Sujata Visaria: Finding the Diamonds in the Rough - Welfare Comparisons of Two Targeting Mechanisms in Microcredit
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In a HKUST IEMS Academic Seminar, Sujata VIsaria (HKUST) examined the distributive impacts of two alternative approaches to deliver agricultural credit to smallholders: TRAIL (or trader-agent intermediated lending), where local traders recommend village residents for individual liability micro-loans, and GBL (or group-based lending), where households self-select into groups and receive joint liability loans. This is joint work with Pushkar Maitra, Sandip Mitra and Dilip Mookherjee. Find out more about the event at http://iems.ust.hk/trail
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Sujata Visaria: Finding the Diamonds in the Rough - Welfare Comparisons of Two Targeting Mechanisms in Microcredit
- 1. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Finding the Diamonds in the Rough The Equity Impacts of Targeting Smallholder Agricultural Credit Pushkar Maitra, Sandip Mitra, Dilip Mookherjee, Sujata Visaria HKUST Institute for Emerging Market Studies 9 March 2017 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 1 / 50
- 2. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Targeting Private Benefits MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 2 / 50
- 3. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Targeting Private Benefits How should governments choose the recipients of private benefits? subsidies: food, fertilizer transfer payments: pensions MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 2 / 50
- 4. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Targeting Private Benefits How should governments choose the recipients of private benefits? subsidies: food, fertilizer transfer payments: pensions Centralized schemes: lack of information Decentralized schemes: corruption & elite capture MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 2 / 50
- 5. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Smallholder Agricultural Credit Designing agricultural credit programs for small farmers State-sponsored efforts: poor information leads to high default Microcredit: high repayment, but does not usually target agriculture Can we design a scheme that leverages local information? and avoids problems of elite capture? MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 3 / 50
- 6. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Agent-intermediated Lending MMMMV (2017) designed an alternative credit delivery mechanism (AIL): MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 4 / 50
- 7. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Agent-intermediated Lending MMMMV (2017) designed an alternative credit delivery mechanism (AIL): Leverages local information, but differently Individual liability loans Borrowers recommended by a local “agent” embedded in the community Agent incentivized by commissions that depend on repayment MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 4 / 50
- 8. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Agent-intermediated Lending MMMMV (2017) designed an alternative credit delivery mechanism (AIL): Leverages local information, but differently Individual liability loans Borrowers recommended by a local “agent” embedded in the community Agent incentivized by commissions that depend on repayment Field experiment in 48 villages TRAIL loans had positive significant average impacts on farm value-added: 22% MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 4 / 50
- 9. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Average Treatment Effects: Farm and Non-Farm Income (Efficiency) MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 5 / 50
- 10. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion The Mechanism TRAIL agents are more likely to select “able” borrowers high productivity low risk of crop failure MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 6 / 50
- 11. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion The Mechanism TRAIL agents are more likely to select “able” borrowers high productivity low risk of crop failure Positive impacts are larger for the more able farmers MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 6 / 50
- 12. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion The Comparison: Group-based Lending Group-based lending involves self-selected borrower groups Joint liability lending Participation does not require recommendation by an agent MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 7 / 50
- 13. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion The Comparison: Group-based Lending Group-based lending involves self-selected borrower groups Joint liability lending Participation does not require recommendation by an agent Both high and low ability individuals will form groups Because both pay lower interest rates on GBL loans than the status quo MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 7 / 50
- 14. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion The Comparison: Group-based Lending Group-based lending involves self-selected borrower groups Joint liability lending Participation does not require recommendation by an agent Both high and low ability individuals will form groups Because both pay lower interest rates on GBL loans than the status quo GBL loans had non-significant average impacts on farm value-added MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 7 / 50
- 15. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Average Treatment Effects: Farm and Non-Farm Income (Efficiency) MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 8 / 50
- 16. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Research Question: Equity Impacts Previous work examines the relative efficiency impacts Welfare impacts depend on both efficiency and equity impacts MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 9 / 50
- 17. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Research Question: Equity Impacts Previous work examines the relative efficiency impacts Welfare impacts depend on both efficiency and equity impacts Could GBL dominate TRAIL on equity grounds? MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 9 / 50
- 18. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Why Worry? MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 10 / 50
- 19. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Why Worry? MMMMV (2017): 30-40% of the efficiency impact of TRAIL due to borrower selection: TRAIL agents selected borrowers who were more productive Productive borrowers may also be wealthier/higher SES to begin with TRAIL could amplify these differences Efficiency gains, but at the cost of equity? MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 10 / 50
- 20. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Aggregate Welfare Impacts We estimate the scheme’s impact on aggregate welfare depends on both efficiency and equity By partitioning households by landholding by social group: religion/caste MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 11 / 50
- 21. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion How we estimate welfare impacts MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 12 / 50
- 22. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion How we estimate welfare impacts Question: If the scheme was introduced into a village, by how much would the welfare of representative household change? MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 12 / 50
- 23. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion How we estimate welfare impacts Question: If the scheme was introduced into a village, by how much would the welfare of representative household change? Problem: selection into the scheme was NOT random Average TRAIL borrower NOT representative of population MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 12 / 50
- 24. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion How we estimate welfare impacts, contd. Question: If the scheme was introduced into a village, by how much would the income of representative household change? MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 13 / 50
- 25. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion How we estimate welfare impacts, contd. Question: If the scheme was introduced into a village, by how much would the income of representative household change? That depends on: does that household participate in the scheme (pg )? MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 13 / 50
- 26. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion How we estimate welfare impacts, contd. Question: If the scheme was introduced into a village, by how much would the income of representative household change? That depends on: does that household participate in the scheme (pg )? if it participates, how much does its income change (CTEg )? MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 13 / 50
- 27. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion How we estimate welfare impacts, contd. Question: If the scheme was introduced into a village, by how much would the income of representative household change? That depends on: does that household participate in the scheme (pg )? if it participates, how much does its income change (CTEg )? Expected income effect for group g = pg × CTEg MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 13 / 50
- 28. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion How we estimate welfare impacts, contd. Question: If the scheme was introduced into a village, by how much would the income of representative household change? That depends on: does that household participate in the scheme (pg )? if it participates, how much does its income change (CTEg )? Expected income effect for group g = pg × CTEg Use welfare functions to infer welfare effects with different assumptions about inequality aversion MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 13 / 50
- 29. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion TRAIL Features MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 14 / 50
- 30. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion TRAIL Features Agent is selected randomly from list of established trader/lenders in any given village MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 14 / 50
- 31. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion TRAIL Features Agent is selected randomly from list of established trader/lenders in any given village Agent recommends 30 borrowers from among landless or marginal landowners (≤ 1.5 acres) subset of these are chosen randomly to receive offer of TRAIL loans MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 14 / 50
- 32. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion TRAIL Features Agent is selected randomly from list of established trader/lenders in any given village Agent recommends 30 borrowers from among landless or marginal landowners (≤ 1.5 acres) subset of these are chosen randomly to receive offer of TRAIL loans Agent plays no further role: MFI sets loan terms, directly lends to and collects repayments from borrowers No group meetings, savings requirements or gender restrictions MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 14 / 50
- 33. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion TRAIL Loan Features Loan interest rate pegged at below average rates on informal credit in the village Dynamic borrower incentives: start with small loans, future credit access grows at fast rate based on current repayment *Loan durations/timing: 4 months, match key-crop cycles *Insurance against covariate (price-yield) risks *Doorstep banking, no bank accounts (*: non-standard) MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 15 / 50
- 34. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion The Group Based Lending Scheme Same loan features as TRAIL loans, except: 5-member self-formed groups of borrowers joint liability monthly group meetings savings requirements MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 16 / 50
- 35. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Experimental Setting Two potato-growing districts in a state in eastern India 48 villages randomly assigned to: TRAIL scheme: 24 GBL scheme: 24 Collaborated with a microfinance institution 8 4-month cycles: Sept 2010 - July 2013 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 17 / 50
- 36. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Partitions Land class Landless 0-0.5 acres 0.5-1 acre 1-1.5 acres MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 18 / 50
- 37. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Partitions Land class Landless 0-0.5 acres 0.5-1 acre 1-1.5 acres Social group scheduled castes/scheduled tribes non-Hindus general caste Hindus MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 18 / 50
- 38. HH Characteristics by Land Class Average Landless 0–0.5 acres 0.5–1.0 acres 1.0–1.5 acres (1) (2) (3) (4) (5) Head’s education: primary school or more 0.420 0.211 0.366 0.552 0.654 (0.011) (0.019) (0.017) (0.021) (0.031) Head’s primary occupation: cultivation 0.438 0.057 0.374 0.692 0.726 (0.011) (0.011) (0.017) (0.020) (0.029) Head’s primary occupation: casual labor 0.332 0.673 0.409 0.091 0.043 (0.010) (0.022) (0.017) (0.012) (0.013) Landholding (Acres) 0.464 0.000 0.261 0.755 1.237 (0.009) (0.000) (0.005) (0.006) (0.009) Pucca house 0.273 0.171 0.259 0.324 0.377 (0.010) (0.018) (0.015) (0.020) (0.031) Electrified house 0.750 0.634 0.733 0.824 0.838 (0.010) (0.023) (0.015) (0.016) (0.024) Owns radio/TV/VCR/DVD 0.452 0.325 0.398 0.543 0.636 (0.011) (0.022) (0.017) (0.021) (0.031) Owns motorized vehicle 0.127 0.068 0.073 0.181 0.272 (0.007) (0.012) (0.009) (0.016) (0.029) Owns phone (mobile or landline) 0.591 0.420 0.536 0.712 0.781 (0.011) (0.023) (0.017) (0.019) (0.027) Has savings bank account 0.446 0.250 0.414 0.542 0.667 (0.011) (0.020) (0.017) (0.021) (0.030) Has insurance policy 0.286 0.139 0.247 0.375 0.461 (0.010) (0.016) (0.015) (0.021) (0.032)
- 39. HH Characteristics by Social Group Total SC/ST Non-Hindu General (1) (2) (3) (4) Head’s education: primary school or more 0.420 0.222 0.317 0.614 (0.011) (0.015) (0.025) (0.016) Head’s primary occupation: cultivation 0.439 0.284 0.432 0.560 (0.011) (0.017) (0.026) (0.016) Head?s primary occupation: casual labor 0.331 0.562 0.276 0.176 (0.010) (0.018) (0.024) (0.012) Landholding (acres) 0.465 0.293 0.482 0.590 (0.009) (0.013) (0.022) (0.014) Pucca house 0.273 0.112 0.329 0.376 (0.010) (0.012) (0.025) (0.016) Electrified house 0.750 0.604 0.792 0.846 (0.010) (0.018) (0.022) (0.012) Own a radio/ TV/ VCR/ DVD 0.453 0.318 0.387 0.583 (0.011) (0.017) (0.026) (0.016) Owns motorized vehicle 0.126 0.030 0.155 0.189 (0.007) (0.006) (0.019) (0.013) Owns phone (mobile or landline) 0.590 0.413 0.691 0.687 (0.011) (0.018) (0.025) (0.015) Has savings bank account 0.446 0.284 0.408 0.586 (0.011) (0.017) (0.026) (0.016) Has insurance policy 0.287 0.161 0.237 0.403 (0.010) (0.013) (0.023) (0.016)
- 40. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Land Class MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 21 / 50
- 41. Step 1: Selection Frequencies pg pg = number of g hhs selected total number of g hhs selected = recommended by TRAIL agents self-selected into GBL groups selection = take-up only households with ≤ 1.5 acres of land considered
- 42. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 1: Selection Frequencies, contd. 0.059 0.073 0.074 0.054 0.068 0.040 0.070 0.032 0.05.1 Landless Land 0-0.5 Land 0.5-1.0 Land 1.0-1.5 TRAIL GBL MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 23 / 50
- 43. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Selection Frequencies by Land Class the landless have a slightly lower selection frequency in TRAIL than in GBL TRAIL: across land classes, selection frequencies are very similar GBL: selection frequencies fall as landholding increases MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 24 / 50
- 44. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 2: CTEs, by land MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 25 / 50
- 45. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 2: CTEs, by land -20000020000 Landless 0-0.5 acres 0.5-1 acres 1-1.5 acres TRAIL, absolute -20000020000 Landless 0-0.5 acres 0.5-1 acres 1-1.5 acres GBL, absolute Conditional Treatment Effects, by Land MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 25 / 50
- 46. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Absolute v. Proportional CTEs, by land: TRAIL MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 26 / 50
- 47. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Absolute v. Proportional CTEs, by land: TRAIL 01000020000 Landless 0-0.5 acres 0.5-1 acres 1-1.5 acres TRAIL, absolute -1012 Landless 0-0.5 acres 0.5-1 acres 1-1.5 acres TRAIL, relative Conditional Treatment Effects, by Land MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 26 / 50
- 48. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Absolute v. Proportional CTEs, by land: GBL -20000-10000010000 Landless 0-0.5 acres 0.5-1 acres 1-1.5 acres GBL, absolute -.50.511.5 Landless 0-0.5 acres 0.5-1 acres 1-1.5 acres GBL, relative Conditional Treatment Effects, by Land MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 27 / 50
- 49. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 3: Expected treatment effects on income -.010.01.02.03.04.05 ty_g Landless 0-0.5 acres 0.5-1 acres 1-1.5 acres TRAIL, relative -.010.01.02.03.04.05 ty_g Landless 0-0.5 acres 0.5-1 acres 1-1.5 acres GBL, relative Expected Proportional Treatment Effects, by Land MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 28 / 50
- 50. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 4: Change in welfare, θ = 0 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 29 / 50
- 51. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 4: Change in welfare, θ = 0 -10123 rdw TRAIL GBL theta=0 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 29 / 50
- 52. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 4: Change in welfare, θ = 1 0.05.1.15.2 rdw TRAIL GBL theta=1 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 30 / 50
- 53. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 4: Change in welfare, θ = 2 20040060080010001200 rdw TRAIL GBL theta=2 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 31 / 50
- 54. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 4: Change in welfare, θ = 3 05000001.0e+061.5e+062.0e+06 rdw TRAIL GBL theta=3 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 32 / 50
- 55. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 4: Change in welfare, θ = 4 01.0e+092.0e+093.0e+09 rdw TRAIL GBL theta=4 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 33 / 50
- 56. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 4: Change in welfare, θ = 5 01.0e+122.0e+123.0e+124.0e+12 rdw TRAIL GBL theta=5 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 34 / 50
- 57. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Social Group MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 35 / 50
- 58. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 1: Selection frequencies 0.073 0.073 0.066 0.050 0.064 0.037 0.05.1 SC/ST Non-Hindu General Probabilities of selection TRAIL GBL MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 36 / 50
- 59. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 2: CTEs, by social group -500005000 SC/ST Non-Hindu General TRAIL, absolute -500005000 SC/ST Non-Hindu General GBL, absolute Conditional Treatment Effects, by Social Group MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 37 / 50
- 60. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Absolute v. Proportional CTEs, by social group: TRAIL 0500010000 SC/ST Non-Hindu General TRAIL, absolute 0.51 SC/ST Non-Hindu General TRAIL, relative Conditional Treatment Effects, by Social Group MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 38 / 50
- 61. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Absolute v. Proportional CTEs, by social group: GBL -500005000 SC/ST Non-Hindu General GBL, absolute -.50.5 SC/ST Non-Hindu General GBL, relative Conditional Treatment Effects, by Social Group MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 39 / 50
- 62. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 3: Expected treatment effects, by social group -.010.01.02.03.04.05 ty_g SC/ST Non-Hindu General TRAIL, relative -.010.01.02.03.04.05 ty_g SC/ST Non-Hindu General GBL, relative Expected Proportional Treatment Effects, by Social Group MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 40 / 50
- 63. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 4: Change in welfare, θ = 0 0.005.01.015.02.025 rdw TRAIL GBL theta=0 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 41 / 50
- 64. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 3: Change in welfare, θ = 4 5.0e+061.0e+071.5e+072.0e+07 rdw TRAIL GBL theta=4 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 42 / 50
- 65. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Step 3: Change in welfare, θ = 5 1.0e+092.0e+093.0e+094.0e+095.0e+096.0e+09 rdw TRAIL GBL theta=5 MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 43 / 50
- 66. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Changes in Inequality θ = 1 θ = 2 θ = 3 θ = 4 θ = 5 (1) (2) (3) (4) (5) Panel A: TRAIL Baseline 0.3249 0.7236 0.8632 0.9051 0.9234 Endline 0.3205 0.7217 0.8630 0.9053 0.9237 Effect on inequality ↓ ↓ ↓ ↑ ↑ Panel B: GBL Baseline 0.3662 0.8139 0.9247 0.9517 0.9625 Endline 0.3594 0.7947 0.9123 0.9431 0.9561 Effect on inequality ↓ ↓ ↓ ↓ ↓ MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 44 / 50
- 67. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Discussion The evidence that TRAIL was elitist is limited. MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 45 / 50
- 68. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Discussion The evidence that TRAIL was elitist is limited. Comparing landless borrowers: in TRAIL had lower baseline farm income than in GBL MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 45 / 50
- 69. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Discussion The evidence that TRAIL was elitist is limited. Comparing landless borrowers: in TRAIL had lower baseline farm income than in GBL In fact, GBL might be keeping out both the high wealth/high status households and the poorest among the low wealth households MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 45 / 50
- 70. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Selection by TRAIL agent Control 1 households Representative sample Difference Panel A: Bought from agent Landless 0.233 0.280 -0.047 (0.079) (0.092) (0.120) 0–0.5 acres 0.523 0.333 0.190*** (0.048) (0.040) (0.062) 0.5–1 acres 0.339 0.365 -0.026 (0.062) (0.047) (0.078) 1–1.5 acres 0.318 0.488 -0.170 (0.102) (0.079) (0.131) Panel B: Borrowed from agent Landless 0.067 0.167 -0.100 (0.046) (0.078) (0.087) 0–0.5 acres 0.349 0.107 0.241*** (0.046) (0.026) (0.050) 0.5–1 acres 0.233 0.173 0.060 (0.055) (0.037) (0.064) 1–1.5 acres 0.227 0.220 0.008 (0.091) (0.066) (0.112) Panel C: Worked for agent Landless 0.167 0.000 0.167** (0.069) (0.000) (0.078) 0–0.5 acres 0.182 0.083 0.098** (0.037) (0.023) (0.042) 0.5–1 acres 0.133 0.086 0.048 (0.044) (0.027) (0.049) 1–1.5 acres 0.000 0.098 -0.098 (0.000) (0.047) (0.064) Panel D: Same social group as agent Landless 0.353 0.222 0.131 (0.083) (0.082) (0.118) 0–0.5 acres 0.504 0.543 -0.039 (0.047) (0.041) (0.062) 0.5–1 acres 0.672 0.517 0.155** (0.059) (0.047) (0.077) 1–1.5 acres 0.913 0.689 0.224** (0.060) (0.070) (0.107) MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 46 / 50
- 71. Social Capital in GBL Groups Total SC/ST Non-Hindu General (1) (2) (3) (4) Invited by group members 0.583 0.536 0.800 0.558 (0.032) (0.048) (0.069) (0.051) Encouraged by officials to join group 0.417 0.464 0.200 0.442 (0.032) (0.048) (0.069) (0.051) Received assistance from others in the group (Cycle 1) 0.248 0.239 0.361 0.216 (0.028) (0.040) (0.081) (0.042) Provided assistance to others in the group (Cycle 1) 0.124 0.080 0.171 0.158 (0.021) (0.026) (0.065) (0.038) Proportion members with same occupation 0.624 0.616 0.598 0.642 (0.015) (0.022) (0.036) (0.023) Proportion members with same education level 0.530 0.520 0.594 0.516 (0.012) (0.019) (0.034) (0.018) Proportion members in same social group 0.522 0.732 0.887 0.192 (0.027) (0.038) (0.044) (0.033) Herfindahl Index by social group 0.762 0.873 0.940 0.593 (0.014) (0.019) (0.024) (0.019) Coefficient of variation of landholding 0.999 1.217 0.975 0.805 (0.035) (0.060) (0.075) (0.044)
- 72. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Summary of Results Compare welfare impacts of two alternative credit delivery models TRAIL is not more elitist than GBL MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 48 / 50
- 73. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Summary of Results Compare welfare impacts of two alternative credit delivery models TRAIL is not more elitist than GBL When partitioning by landholding: TRAIL generates higher average gains and benefits the landless more than GBL As a result it dominates GBL. MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 48 / 50
- 74. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Summary of Results Compare welfare impacts of two alternative credit delivery models TRAIL is not more elitist than GBL When partitioning by landholding: TRAIL generates higher average gains and benefits the landless more than GBL As a result it dominates GBL. When partitioning by social group: TRAIL: High status group outperforms other groups GBL: Low status groups outperform high status groups Point estimates indicate larger welfare in GBL under high θ But differences are not statistically significant MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 48 / 50
- 75. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Conclusion Our previous work indicates that TRAIL is superior to GBL from an efficiency standpoint. From an equity standpoint: Clear evidence from land partitioning that it outperforms GBL Less clear evidence from social group partitioning differences depend on θ values lack statistical significance MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 49 / 50
- 76. Equity Impacts of Targeting Credit MMMV Motivation Equity Impacts TRAIL & GBL Partitions Results Land Social Group Inequality Mechanisms Conclusion Thank you! MMMV (Mar 2017) Equity Impacts of Targeting Credit Mar 2017 50 / 50