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Dangers of a Double-Bottom Line: A Poverty Targeting Experiment Misses Both Targets

Author

Listed:
  • Dean Karlan
  • Adam Osman
  • Jonathan Zinman

Abstract

Two for-profit Philippine social enterprises, aiming to demonstrate corporate social responsibility by increasing microlending to the poor, incorporated a widely-used poverty measurement tool into their loan applications and tested the tool using randomized training content. Treated loan officers were instructed why and how to use the tool for targeting; control group training merely labelled the tool “additional household information”. The targeting training backfired, leading to no additional poor applicants and lower-performing loans. Descriptive evidence suggests the targeting training exacerbated loan officer misperceptions and multitasking problems. Our results help explain why corporate social responsibility efforts are often siloed from core operations.

Suggested Citation

  • Dean Karlan & Adam Osman & Jonathan Zinman, 2018. "Dangers of a Double-Bottom Line: A Poverty Targeting Experiment Misses Both Targets," NBER Working Papers 24379, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24379
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    References listed on IDEAS

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    1. Vivi Alatas & Abhijit Banerjee & Rema Hanna & Benjamin A. Olken & Julia Tobias, 2012. "Targeting the Poor: Evidence from a Field Experiment in Indonesia," American Economic Review, American Economic Association, vol. 102(4), pages 1206-1240, June.
    2. Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2015. "Memory, Attention and Choice," Working Paper 237951, Harvard University OpenScholar.
    3. Hanson, Andrew & Hawley, Zackary & Martin, Hal & Liu, Bo, 2016. "Discrimination in mortgage lending: Evidence from a correspondence experiment," Journal of Urban Economics, Elsevier, vol. 92(C), pages 48-65.
    4. Cull,Robert J. & Morduch,Jonathan J., 2017. "Microfinance and economic development," Policy Research Working Paper Series 8252, The World Bank.
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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