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Substitution Bias and External Validity: Why an Innovative Anti-poverty Program Showed no Net Impact

  • Morduch, Jonathan
  • Ravi, Shamika
  • Bauchet, Jonathan

The net impact of development interventions can depend on the availability of close substitutes to the intervention. We analyze a randomized trial of an innovative anti-poverty program in South India which provides “ultra-poor” households with inputs to create a new, sustainable livelihood. We find no statistically significant evidence of lasting net impact on consumption, income or asset accumulation. Instead, income from the new livelihood substituted for earnings from wage labor. A very similar intervention made a large difference elsewhere in South Asia, however, where wage labor alternatives were less compelling. The analysis highlights the roles of substitution bias and dropout bias in shaping evaluation results and delimiting external validity.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/25931/1/wp2013-3.pdf
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Paper provided by Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University in its series CEI Working Paper Series with number 2013-03.

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Length: 57, 14 p.
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:hit:hitcei:2013-03
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  1. AfDB AfDB, . "AfDB Group Annual Report 2010," Annual Report, African Development Bank, number 310, 7.
  2. Matin, Imran & Hulme, David, 2003. "Programs for the Poorest: Learning from the IGVGD Program in Bangladesh," World Development, Elsevier, vol. 31(3), pages 647-665, March.
  3. Anirudh Krishna & Meri Poghosyan & Narayan Das, 2012. "How Much Can Asset Transfers Help the Poorest? Evaluating the Results of BRAC's Ultra-Poor Programme (2002--2008)," Journal of Development Studies, Taylor & Francis Journals, vol. 48(2), pages 254-267, May.
  4. AfDB AfDB, . "Annual Report in Brief 2010," Annual Report, African Development Bank, number 304, 7.
  5. Jishnu Das & Stefan Dercon & James Habyarimana & Pramila Krishnan & Karthik Muralidharan & Venkatesh Sundararaman, 2013. "School Inputs, Household Substitution, and Test Scores," American Economic Journal: Applied Economics, American Economic Association, vol. 5(2), pages 29-57, April.
  6. Mallick, Debdulal, 2009. "How effective is a Big Push to the Small? Evidence from a Quasi-random Experiment," MPRA Paper 22824, University Library of Munich, Germany.
  7. Angus Deaton, 2010. "Instruments, randomization, and learning about development," Working Papers 1224, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  8. Hunt Allcott, 2012. "Site Selection Bias in Program Evaluation," NBER Working Papers 18373, National Bureau of Economic Research, Inc.
  9. AfDB AfDB, . "AfDB Group Annual Report 2010 (Arabic)," Annual Report, African Development Bank, number 311, 7.
  10. James Heckman & Neil Hohmann & Jeffrey Smith, 1998. "Substitution and Dropout Bias in Social Experiments: A Study of an Influential Social Experiment," UWO Department of Economics Working Papers 9819, University of Western Ontario, Department of Economics.
  11. M. Shahe Emran & Stephen C. Smith & Virginia Robano, 2009. "Assessing the Frontiers of Ultra-Poverty Reduction: Evidence from CFPR/TUP, an Innovative Program in Bangladesh," Working Papers 2009-06, The George Washington University, Institute for International Economic Policy.
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