Trouble with pre-analysis plans? Try these three weird tricks
Development Impact blog, 12 July 2017
Pre-analysis plans increase the chances that published results are true by restricting researchers’ ability to data-mine. Unfortunately, writing a pre-analysis plan isn’t easy, nor is it without costs, as discussed in recent work by Olken and Coffman and Niederle. Two recent working papers — “Split-Sample Strategies for Avoiding False Discoveries,” by Michael L. Anderson and Jeremy Magruder (ungated here) and “Using Split Samples to Improve Inference on Causal Effects,” by Marcel Fafchamps and Julien Labonne (ungated and updated here) — propose some very clever refinements to address some of the challenges inherent in pre-analysis plans.
Read the blog by Owen Ozier.
Rural electrification: How much does Sub-Saharan Africa need the grid?
Let’s Talk Development blog, 11 July 2017
An intense debate continues on how best to provide electricity to the 1.1 billion people currently without access to it — of whom 600 million are living in Sub-Saharan Africa, many of them in rural areas. According to a 2015 IEG evaluation, low-access countries received about 3.6 billion USD per year into the electricity sector from all sources over 2000 — 2014. The bulk of these funds has gone into extension of the traditional electricity grid. The IEG report also states that to achieve universal grid access in current low-access countries by 2030 will require over 17 billion USD per year, including about 12 billion USD per year for new transmission and distribution capacity. An additional 20 billion USD per year will be needed to address current supply inadequacies and expand generation capacity to meet growing demand. The largest share of this investment would be in Sub-Saharan Africa, given the size of the population without access and the challenges of making effective infrastructure investments there (Foster and Briceño-Garmendia, 2010).
Read the blog by Michael Toman and Jörg Peters.
What does a game-theoretic model with belief-dependent preferences teach us about how to randomize?
Development Impact blog, 10 July 2017
The June 2017 issue of the Economic Journal has a paper entitled “Assignment procedure biases in randomized policy experiments” (ungated version). The abstract summarizes the claim of the paper:
“We analyse theoretically encouragement and resentful demoralisation in RCTs and show that these might be rooted in the same behavioural trait –people’s propensity to act reciprocally. When people are motivated by reciprocity, the choice of assignment procedure influences the RCTs’ findings. We show that even credible and explicit randomisation procedures do not guarantee an unbiased prediction of the impact of policy interventions; however, they minimise any bias relative to other less transparent assignment procedures.”
Of particular interest to our readers might be the conclusion “Finally, we have shown that the assignment procedure bias is minimised by public randomisation. If possible, public lotteries should be used to allocated subjects into the two groups”
Given this recommendation, I thought it worth discussing how they get to this conclusion, and whether I agree that public randomization will minimize such bias.
Read the blog by David McKenzie.
Measuring outpatient safety at scale: Infection prevention and control practices in Kenya
United Nations University blog, June 2017
Primum non nocere — first, do no harm. This most basic tenet of medical care is routinely violated in clinics and hospitals around the world today. But the absence of routine data means that when it comes to improving patient safety, we are often in the dark. Available studies frequently rely on self-reported data from healthcare workers, focus on a single domain such as hand hygiene and are based on small samples: one review found that only 10 of 41 studies on hand hygiene interventions were collected in more than one hospital!
Read the blog by Guadalope Bedoya and Jishnu Das.
Foreign banks and the international transmission of monetary policy
VoxEU blog, 6 July 2017
Monetary policies pursued by lending countries may have negative spillovers for financial stability in emerging markets, because monetary policy is transmitted through its effect on the aggregate supply of cross-border loans. This column uses data on the international syndicated loan market to argue that foreign bank ownership in a borrower country reduces the negative impact of lender-country monetary policy on cross-border syndicated loan supply. This suggests that countries could stabilise their cross-border credit supply by reducing restrictions on foreign bank entry into local markets.
Read the blog by Asli Demirgüç-Kunt, Bálint Horváth, and Harry Huizinga.
Globalization and banking
All About Finance blog, 5 July 2017
Since the global financial crisis of 2007, international banking has attracted heightened interest from policy makers, researchers, and other financial sector stakeholders. Perhaps no sector of the economy better illustrates the potential benefits — but also the perils — of deeper integration than banking. Before the crisis, international banks (banks that do business outside of the country they are headquartered in) were generally considered to be an important contributor to financial development as well as economic growth. This belief coincided with a significant increase in financial globalization in the decade prior to the crisis, particularly for banking institutions.
Read the blog by Asli Demirgüç-Kunt.
Industrial policies versus public goods to spur growth
Future Development blog, 29 June 2017
Ask finance ministers around the world what they are worried about, and they will likely reply “how to spur economic growth.” They all think they must do something, but the question is what exactly. In the aftermath of the economic crisis of 2008-2009, there has been a revival of interest in industrial policies as governments looked for ways to increase productivity in the face of severely constrained finance. Are industrial policies the best instrument to increase productivity? Or is investing in public goods a better use of scarce resources? Since the heydays of industrial policies in the 1960s, these questions have been hotly debated.
Read the blog by Norman Loayza.
Can temporary subsidies and agricultural extension build sustainable adoption?
Development Impact blog, 28 June 2017
A fair number of governments in developing countries support agricultural subsidy programs. One of the arguments for these subsidies is that there is some kind of market failure (information is often cited) that the subsidy is meant to overcome. So, that means when the subsidy is removed (which is the politically hard part), we should see adoption sustained. There isn’t much clear evidence on this, but two recent papers provide some insight.
Read the blog by Markus Goldstein.
Which features of procurement systems increase competition and reduce corruption?
Let’s Talk Development blog, 26 June 2017
Public procurement of services, works and supplies is estimated to account for 15–20% of GDP in developing countries, and up to 50% or more of total government expenditure. Efficient and effective procurement is vital to core government functions, including public service delivery and provision of infrastructure. Weaknesses in procurement systems can lead to large-scale waste of public funds, reduced quality of services, corruption, and loss of trust in government.
There is relatively little systematic evidence, however, on the links between procurement systems and procurement outcomes. A new Policy Research Working Paper adds to the evidence base, using data on almost 34,000 firms from the World Bank’s Enterprise Surveys, in 88 countries that also have data on procurement systems from PEFA (Public Expenditure and Financial Accountability) assessments conducted between 2011 and 2015. This study finds that in countries with more transparent procurement systems, where exceptions to open competition in tendering must be explicitly justified, firms are more likely to participate in public procurement markets. Moreover, firms report paying fewer and smaller kickbacks to officials in countries with more transparent procurement systems, with effective and independent complaints mechanisms, and with more effective external auditing systems. These findings — particularly on kickbacks — are robust to the inclusion of numerous controls and to a range of sensitivity tests.
Read the blog by Steve Knack.
Can universal basic income boost financial inclusion and transparency?
Future Development blog, 15 June 2017
The main argument for a universal basic income (UBI) is that it would reduce poverty and income inequality. Yet UBI advocates often overlook a range of other potential benefits. Digital UBI payments can bring people into the financial system and build their financial capability, unlocking a range of development benefits for citizens and governments alike.
Read the blog by Leora Klapper.
The active ingredient of inequality
Let’s Talk Development blog, 15 June 2017
In a post-Piketty world, few people need to be convinced that inequality is important. But which inequality do we care most about? Or, to paraphrase the title of Amartya Sen’s famous 1979 Tanner Lectures, “inequality of what”?
In an ideal world, what is it that ought to be (perfectly) equally distributed? I suspect that very few people would answer “income” or “wealth” to such a question. Of course, many of us might prefer incomes and wealth to be distributed less unequally than they currently are. But would people generally insist that a fair society is one in which everyone has exactly the same level of income, or wealth?
Read the blog by Francisco Ferreira.
Can Islamic finance boost financial inclusion?
Future Development blog, Thursday, June 8, 2017
Evidence suggests Islamic financial services can encourage Muslims to take advantage of banks and other formal financial institutions for services such as loans.
In a Muslim majority country like Jordan, offering a Sharia-compliant loan boosted application rates from 18 to 22 percent, according to a recent study by Dean Karlan, professor of economics at Yale University. Karlan spoke at a recent MENA Chief Economist Office Seminar Series entitled “Understanding Demand for Sharia-Compliant Financial Products.”
Generalizing this finding is not so straightforward. To begin, look at the data detailing penetration of formal financial services among adults in Muslim majority countries.
You’ll find that financial inclusion often falls short among Muslim-majority nations. According to the 2014 Findex Database, while 57 percent of adults in Turkey have a bank account, in Jordan the share is 25 percent, and in Pakistan just 13 percent.
Read the blog by Leora Klapper and Saniya Ansar.
A letter to Oxfam: Reframing the questions around private-sector health care
Future Development blog, 7 June 2017
As a researcher working on health and education over the last 15 years, I read your 2009 paper on the dangers of private health care in low- and middle-income countries with great interest. I admire the strength of your convictions, but worry that your inaccurate reading of the literature (“what do we know about private health care?”) detracts from your normative question (“what kinds of health systems should we aspire to in a world that is fair?”), leaving readers confused about what to believe.
To be clear, I agree that if we want a world where the poor can access high-quality care, private markets do not offer an easy “out” from much needed investments in the public sector. However, this is not because the private sector provides worse care than the public sector, as you suggest on Pages 19 to 21 of your report. All the available evidence (the little there is) suggests that primary care is either equivalent or higher quality in the private sector.
I support these claims in reverse.
Read the blog by Jishnu Das.
What do we know about the link between financial inclusion and inclusive growth?
All About Finance blog, 6 June 2017
Adults around the world and in all income groups use a variety of financial services, ranging from digital payments and savings accounts to loans and insurance. Many low-income adults, however, rely largely on informal financial services — 2 billion adults worldwide, or 38 percent, reported not having an account at a formal institution in 2014, according to Global Findex data. The World Bank has launched the ambitious goal of Universal Financial Access by 2020. This goal is not an end in itself. Rather, financial inclusion is a means to an end.
Which bring us to the question: What do we know about the link between financial inclusion and inclusive growth benefiting all income groups?
Read the blog by Asli Demirgüç-Kunt, Leora Klapper, and Dorothe Singer.
Global talent flows: Causes and consequences of high-skilled migration
Let’s Talk Development blog, 31 May 2017
Highly skilled workers play a starring role in today’s knowledge economy. They make exceptional direct contributions, including breakthrough innovations. As teachers, policy makers, and entrepreneurs they guide the actions of others. They propel the knowledge frontier and spur economic growth. In this process the mobility of skilled workers, within and across national borders, becomes critical to enhancing productivity. Using newly available data, a recent paper by Kerr, Kerr, Özden, and Parsons reviews the landscape of global talent mobility and discusses the causes and consequences of high-skilled migration.
Much attention has been paid to understanding the worldwide distribution of human capital and how global migration flows further tilt the deck against poor countries. The migration patterns we see today are the result of a complex tangle of firms and other employers pursuing scarce talent, governments trying to manage these flows through policy, and individuals seeking their best options given the constraints imposed on them. The central outcome, however, is clear: the flows of high-skilled migrants are very concentrated, both within and across national borders.
Read the blog by Caglar Ozden, Sari Kerr, William Kerr, and Chris Parsons.