Making Headlines

Over the weekend the Financial Times carried a column by Undercover Economist Tim Harford on the randomized microcredit impact studies.Longtime readers of this blog (every time I use a phrase like that I think to myself that there must be at least one of you...) will probably not learn much from the column, except about Tim's impressive ability to compress so much down to a few words, and about his dubious judgment, in giving me the last word. But the headline might catch your attention: "Perhaps microfinance isn’t such a big deal after all."As with the Boston Globe story in September ("Small change: Billions of dollars and a Nobel Prize later, it looks like ‘microlending’ doesn’t actually do much to fight poverty"), ACCION International was swiftest to respond. (Here is ACCION's letter in the Globe.) Beth Rhyne, published a piece on the blog of ACCION's Center for Financial Inclusion, which she heads, entitled "Not a big deal? Microfinance is about inclusion." ACCION's new President and CEO Michael Schlein posted a comment on Tim's site:

Tim Harford’s article “Perhaps Microfinance isn’t such a big deal after all” is right – and wrong.He’s right that microfinance has been oversold and is often described as the panacea that will bring an end to global poverty. He’s right to see the backlash coming. But he’s wrong to say it isn’t a big deal. It is.

To which Tim Tweeted:

Note to all microfinance enthusiasts: I DO NOT WRITE MY OWN HEADLINES

— Tim Harford (@TimHarford) December 7, 2009

Probably Michael Schlein, Beth Rhyne, and their communications people know that. They didn't write for Tim's sake, but for all the readers they fear will get the wrong impression.I had cause to reflect on the newspaper-writers-don't-write-their-own-headlines problem when the New York Times published Stephanie Strom's story on my blog post about Kiva. I worried that the title, "Confusion on Where Money Lent via Kiva Goes," seemed more negative than my own take on Kiva, that it made it sound like Kiva users' money was ending up in a secret bank account in the Cayman Islands.So to the point foreshadowed in my own headline: In the blog age, it is archaic, even foolish, to deprive journalists in what Stephanie calls the "dino media" of a say in the titles to their own pieces. Most bloggers write their own headlines, so increasingly readers will assume dino media writers exercise the same control, and so attribute headlines to authors. Since those are the most important lines in a piece, the status quo can lead to serious misunderstandings about not only the message of a piece, but the authorship of that message. You think Tim wrote that, but he didn't. Illusions of P2P, anyone? Forget global warming and global poverty. This is my cause of the day: give columnists vetoes over the headlines that crown their prose.As to the substance at hand, I mostly agree with the ACCION's defense of microfinance---which is if anything supported by Tim's column in his quote of me. (Disclosure: my boss Nancy Birdsall has joined the ACCION board.) Beth says it best:

Microfinance’s purpose is not to cure the world’s poverty ailments. Its purpose is to include otherwise ignored people into the financial sector. You don’t need an impact evaluation to tell you what a valuable role financial services play in your own life – and it is the same for the clients of microfinance. Low income and informal individuals who would otherwise be at the doorstep of a neighborhood loan shark are instead able to find loans, savings programs, and, in some cases, other financial services to help them manage cash flow, expand their businesses, cope with emergencies, or save for the future.

Michael Schlein's take I find less persuasive because it feels like selecting success stories while remaining silent on the inevitable failures, the poor people made worse off by unwise or ill-fated borrowing:

We know microfinance works because we’ve seen it in action, first-hand. We track individuals and families over a period of years, recording and bearing witness to the improved quality of their lives. We see it empower women, giving them access to the material, human and social resources necessary to make strategic choices in their lives; to establish or strengthen financial independence; to transform power relationships; to improve the stability and prospects of their family by directing more income toward education; and, particularly, to engender dignity and pride.

It looks to me like ACCION, more than other microfinance groups, is now primed for the fight over perceptions and expectations opened up by the randomized trials. Historically, ACCION was the strongest champion of the institutional conception of success in microfinance, the view that the goal should be the creation of dynamic, self-sufficient financial institutions. That view never sold as well as the image of microfinance as a proven tool to reduce poverty, as empowerer of women. After cashing in on the Compartamos IPO, which gave it both cash and a public relations problem, ACCION attempted to outdo other groups at their own game with such initiatives as lendtoendpoverty.org. Perhaps the new studies will send ACCION back to its roots, and bring along more of the microfinance movement this time.