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When I reviewed Dean Karlan and Jonathan Zinman's randomized study of the impacts of microcredit in Manila, I noted that the people in the study had household incomes averaging $15,000 and more education than the average American. Turns out that income figure is wrong.
Dean wrote to me last night that in computing household income, they had counted business profits but forgotten to subtract business expenses. Mistakes like these happen all the time in complex number crunching, just as computer programs always have bugs. They are easy to make, and sound dumb once found and described. This is one reason to circulate working papers, which expose initial findings to scrutiny, as Dean and Jonathan have done.
According to the new figures, households in the study had incomes averaging 5,301 pesos/month/household member. At an exchange rate of 50 pesos/dollar, that's $106/month/person, or about $3.50/day. This still puts the Manila borrowers far above the official Philippines poverty line of about 1,000 pesos/month/person, and well above the Hyderabad slumdwellers in the other major randomized study of microcredit, who earned about $20/month/person. But it does make the Karlan and Zinman study more relevant than I had thought to the question of how microcredit affects the poor.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.
Recently CGD hosted the Second Annual Birdsall House Conference on Women, which focused on beyond-aid approaches for women’s economic empowerment, with particular emphasis on private sector engagement. CGD experts have written about how international organizations and national agencies should examine and correct gender biases in the design and delivery of their strategies for financial inclusion. But while public sector interventions are crucial for promoting women’s economic empowerment, the panelists pointed out that the private sector is in many ways better equipped to provide opportunities for women to grow their businesses, investments, and incomes. Here’s our takeaway.
On Monday, Grant Shapps, the UK's Minister of State at the Department for International Development, kicked off DFID’s Energy Africa campaign at an event hosted by the Shell Foundation designed to help his team figure out how the UK government can invest its political clout and an initial £30 million ($46 million) to tackle rural energy poverty in Africa. Given solar’s limitations and these risks, how can we make sure that Energy Africa fulfils Minister Shapps’s ambitious brief?