I., and D.N. Weil (2011), “Mobile Banking: The Impact of M-PESA in Kenya,” NBER Working Paper.

• *Morduch, J. (1999), “The Microfinance Promise,” Journal of Economic Literature 37: 1569-1614.

• *Roberts, R. (2011), “Townsend on Development, Poverty, and Financial Institutions,” EconTalk,

http://www.econtalk.org/archives/2011/03/townsend_on_dev.html last accessed August 19, 2011.

• Roberts, R. (2011), “Munger on Microfinance, Savings, and Poverty,” EconTalk,

• http://www.econtalk.org/archives/2011/04/munger_on_micro.html last accessed August 19, 2011.

• Stiglitz, J.E., and A. Weiss (1981), “Credit Rationing in Markets with Imperfect Information,” American Economic Review 71: 393-410.

8. Technology Adoption (Week of November 7)

46"

"

• *Duflo E., M. Kremer, and J. Robinson (2008), “How High Are Rates of Return to Fertilizer? Evidence from Field Experiments in Kenya,” American Economic Review Papers and Proceedings 98(2): 482-488.

• Liu, E. (2010), “Time to Change What to Sow: Risk Preferences and Technology Adoption Decisions of Cotton Farmers in China,” Review of Economics and Statistics forthcoming.

• *Feder, G., R.E. Just, and D. Zilberman (1985), “Adoption of Agricultural Innovations in Developing Countries: A Survey,” Economic Development and Cultural Change 33(2): 255-298.

• Foster, A.D. and M.R. Rosenzweig (1995), “Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy 103(6): 1176-1209.

• Foster, A.D., and M.R. Rosenzweig (2010), “Microeconomics of Technology Adoption,” Working Paper, Yale University.

9. Institutions, Corruption, and Governance (Week of November 14)

• Acemoglu, D., S. Johnson, and J. Robinson (2001), “The Colonial Origins of Economic Development,” American Economic Review 91(5): 1369-1401.

• *Aldashev, G. (2009), “Legal Institutions, Political Economy, and Development,” Oxford Review of Economic Policy 25(2): 257-270.


• Besley, T., and M. Ghatak (2010), “Property Rights and Economic Development,” Working Paper, London School of Economics.

• *La Porta, R., F. Lopez-de-Silanes, and A. Shleifer (2008), “The Economics Consequences of Legal Origins,” Journal of Economic Literature 46(2): 285-332.

• Malmendier, U. (2009), “Law and Finance ΓÇÿat the Origin’,” Journal of Economic Literature 47(4): 1076-1108.

47"

"

• Bardhan, P. (1997), “Corruption and Development: A Review of Issues,” Journal of Economic Literature 35(3): 1320-1346.

• Bertrand, M., S. Djankov, R. Hanna, and S. Mullainathan (2007), “Obtaining a Driver’s License in India: An Experimental Approach to Studying Corruption,” Quarterly Journal of Economics 122(4): 1639-1676.

• *Chattopadhyay, R., and E. Duflo (2004), “Impact of Reservation in Panchayati Raj: Evidence from a Nationwide Randomized Experiment,” Economic and Political Weekly 39(9): 979-986. Fisman, R., and E. Miguel (2008), Economic Gangsters, Princeton: Princeton University Press. Romer, P. (2010), “Zip It,” City Journal, http://www.city-journal.org/2010/eon0723pr.html last accessed August 19, 2011.

• November 21: No class on Tuesday, Thanksgiving on Thursday.) November 28: Review session on Tuesday, Second Midterm on Thursday.)

48"

"

OUTLINE D

Course materials

Required texts Banerjee, Abhijit and Esther Duflo, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. Public Affairs, 2011.

Collins, Daryl, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven, Portfolios of the Poor: How the World’s Poor Live on $2 a Day. Princeton University Press, 2009.

Recommended texts

Armendariz, Beatriz and Jonathan Morduch, The Economics of Microfinance, MIT Press, 2005.

Diamond, Jared, Guns, Germs, and Steel. Norton, 1999.

Easterly, William, The Elusive Quest for Growth. MIT Press, 2001.

Easterly, William, The White Man’s Burden. Penguin, 2006.

Sachs, Jeffrey, The End of Poverty. Penguin, 2005.

Sen, Amartya, Development as Freedom. Knopf, 1999.

Access to readings

Many readings are in one of the two required texts, Poor Economics and Portfolios of the Poor. These books have been ordered and are (or should soon be) available at bookstores serving the University, such as Ulrich’s, Michigan Book and Supply, and Barnes and Noble/Michigan Union Bookstore. Other readings available electronically via either: 1) the Ctools site for the class, or 2) at the web addresses given on the reading list below. For some articles, a policy-oriented summary in the form of a “JPAL brief” is available, and I have provided a link to that resource.

Reading List

Economic Development: The Facts and the Puzzles (1 class)

• **Sachs, The End of Poverty, Ch. 1

• **World Bank, World Development Report 2011: Conflict, Security, and Development. Washington, DC:

49"

"

• 2011. Tables 1-3, p. 344 -349. (And skim other tables and text according to your interests.)

http://wdr2011.worldbank.org/fulltext

• Amartya Sen, "The Concept of Development," in Chenery and Srinivasan, eds., Handbook of

• Development Economics, Vol. 1, Elsevier Science Publishers, 1988.

• Kaushik Basu, "On the Goals of Development," in G.M. Meier and J.E. Stiglitz (2001), Frontiers of development economics : the future in perspective, p. 61-102 (including comments by Paul Streeten and Michael Lipton).

• William Easterly, "Life During Growth," Journal of Economic Growth, 4(3), September 1999.

• Angus Maddison, The World Economy: A Millennial Perspective, OECD Development Centre Studies, 2001, ch. 1-2 and appendix A.

The Economic Lives of the Poor (1 class)

• **Collins, Morduch, Rutherford, and Ruthven, Portfolios of the Poor, Ch. 1-2.

• **Banerjee, A., Duflo, E. (2007). “The Economic Lives of the Poor.” The Journal of Economic Perspectives, 21(1), pp. 141-167.

Economic Growth (1 class)

• **Sachs, The End of Poverty, Ch. 2-3

• **Easterly, The Elusive Quest for Growth, Ch. 2-3

• *Ray, Debraj, Development Economics, Princeton University Press, 1998.

• Ch. 3, “Economic Growth”.

• Pritchett, Lant, “Divergence, Big Time,” Journal of Economic Perspectives, Summer 1997.

Geography

50"

"

• **David Bloom and Jeffrey Sachs, “Geography, Demography, and Economic Growth in Africa,”

• Brookings Papers on Economic Activity, 1998:2.

• *Paul Kennedy, The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000. Fontana Press: London, 1987. “The European Miracle”, in Ch. 1, pp. 20-38 (page numbers may vary).

• Diamond, Jared, Guns, Germs, and Steel, Prologue, Ch. 1, Ch. 4-10.

• David S. Landes, “Why Europe and the West. Why not China.” Journal of Economic Perspectives, Vol. 20, No. 2, Spring 2006, pp. 3-22.

Institutions (1 class)

• **Acemoglu, Johnson, and James A. Robinson, “Institutions as a Fundamental Cause of Long-Run Growth,” Chapter 6 of Handbook of Economic Growth, eds. Philippe Aghion and Steven Durlauf, Elsevier, 2005, pp. 385-472.

• *Rodrik, Dani, “Institutions for High-Quality Growth,” Ch. 5 in One Economics, Many Recipes: Globalization, Institutions, and Economic Growth, Princeton University Press, 2007, pp. 153-183.

• *Olken, Benjamin, “Monitoring Corruption: Evidence from a Field Experiment in Indonesia,” Journal of Political Economy 115 (2), pp. 200-249, April 2007.

• JPAL brief version:

http://www.povertyactionlab.org/sites/default/files/publications/70_Policy_Briefcase_5.pdf

• Acemoglu, Daron, Simon Johnson, and James A. Robinson, “The Colonial Origins of Comparative Development: An Empirical Investigation,” The American Economic Review, Vol. 91, No. 5, Dec. 2001, pp. 1369-1401.

• Acemoglu, Daron, Simon Johnson, and James A. Robinson, “Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution,” Quarterly Journal of Economics, Vol. 117, No. 4, November 2002, pp. 1231-1294.

• Banerjee and Duflo, Poor Economics, Ch. 10.

51"

"

• Ferraz, Claudio and Frederico Finan, “Exposing Corrupt Politicians: The Effects of Brazil’s Publicly Released Audits on Electoral Outcomes.” Quarterly Journal of Economics, 2008, 123(2): 703-745. JPAL brief version: http://www.povertyactionlab.org/publication/exposing-corrupt-politicians

• Klitgaard, Robert, Controlling Corruption, Berkeley: University of California Press, 1988.

• Yang, Dean, “Integrity for Hire: An Analysis of a Widespread Program for Combating Customs Corruption,” Journal of Law and Economics, Vol. 51, No. 1, February 2008, pp. 25-57.

• Yang, Dean, “Can Enforcement Backfire. Crime Displacement in the Context of Customs Reform in the Philippines,” Review of Economics and Statistics, Vol. 90, No. 1, February 2008, pp. 1-14.

Economic policy (1 class)

• **Rodrik, Dani, “Goodbye Washington Consensus, Hello Washington Confusion. A Review of the World Bank’s ‘Economic Growth in the 1990s: Learning from a Decade of Reform’,” Journal of Economic Literature, 44, December 2006, 973–87.

• **Hausmann, Ricardo, Dani Rodrik, and Andres Velasco, “Growth Diagnostics”, in J. Stiglitz and N. Serra, eds., The Washington Consensus Reconsidered: Towards a New Global Governance, Oxford University Press, New York, 2008. (WAITING FOR COPY OF BOOK.)

• *Hausmann, Ricardo and Dani Rodrik, “Self-Discovery in a Development Strategy for El Salvador,” Economia, Vol. 6(1), Fall 2005.

• John Williamson, “From Reform Agenda to Damaged Brand Name,” Finance and Development, September 2003.

• John Williamson, What Washington Means by Policy Reform, Institute for International Economics, November 2002 update.

• Ricardo Hausmann and Dani Rodrik, "Economic Development as Self-Discovery," Journal of Development Economics, Vol. 72 (2), December 2003, pp. 603-633.

52"

"

• Dani Rodrik, "Getting Interventions Right: How South Korea and Taiwan Grew Rich," Economic Policy, April 1995.

Foreign aid (1 class)

• **Jeffrey Sachs, The End of Poverty, Ch. 15.

• **William Easterly, “The Big Push Déjà Vu: A Review of Jeffrey Sachs’s The End of Poverty: Economic Possibilities for our Time,” Journal of Economic Literature, Vol. XLIV, March 2006, pp. 96-105.

• *Easterly, The White Man’s Burden, Ch. 1-2.

• *Banerjee and Duflo, Poor Economics, Ch. 1.

• *Nicholas Kristof, “Aid: Can It Work.” New York Review of Books, Vol. 53, No. 15, October 5, 2006.

• *Jeffrey Sachs, “How Aid Can Work” (Letter to the Editor), New York Review of Books, Vol. 53, No. 20, December 21, 2006.

• *The Economist, “Special Report: The $25 billion question – Aid to Africa,” July 2, 2005, Vol. 376, Iss. 8433, p. 25.

Global public goods (application: advance market commitments) (1 class)

• **Ruth Levine, Michael Kremer, and Alice Albright, “Making Markets for Vaccines: Ideas to Action,”

• Center for Global Development, Advance Market Commitment Working Group, 2005. http://www.cgdev.org/doc/books/vaccine/MakingMarkets-complete.pdf

• *Jeffrey Sachs, "Helping the World's Poorest," The Economist, Aug. 12, 1999.

• Prabhat Jha, et. al., "Improving the Health of the Global Poor," Science, Vol. 295, March 15, 2002, pp. 2036-2039.

53"

"

The Evaluation Problem: How Do We Know What Works. (1 class)

• **Banerjee, Abhijit and Esther Duflo (2009), “The Experimental Approach to Development Economics,” Annual Review of Economics, Vol. 1, pp. 151-178.

• *Duflo, Esther, Rachel Glennerster, and Michael Kremer (2008), “Using Randomization in Development Economics Research: A Toolkit,” in T. Paul Schultz & John A. Strauss (ed.), Handbook of Development Economics, Elsevier, Ch. 61, pp. 3895-3962.

Education (2 classes)

Class 1: The Supply Side

• **Banerjee and Duflo, Poor Economics, Ch. 4.

• *Banerjee, Abhijit, Shawn Cole, Esther Duflo, and Leigh Linden, “Remedying Education: Evidence from Two Randomized Experiments in India,” Quarterly Journal of Economics, 122(3), 2007, pp. 1235-1264.

• JPAL brief version: http://www.povertyactionlab.org/sites/default/files/publications/26_Policy_Briefcase_2.pdf

• *Duflo, Esther, Rema Hanna, and Stephen Ryan, “Incentives Work: Getting Teachers to Come to School,” American Economic Review, forthcoming. JPAL brief version:

• http://www.povertyactionlab.org/sites/default/files/publications/80_Policy_Briefcase_6.pdf

• *J-PAL Brief, “Showing Up is the First Step,” Abdul Lateef Jameel Poverty Action Lab, MIT, Summer 2009. http://www.povertyactionlab.org/publication/absenteeism-showing-first-step.

54"

"

• Paul Glewwe, Michael Kremer, Sylvie Moulin and Eric Zitzewitz, "Retrospective vs. Prospective Analyses of School Inputs: The Case of Flip Charts in Kenya," Journal of Development Economics 74(1), June 2004, pp. 251-268. Michael Kremer, "Improving School Quality in Developing Countries," in Anne O. Krueger, ed., Economic Policy Reform: The Second Stage, University of Chicago Press: Chicago, 2000.

• Benhabib, Jess and Mark Spiegel, "The Role of Human Capital in Economic Development," Journal of Monetary Economics, Oct. 1994.

• Psacharopoulos, George, “Economic Impact of Education,” from G. Psacharopoulos, The Economic Impact of Education, ICS Press, 1991. (Reprinted in Gerard Meier and James Rauch, eds., Leading Issues in Economic Development, 7th edition, Oxford University Press, 2000.)

Class 2: The Demand Side

• **Jensen, Robert, “The (Perceived) Returns to Education and the Demand for Schooling," Quarterly Journal of Economics, 2010, 125(2), p. 515-548.

• **Kremer,Michael, Edward Miguel, and Rebecca Thornton. “Incentives to Learn,” Review of Economics and Statistics, 91 (3):437-456. 2009.

• Angrist, Joshua, Eric Bettinger, Erik Bloom, Elizabeth King, and Michael Kremer, "Vouchers for Private Schooling in Colombia: Evidence from a Randomized Natural Experiment," American Economic Review, Vol. 92, no. 5, December 2002, pp. 1535-1558.

Health

• **Banerjee and Duflo, Poor Economics, Ch. 2, 3 and 5.

• **Deon Filmer, Jeffrey Hammer, and Lant Pritchett, "Weak Links in the Chain: A Diagnosis of Health Policy in Poor Countries," World Bank Research Observer, 15(2), August 2000, pp. 199-224.

• *Banerjee, Abhijit V., Esther Duflo, Rachel Glennerster, and Dhruva Kothari, “Improving

55"

"

• Immunisation Coverage in Rural India: A Clustered Randomised Controlled Evaluation of

• Immunisation Campaigns with and without Incentives.” British Medical Journal, 2010, Vol. 340: c2220.

• JPAL brief version: http://www.povertyactionlab.org/publication/incentives-immunization

• *Michael Kremer and Edward Miguel, “Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities,” Econometrica, Vol. 72, No. 1, 2004, pp. 159-217. JPAL brief version:

• http://www.povertyactionlab.org/sites/default/files/publications/54_Policy_Briefcase_4.pdf

• *Maccini, Sharon and Dean Yang, “Under the Weather: Health, Schooling, and Socioeconomic Consequences of Early-Life Rainfall,” American Economic Review, Vol. 99, No. 3, June 2009, pp. 1006-1026.

• Robert Fogel, "Economic Growth, Population Theory, and Physiology: The Bearing of Long-term Processes on the Making of Economic Policy," American Economic Review, 84(3), June 1994, pp. 369-395.

Microfinance (3 classes)


• **Collins, Morduch, Rutherford, and Ruthven, Portfolios of the Poor, Ch. 5.

• *Armendariz and Morduch, The Economics of Microfinance, Ch. 1, 2, and 4.

• *Banerjee, Abhijit, Esther Duflo, Cynthia Kinnan, and Rachel Glennerster, “The miracle of microfinance. Evidence from a randomized evaluation,” working paper, 2010. http://faculty.wcas.northwestern.edu/~cgk281/MoM.pdf

• *de Mel, Suresh, David McKenzie, and Chris Woodruff, “Returns to Capital: Results from a Randomized Experiment,” Quarterly Journal of Economics, 123(4): 1329-72, 2008.

56"

"

• Bauchet, Jonathan, Cristobal Marshall, Laura Starita, Jeanette Thomas, and Anna Yalouris, “Latest Findings from Randomized Evaluations of Microfinance,” Access to Finance Forum, No. 2, CGAP, December 2011.

• http://www.povertyactionlab.org/publication/latest-findings-randomized-evaluations-microfinance

• Banerjee, Abhijit V., and Esther Duflo (2010), "Giving Credit Where It Is Due." Journal of Economic Perspectives, 24(3): 61–80.

• Morduch, Jonathan, “The Microfinance Promise,” Journal of Economic Literature. Vol. 37 (4), Dec. 1999, pp. 1569-1614.

• Class 2: Making Credit Markets Work

• **Giné, Xavier and Dean Karlan, “Group versus Individual Liability: Short and Long Term Evidence from Philippine Microcredit Lending Groups,” working paper, 2011.

• http://karlan.yale.edu/p/GroupversusIndividualLending.pdf

• **Giné, Xavier, Jessica Goldberg, and Dean Yang, “Credit Market Consequences of Improved Personal Identification: Field Experimental Evidence from Malawi,” American Economic Review, forthcoming. JPAL brief version:

• http://www.povertyactionlab.org/publication/fingerprinting-reduce-risky-borrowing

Class 3: Savings

• **Banerjee and Duflo, Poor Economics, Ch. 8. ** Collins, Morduch, Rutherford, and Ruthven, Portfolios of the Poor, Ch. 4.

• ** Armendariz and Morduch, The Economics of Microfinance, Ch. 6 (sections 6.1-6.5, 6.8). *Nava Ashraf, Dean Karlan, and Wesley Yin, “Tying Odysseus to the Mast: Evidence from a

• Commitment Savings Product in the Philippines,” Quarterly Journal of Economics, Vol. 121 No. 2, May 2006, pp. 635-672.

57"

"

• *Duflo, Esther, Michael Kremer, and Jonathan Robinson, “Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya,” American Economic Review, Vol. 101, October 2011, pp.

• 2350-2390. JPAL brief version: http://www.povertyactionlab.org/publication/well-timed-nudge Stuart Rutherford, The Poor and Their Money. Oxford University Press, New Delhi, 2000.

Disasters, Insurance, and Risk (1 class)


• **Collins, Morduch, Rutherford, and Ruthven, Portfolios of the Poor, Ch. 3.

• **Armendariz and Morduch, The Economics of Microfinance, Ch. 6 (sections 6.6-6.7).

• *Giné, Xavier and Dean Yang, “Insurance, Credit, and Technology Adoption: Field Experimental Evidence from Malawi,” Journal of Development Economics, Vol. 89, 2009, pp 1-11.

• *Morduch, Jonathan, “Between the State and Market: Can Informal Insurance Patch the Safety Net.” World Bank Research Observer, 14(2), August 1999.

• Yang, Dean and HwaJung Choi, “Are Remittances Insurance. Evidence from Rainfall Shocks in the Philippines,” World Bank Economic Review, Vol. 21 (2), May 2007, pp. 219-248.

• Yang, Dean “Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002,” B.E. Journal of Economic Analysis and Policy: Vol. 8, No. 1 (Advances), Article 13, 2008.

International Migration and Remittances (2 classes)

Class 1: Migration

• **Clemens, Michael, “Economics and Emigration: Trillion Dollar Bills on the Sidewalk.” Journal of Economic Perspectives, Vol. 25, No. 3, Summer 2011, pp. 83-106.

• **Gibson, John and David McKenzie, “Eight Questions About Brain Drain,” Journal of Economic Perspectives, Vol. 25, No. 3, Summer 2011, pp. 107-28.

58"

"

• *Birdsall, Nancy, Dani Rodrik, and Arvind Subramanian, “How to Help Poor Countries,” Foreign Affairs, Vol. 84, Iss. 4, Jul/Aug 2005, p. 136.

• *World Bank, Global Economic Prospects 2006: Economic Implications of Remittances and Migration. Chapters 4 and 5.

• *World Bank, Migration and Remittances Fact Book. Online resource. (Skim the data on this website and look up information for regions and countries of interest to you.) http://go.worldbank.org/QGUCPJTOR0

Class 2: Remittances

• **Yang, Dean, “Migrant Remittances,” Journal of Economic Perspectives, Vol. 25, No. 3, Summer 2011, pp. 129-152. *“Economics Focus: Monetary lifeline,” The Economist, July 31, 2004, p. 66.

• *Yang, Dean, “International Migration, Remittances, and Household Investment: Evidence from Philippine Migrants’ Exchange Rate Shocks,” Economic Journal, Vol. 118, April 2008, pp. 591-630.

• *Ashraf, Nava, Diego Aycinena, Claudia Martinez A., and Dean Yang, “Remittances and the

• Problem of Control: A Field Experiment Among Migrants from El Salvador,” mimeo, University of Michigan, 2011. http://www.umich.edu/~deanyang/papers/aamy_remittancecontrol.pdf

59"

"

OUTLINE E

Synopsis: The focus of the course will be on the microeconomics of development, with strong policy and empirical

components. We will begin with an introduction to poverty and its measurement. We will then discuss the literature on

foreign aid effectiveness. After reviewing impact evaluation methods, including randomized designs, we will study

specific interventions on education, health, and credit. We will then turn to the study of institutions, including historical

roots, democracy, corruption, resource and ethnic curses, and conflict.

Assessment:

1. Practical class presentation (paper) – 20%

This is the group presentation of a designated research paper or specific source in the practical class. It will involve a powerpoint presentation (made for 30min), and broad discussion in class (for the remaining time), as everyone is expected to read the paper in advance and have questions to ask. The group will be responsible to answer the questions raised.

2. Impact evaluation proposal – 20%.

The impact evaluation proposal will take the form of a 5-page (font size 12 pp) written report (which can be done in groups), which should be sent to Nuno Palma by May 23, 2012. This impact evaluation proposal should contain: (i) a relevant research question related to any of the themes of the course, competently motivated (i.e., relating to other papers, policy debates, etc.); (ii) the description of a proposed intervention that is useful for answering the research question (the

intervention may be real or imaginary; however, feasibility will be particularly valued, as it may turn reality with your help after the course!!); (iii) an evaluation design, including method (field, lab, natural experiment, etc.) and description of measurement (household survey, test scores, etc.)

60"

"

3. Oral participation in the lectures and practical classes – 10%.

This includes number and quality of questions asked during the student presentations.

4. Final exam – 50%.

Main sources:

• Ray, Debraj (1998), Development Economics, Princeton University Press.

• Banerjee, Abhijit V., and Esther Duflo (2011), Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, Public Affairs.

• Acemoglu, Daron and James A. Robinson (2006), Economic Origins of Dictatorship and Democracy, Cambridge

University Press.

• Besley, Timothy (2006), Principled Agents. The Political Economy of Good Government, Oxford University Press.

Outline

1. Poverty

• Ray, chapters 1 and 8.1-8.2 .

• Banerjee and Duflo, chapters 1 and 2.

• Practical class: organization

2. Aid.

• Collier, Paul (2007), The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It, Oxford University Press. [with special attention to chapter 7]

• Easterly, William (2001), The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics, MIT Press. [with special attention to chapter 6]

• Sachs, Jeffrey D. (2005b), The End of Poverty: Economic Possibilities for Our Time, Penguin Press. [with special attention to chapters 13-14]

61"

"

• Practical class: debate Sachs vs. (Collier) vs. Easterly

3. Toolbox

• Acemoglu Daron (2009), Theory, General Equilibrium, Political Economy and Empirics in Development Economics, Journal of Economic Perspectives, 24(2), pp. 17-32.

• Angrist, Joshua (2008), Treatment Effects, The New Palgrave Dictionary of Economics.

• Duflo, Esther, Rachel Glennerster, and Michael Kremer (2006), Using Randomization in

• Development Economics Research: A Toolkit, NBER Technical Working Paper 333.

• Practical class: Duflo, Glennerster, and Kremer paper

4. Education

• Banerjee and Duflo, chapter 4.

• Barrera-Osorio, Felipe, Marianne Bertrand, Leigh L. Linden, and Francisco Perez-Calle (2007), Improving the Design of Conditional Transfer Programs: Evidence from a Randomized Education Experiment in Colombia, American Economic Journal: Applied Economics, forthcoming.

• Duflo, Esther, Rema Hanna, and Stephen Ryan (2007), Monitoring Works: Getting Teachers to Come to School, American Economic Review, forthcoming Practical class: Duflo, Hanna, and Ryan paper

5. Health

62"

"


• Duflo, Esther (2000), Child Health and Household Resources: Evidence from the South African Old-Age Pension

Program, American Economic Review: Papers and Proceedings, 90(2), pp. 393-398.

• Miguel, Edward, and Michael Kremer (2004), Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities, Econometrica. 72(1), pp. 159-217;

• Practical class: Miguel and Kremer paper

6. Finance

• Banerjee and Duflo, chapters 6-8.

• Ashraf, Nava, Dean Karlan, and Wesley Yin (2006), Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines, Quarterly Journal of Economics, 121(2), pp. 635-672.

• Banerjee, Abhijit V., Esther Duflo, Rachel Glennerster, and Cynthia Kinnan (2009), The Miracle of Microfinance.

Evidence from a Randomized Evaluation, Working Paper, MIT.

• Karlan, Dean, and Jonathan Zinman (2009), Observing Unobservables: Identifying Information Assymmetries with a

Consumer Credit Field Experiment, Econometrica, 77(6), pp. 1993-2008.

• Morduch, Jonathan (1999), The Microfinance Promise, Journal of Economic Literature, 37(4), pp. 1569-1614.

• Practical class: Ashraf, Karlan, and Yin paper

7. History


• Acemoglu and Robinson, chapter 4.

63"

"

• Acemoglu, Daron and Simon Johnson and James A. Robinson (2001), The Colonial Origins of Comparative

Development: An Empirical Investigation, American Economic Review, 91, pp. 1369-1401.

• Albouy, David (2008). The Colonial Origins of Comparative Development: An Investigation of the Settler Mortality Data, NBER Working Paper 14130.

• Feyrer, James and Bruce Sacerdote (2009), Colonialism and Modern Income -- Islands as Natural Experiments, Review of Economics and Statistics, 91(2), pp. 245-262.

• North, Douglass C. (1991), Institutions, Journal of Economic Perspectives, 5(1), pp. 97-112.

• Sachs, Jeffrey (2003), Institutions Matter but not for Everything, Finance and Development, 38-41.

• Practical class: Acemoglu, Johnson, and Robinson paper

8. Democracy


• Acemoglu and Robinson, chapter 4.

• Besley, Timothy, and Robin Burgess (2002), The Political Economy of Government Responsiveness: Theory and

• Evidence from India, Quarterly Journal of Economics, 117(4), pp. 1415-1451.

• Bjorkman, Martina, and Jakob Svensson (2009), Power to the People: Evidence from a Randomized Field Experiment on Community-Based Monitoring in Uganda, Quarterly Journal of Economics, 124 (2), pp. 735-769.

• Wantchekon, Leonard (2003), Clientelism and Voting Behavior: Evidence from a Field Experiment in Benin, World

Politics, 55, pp. 399-422.

• Practical class: Bjorkman and Svensson paper

64"

"

9. Corruption


• Besley, chapter 2.

• Bertrand, Marianne, Simeon Djankov, Rema Hanna, and Sendhil Mullainathan (2006), Obtaining a Driver's License in India: An Experimental Approach to Studying Corruption, Quarterly Journal of Economics, 122(4), pp. 1639-1676.

• Fisman, Raymond and Edward Miguel (2006), Corruption, Norms, and Legal Enforcement: Evidence from Diplomatic Parking Tickets, Journal of Political Economy, 115(6), pp. 1020-1048.

• Olken, Benjamin (2006). Monitoring Corruption: Evidence from a Field Experiment in Indonesia, Journal of Political Economy, 115(2), pp. 200-249.

• Reinikka, Ritva, and Jakob Svensson (2004). Local Capture: Evidence from a Central Government Transfer Program in Uganda, Quarterly Journal of Economics, 119 (2), pp. 679-705.

• Practical class: Olken paper

10. Curses


• Easterly, William, and Ross Levine (1997), Africa’s Growth Tragedy: Policies and Ethnic Divisions, Quarterly Journal of Economics, 112 (4), pp. 1203-1250.

• Habyarimana, James, Macartan Humphreys, Daniel N. Posner, and Jeremy M. Weinstein (2007), Why Does Ethnic

• Diversity Undermine Public Goods Provision., American Political Science Review, 101(4), pp. 709-725.

• Mehlum, Halvor, Karl Moene and Ragnar Torvik (2006), Institutions and the Resource Curse, The Economic Journal, 116(508), pp. 1-20.

65"

"

• Vicente, Pedro C. (2010), Does Oil Corrupt. Theory and Evidence from a Natural Experiment in West Africa, Journal of Development Economics, 92(1), pp. 28-38.

• Practical class: Habyarimana, Humphreys, Posner, and Weinstein paper

11. Conflict


• Collier, Paul and Anke Hoeffler (2004), Greed and Grievance in Civil Wars, Oxford Economic Papers, 56, pp. 663-595.

• Fearon, James, Macartan Humphreys, Jeremy M. Weinstein (2009), Can Development Aid Contribute to Social Cohesion After Civil War. Evidence from a Field Experiment in Post-Conflict Liberia, American Economic Review, 99(2), pp. 287–91.

• Jones, Benjamin F. and Benjamin A. Olken (2009), Hit or Miss. The Effect of Assassinations on Institutions and War, American Economic Journal: Macroeconomics, 1 (2), pp. 55-87.

• Miguel, Edward, Shanker Satyanath, and Ernest Sergenti (2004), Economic Shocks and Civil Conflict: An Instrumental Variables Approach, Journal of Political Economy, 112(4), pp. 725-753.

• Practical class: Miguel, Satyanath, and Sergenti paper

12. Presentations of proposed interventions

66"

"

OUTLINE F

Course Materials Readings & Questions Lecture Notes

Syllabus Easterly Ch. 1 Introduction

UST-GDI Class Project Poor Economics Ch. 1 Economic Growth: Harrod-Domar

Poor Economics Website Easterly Ch. 2 Economic Growth: Solow

Easterly's book: The Elusive Quest for Growth (Link to e-book)

Easterly Ch. 3 Inequality and PDF notes

UST-GDI Groups Easterly Ch. 4 Poverty and PDF notes

UST-GDI Funding Criteria Easterly Ch 8 and 9 Nutrition and PDF notes

UST-GDI Presentation Schedule Easterly Ch 13 Health and PDF notes

Final Exam Review Poor Economics Ch. 2 Education and PDF notes

Poor Economics Ch. 3 Population and PDF notes

Poor Economics Ch. 4 Urban Rural Issues and PDF notes

Poor Economics Ch 5 Agriculture

Poor Economics Ch 7 Credit and PDF notes

Additional Readings from Syllabus

Banerjee and Duflo The Economic Lives of the Poor

67"

"

The Economist The Poor and the Rich Strauss (1986): Does Better Nutrition Raise Farm Productivity?” Migule (2005) Ch. 6 in Health and Economic Growth Strauss and Thomas (1998) Health, Nutrition and Economic Development (section 3.0 and 3.1 starting on page 775) Rosenzweig (1995) Why are there returns to schooling? Glewwe (2002) Schools and Skills in Developing Countries Eicher and Staatz Ch. 1 Agricultural Development Ideas in Historical Perspective Binswanger and Deininger (1997) Explaining Agric. and Agrarian Policies in Dev. Countries

68#

#

OUTLINE G

General introduction

Part 1: Two standard estimation methods for multiple regression models: OLS and MLE.

October 6, 2011: EXCEPTIONALLY, THE CLASS WILL TAKE PLACE FROM 5:00 PM TO 8:00 PM.

Lecture 1: Back to basics: OLS (Ordinary Least Squares) for continuous dependent variables.

Lecture 2: MLE (Maximum Likelihood Estimates) for limited dependent variables.

• Benchmark paper 1: Alesina A. and Fuchs-Schündeln N., 2007, Good bye Lenin (or not.):the effect of communism on people' preferences, American Economic Review 97(4), 1507-1528.

• Benchmark paper 2: Collier P., Hoeffler A. and Rohner D., 2009, Beyond greed and grievance: feasibility and civil war, Oxford Economic Papers 61(1), 1-27.

Part 2: Estimating causal/treatment effects.

Lecture 3: The Instrumental Variables approach.

• Benchmark paper 1: Acemoglu D., Johnson S. and Robinson J. A., 2001, The colonial origins of comparative

development: an empirical investigation, American Economic Review, 91(5), 1369-1401.

• Benchmark paper 2: Miguel E., Satyanath S. and Sergenti E., 2004, Economic shocks and civil conflict: an

instrumental variables approach, Journal of Political Economy 112(4), 725-753.

See also:

• Glaeser E., La Porta R., Lopez de Silanes F., and Shleifer A., 2004, Do institutions cause growth., Journal of

Economic Growth, 9(3), 271-303.

Lecture 4: The Heckman procedure.

69#

#

• Benchmark paper 1: Zhu N., 2002, The impacts of income gaps on migration decisions inChina, China Economic Review 13 (2-3) 213–230.

• Benchmark paper 2: Zhu N. and Zhang C., 2007, Push-pull factors for participation in nonfarm activities in rural China, Working Paper.

Lecture 5: The Regression Discontinuity design.

• Lecture 5 relies on the following methodological paper:

• Lee D. and Lemieux T., 2010, Regression discontinuity designs in economics, Journal ofEconomic Literature 48(2), 281-355.

• Benchmark paper 1: Pettersson-Lidbom P., 2008, Do parties matter for economic outcomes. A Regression-

• Discontinuity approach, Journal of the European Economic Association 6(5), 1037-1056.

• Benchmark paper 2: Lalive R., 2007, Unemployment benefits, unemployment duration, and post-unemployment jobs a

• Regression Discontinuity approach, American Economic Review 97(2), 108-112.

• Dataset (very similar to the one used in benchmark paper 2): here

• Problem set: here Translate

Lecture 6: Randomized experiments, the gold standard of impact evaluation.

• Lecture 6 relies on the following methodological paper:

• Duflo E, Glennerster R. and Kremer M., 2007, Using randomization in development economics research: a toolkit, Handbook of Development Economics, Volume 4, Chapter 61, Pages 3895-3962.

• Benchmark paper 1: Wantchekon L., 2003, Clientelism and voting behavior: evidence from a field experiment in Benin, World Politics 55(3), 399–422.

70#

#

• Benchmark paper 2: Thornton R., 2008, The demand for, and impact of, learning HIV Status, American Economic Review 98(5), 1829–63.

71#

#

OUTLINE H

Objective: Health, education and income are used as key markers of development in a community. The objective of the course is to provide you an understanding of factors and characteristics that determine economic development in a community. In this course, the household is the major unit of analysis. We focus on areas of human capital (health and education) accumulation, poverty, program evaluation and microfinance. The papers used here use an empirical approach to understand development issues at the microeconomic level.

Reading list

The * readings are required readings, all of which will be available on blackboard.

1. Introduction to Development Economics

In this section, we will use microeconomic indicators of well being to measure country’s economic performance. These microeconomic indicators are constructed using household survey data from developing countries. There are no required readings for this introductory section. You can simply rely on class notes that will be posted on blackboard. In this section we will cover the following – (a) measures of well being constructed using micro level data and to understand the difference between macro and micro measures, (b) understand the living conditions of the poor around the world, and (c) understanding the role of human behavior in development problems.

Banerjee, A and E. Duflo. 2007. The Economic Lives of the Poor, Journal of Economic Perspectives, vol 2(1), 141-167

Mullainathan, S. 2010. Development Economics through the lens of psychology, Proceedings of the Annual Bank Conference on Development Economics, forthcoming.

2. Poverty

In this section we will learn to construct measures of poverty, most important indicator of well economic well being.

*Ravallion, M. 1998. Poverty Lines in Theory and Practice. Living Standards Measurement Study. Working Paper No. 133, Washington, D.C.: World Bank.

*Ravallian, M. and B, Bidani. 1994. How Robust is a Poverty Profile? World Bank Economic Review 8(1): 75-102.

World Bank. 2001. World Development Report: Attacking Poverty 2000/2001. Washington, DC: World Bank, pp. 15-29.

72#

#

Lanjouw, P. and M. Ravallion. (1995). Poverty and Household Size. Economic Journal 105: 1415-1434.

Deaton, A. 2003. Measuring Poverty in a Growing World. Available at: http://unstats.un.org/unsd/methods/poverty/Deaton%20June%202003%20Measuring%20poverty%20in%20a%20growing%20world.pdf

3. Program Evaluation

In this section, we will use empirical methods used by academicians and policy makers to assess the effectiveness of programs and policies such as the food for education policy, conditional cash transfer program, and nutrition supplement program.

There are two kinds of empirical frameworks – natural experiments and field experiments used to evaluate programs and policies.

*Duflo, E., R. Glennerster and M. Kremer. 2008. Using Randomization in Development Economics Research: A Toolkit, in T.P. Schultz and J. Strauss (eds.), Handbook of Development Economics, Volume 4, Amsterdam: North Holland Press (selected sections only).

*Duflo, E. 2006. Field Experiments in Development Economics. [available at: http://econ-www.mit.edu/files/800]

Banerjee, A, E. Duflo. 2009. The Experimental Approach to Development Economics [ http://econ-www.mit.edu/files/3158]

Banerjee, A., E. Duflo, R. Glennerster, C. Kinnan. 2009. The Miracle of Microfinance? Evidence from a Randomized Evaluation [available at: http://econ-www.mit.edu/files/4161]

Miguel E. and M. Kremer. 2004. Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities, Econometrica, 72.1:159-217

73#

#

*Banerjee, A, S. Cole, E. Duflo and L. Linden. 2007. Remedying Education: Evidence from Two Randomized Experiments in India, The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 1235-1264

*Cohen, J. and P. Dupas. 2009. Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment, forthcoming in Quarterly Journal of Economics [available at: http://www.econ.ucla.edu/pdupas/CohenDupas.pdf]

*Bobonis, G., E. Miguel, C. P-Sharma. 2006. Iron Deficiency Anemia and School Participation, Journal of Human Resources, vol 41 (4), 692-721. [available at: http://elsa.berkeley.edu/~emiguel/pdfs/miguel_anemia.pdf]

4. Human Capital

Health and education are two important dimensions of human capital accumulation. Human capital is significant determinant of growth and welfare. In this section, we are introduced to the different short-run and long-run measures of health and education among children and adults. We analyze how to identify the various determinants of health and educational outcomes that guide policy prescription.

4.1 Education

*Orazem, P. and E. King. 2008. Schooling in Developing Countries: The Roles of Supply, Demand and Government policy, in T.P. Schultz and J. Strauss (eds.), Handbook of Development Economics, Volume 4, Amsterdam: North Holland Press.

*Birdsall, N. 1985. Public Inputs and Child Schooling in Brazil. Journal of Development Economics, 18 (1), 67–86.

*Brown, P. H., and Park, A. 2002. Education and Poverty in Rural China." Economics of Education Review no. 21: 523-41.

Filmer, D., and Pritchett L., 1999. The Effect of Household Wealth on Educational Attainment: Evidence From 35 countries, Population and Development Review 25(1).

Glewwe, P. 2002. Schools and Skills in Developing Countries: Education Policies and Socioeconomic Outcomes, Journal of Economic Literature no. XI (June 2002): 463-82.

Glewwe, P. and Jacoby, H. 1995. An Economic Analysis of Delayed Primary School Enrollment in a Low Income Country: The Role of Early Childhood Nutrition, The Review of Economics and Statistics no. 77 (Feb 1995): 156-69.

Returns to Education

74#

#

*Psacharopoulos, G. and H. A. Patrinos. (2004). Returns to Investment in Education: A Further Update. Education Economics 12(2): 111-134.

Schultz, T. P.. 1988. Education investments and Returns. Handbook of Development Economics, vol 3, Edited by H. Chenery and T. N. Srinivasan. Amsterdam: North Holland Press.

Angrist, J. and V. Lavy. 1997. The Effect of a Change in Language of Instruction on the Returns to Schooling in Morocco, Journal of Labor Economics, 15:S48-76.

Duflo, E. 2001. Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence From an Unusual Policy Experiment, American Economic Review, 91:795-813.

4.2 Health

*Strauss, J. and Thomas, D. 2008. Health over the Life Course, forthcoming in the Handbook of Development Economics vol. 4, edited by T. Paul Schultz and John Strauss eds., Amsterdam: North Holland Press.

*Barrera, A. (1990). The Interactive Effects of Mother’s Schooling and Unsupplemented Breastfeeding on Child Health. Journal of Development Economics 34(1/2): 81-98.

*Ghuman, S., J., Behrman, J., Borja, S., Gultiano, and E., King. (2005). Family Background, Service Providers, and Early Childhood Development in Philippines: Proxies and Interactions. Economic Development and Cultural Change, pp 129-164.

Mani, S. (2007). The Role of the Household and Community in Determining Child Health. Dissertation, mimeo.

Duncan, T., V. Lavy, and J. Strauss. 1996. Public Policy and Anthropometric Outcomes in the Côte D’Ivoire. Journal of Public Economics 61(2):155-92

Cebu Study Team. 1992. A Child Health Production Function Estimated from Longitudinal Data. Journal of Development Economics 38(2): 323-351.

Thomas, D., J., Strauss, and M., Henriques. 1990. Child survival, Height for Age and Household Characteristics in Brazil. Journal of Development Economics 33: 197-234.

Thomas, D., J., Strauss and M., Henriques. 1991. How does Mother's Education affect Child Height. Journal of Human Resources 26( 2): 183-211.

Returns to Good Health

75#

#

*Strauss, J. and D., Thomas. 1998. Health, Nutrition, and Economic Development. Journal of Economic Literature 36(2): 766-817.

*Thomas, D. and J., Strauss. 1997. Health, Wealth, and Wages of Men and Women in Urban Brazil. Journal of Econometrics 77(1): 159-186.

Thomas, D. et. al. 2005. Casual Effect of Health on Labor Market Outcomes: Experimental Evidence. Working Paper, Duke University.

5. Microfinance

In this topic we will learn about the key features of microfinance and how successful is it in improving welfare outcomes? What is the future of this very popular form of household finance?

*Morduch, J. 1999. The Microfinance Promise. Journal of Economic Literature, vol. 37 (4), pp 1569-1614.

Morduch, J. 2000. The Microfinance Schism. World Development, vol. 28 (4), pp 617-629.

Morduch, J. 1999. The Role of Subsidies in Microfinance – Evidence from Grameen Bank, Journal of Development Economics, vol. 60, pp 229-248.

Gine, X., P. Jakiela, D. Karlan, J. Morduch. 2006. Microfinance Games, Working papers 2102, the field experiments website.

Gine, X. and D. S. Karlan, 2006. Group Versus Individual Liability: A Field Experiment in the Philippines, Policy Research Working Paper Series 4008, The World Bank.

An Interactive Introduction to Randomized Evaluation

Documents

Transcript of An Interactive Introduction to Randomized Evaluation