Research Themes

Behavioural Economics

Constraints to Female Entrepreneurship in Pakistan: the role of women's goals and aspirations

Researcher: Farah Said (Lahore School), Giovanna d'Adda (University of Milan), Mahreen Mahmud (University of Oxford) and Diego Ubfal (Bocconi University)

This research is funded by the International Growth Centre (IGC) and will be conducted in collaboration with National Rural Support Programme (NRSP). Evidence on the impact of microfinance loans on business outcomes shows that the effects are moderately positive, but not transformational, especially for women (Banerjee, 2013; Banerjee, Karlan, & Zinman, 2015). This is confirmed even when access to finance is coupled with business training (Gine and Mansuri, 2016, Berge, Bjorvatn and Tungodden, 2014), suggesting that other factors, beyond credit and knowledge constraints, reduce women's ability to start or grow a business.

Psychological and social factors, limiting female autonomous decision making and control over resources, have been cited as important obstacles to the impact of microfinance and business training programs (Jakiela and Ozer 2016, Field, Jayachandran and Pande, 2010, Field et al. 2015, De mel, Mckenzie and Woodruff 2014). Psychological factors include self-control problems, feeling incapable of resisting demands from peers and family members and low perceived self-efficacy. Social factors may include intra-household constraints on women's ability to work outside the home or interact with non-household members and lack of bargaining power. The study involves a RCT in Punjab, Pakistan to test for these two explanations directly through two interventions, one targeting women's aspirations, and the other focusing on their ability to achieve objectives. This study will determine which of these psychological elements, combined with microcredit loans, can lead to enterprise creation and improve business outcomes.

Status: Fieldwork ongoing, expected to finish by December 2018.
Expected publication: June 2019.

Behavioural insights for evidence-based policy making - impact of depression intervention on individual preferences

Researcher: Farah Said (Lahore School), Sonia Balhotra (University of Essex), Utteeyo Dasgupta (Wagner College & Fordham University) and Joseph Vecci (University of Gothenburg).

This research aims to use lab-in-the-field experiments to identify behavioural effects of depression on women. Among preferences that we expect are modified by depression or violence exposure are the valuation of agency, present-biasedness, risk-aversion and confidence.

This research is funded by the University of Essex .Depression is often associated with significant economic costs. For instance, depression is considered to reduce productivity by decreasing the motivation in performing everyday tasks or creating pessimistic views on returns on effort (de Quidt & Haushofer, 2016). However, economics literature does not provide us with any evidence quantify these effects. This research aims to use lab-in-the-field experiments to identify such behavioural effects of depression on economic decisions. Among preferences that we expect are modified by depression are risk-aversion, decisiveness, altruism, trust and effort.

Status: Piloting expected in May 2018; fieldwork in Sept-Oct 2018
Expected publication: June 2019.

Overcoming Constraints to Giving

Researcher: Haman Ahmed (Lahore School), Kate Vyborny (Duke University) and Sadia Hussain (Lahore School)

In this study we propose a lab experiment to test (i) how potential donors respond to additional information; and (ii) whether their response to additional information varies if charitable giving is framed religiously or if giving decisions are made public. We study the impact of information on three aspects of donor behaviour: their perceptions about quality of recipient organizations, choice of organizations to donate to, and amount of donations. (Expected in 2019).

Pressures from peers and spouses and self-control problems as constraints to microenterprise growth: Experimental evidence from Pakistan

Researcher: Farah Said (Lahore School), Uzma Afzal (Lahore School), Marcel Fafchamps (Stanford University) and Giovanna d'Adda (University of Milan).

This study will assess the role of self-control problems and peer pressures on take-up and use of a financial product by female micro-entrepreneurs in Pakistan by combining laboratory and field experiments. The project received International Growth Centre (IGC) funding in March 2015 and experimental sessions were carried out in Chakwal in April-May 2015. A second round of experiments was conducted in April 2017.

Results indicate that female involvement in household decision making is decreasing in the importance of the decision, a. Authors find no evidence that women have pent up demand for agency. Instead, women are less willing to pay for agency when facing an unknown man. This evidence suggests that women in the study population have internalized gender norms, and that these norms regulate interactions between genders most strongly outside of the household.

Status: Fieldwork completed, data analysis under way. Preliminary results presented in various seminars in the US, SEEDEC 2018 (expected).
Expected publication: Oct 2018.

Institutional capacity as an organizational challenge: a field experiment in Pakistan

Researcher: (Hamna Ahmed (Lahore School), Simon Quinn (University of Oxford), Kate Vyborny (Duke University) and Asha Gul (University of New South Wales)

This project is a novel field experiment involving a large donor organization and over 800 recipient community organizations across Pakistan. The project involves two components: The first component aims to study whether community organizations can be incentivized to improve their performance through: (i) systematic self-assessment and reporting of defined Key Performance Indicators (KPIs), and (ii) A transparent non-financial rewards scheme based on these KPIs. Pakistan Poverty Alleviation Fund (PPAF) and International Growth Centre (IGC) have funded this component of the project. Initiated in 2014, four rounds of reporting and incentives for recipient organizations have been completed to date.

The second component of the project will explore (i) how each part of a large, complex organization (the donor) responds to new information on performance (of recipient community organizations) on KPIs; (ii) How the responses of both donor and recipients to new information and incentives relate to organizational characteristics of theoretical importance, including divergence of preferences between members of the organization; communication costs between parts of the organization; and decentralization of decision-making authority. This part will build on an existing initial stage of the research carried out in component 1 of the project. National Science Foundation (NSF) is providing support that will allow the continuation and strengthening of Component 1 and expansion of the scope of the study to cover component 2. A first pilot of this component was carried out in February 2018. The full experiment will be carried out in summer while the endline survey for the study is scheduled for fall of this year.

Hamna Ahmed and Kate Vyborny presented some initial findings from this project at PPAF's second international research conference to deliberate converting Knowledge to Action, held in Islamabad in April 2017.

Overcoming Constraints to Female Labor Force Entry

Researcher: Hamna Ahmed (Lahore School), Mahreen Mahmud (Lahore School), Farah Said (Lahore School) and Zunia Tirmazee (Lahore School)

The project has been funded by the Private Enterprise Development in Low-Income Countries (PEDL) Exploratory grant, 2017. This study is a randomised controlled trial to test the impact of two low-cost interventions to overcome psychological and information constraints to female labor force participation (FLFP). The research questions that this project aims to address are, (i) does motivating female students and (ii) does providing information about the job market, promote female labor force entry.

The project focusses on female students, in their final year undergraduate degree, and enrolled in women only Public colleges in urban Lahore, the second largest metropolitan city in Pakistan, comprising of approximately 11 million people. While socioeconomic background, information on available jobs and job skills are significant determinants of entry into the labor market (Humphrey et al 2009; Jenson, 2012); studies have shown only modest impacts of job search assistance and skills training on employment and wages (McKenzie 2017).

Further, skills training programmes in particular often suffer from low enrolment (Cheema et al., 2012, 2015) and high cost (Adhoho et al., 2014); suggesting it is time to think of new interventions that can complement traditional skills training programmes to promote employment. One possibility for these results may be presence of psychological barriers and low motivation as binding constraints to FLFP which this project aims to address.

Consanguineous Marriage and Investments in Children

Researcher: Theresa Chaudhry (Lahore School), Rabia Arif (Lahore School)

Hamilton's Rule (1964), taken from evolutionary biology, suggests that people will display greater altruism towards individuals that are more closely related to help ensure the survival of their own genes. Dr. Theresa Chaudhry (Lahore School) and Rabia Arif (Lahore School) are working on an analysis of the impact of consanguineous (first cousin) marriage on children, including child labor, household chores, education, and nutrition, to see whether children of cousin marriages may be the recipients of greater altruism due to the stronger genetic tie.

Results are showing that children of consanguineous parents are as likely to attend school, attend private school, and be engaged child labor as other children. Also, educational expenditures do not seem differ either between the two groups. However, children of consanguineous parents miss more school and do less work at home (especially boys) as compared to children of non-consanguineous parents.

Two Sides of the Same Rupee? Comparing Demand for Microcredit and Microsaving in a Framed Field Experiment in Rural Pakistan

Researcher: Farah Said (Lahore School), Uzma Afzal (Lahore School), Naved Hamid (Lahore School), Marcel Faffchamps (Stanford University), Giovanna d'Adda (University of Milan) and Simon Quinn (Oxford University)

The study is a Randomized Control Trial designed to compare the effectiveness of micro-savings and micro-loans as means for households to manage risk and liquidity.

This research is funded by the IGC and is conducted in collaboration with the National Rural Support Programme (NRSP) funded by the Department for International Development (DfID) and Economic and Social Research Council (ESRC). The study explores the role of commitment and reminders in product takeup and repayment. This project builds on existing research and pilots funded by the International Growth Centre (IGC) with a sample of microfinance clients of NRSP. Results indicate that for microfinance clients, savings and credit products are often substitutes, satisfying the same underlying demand for a regular schedule of deposits and a lump-sum withdrawal

Published Article: Afzal, Uzma and d'Adda, Giovanna and Fafchamps, Marcel and Quinn, Simon and Said, Farah, (2017). "Two Sides of the Same Rupee? Comparing Demand for Microcredit and Microsaving in a Framed Field Experiment in Rural Pakistan", The Economic Journal.

Microinsurance Demand after a Rare Flood Event: Evidence from a Field Experiment in Pakistan

Researcher: Farah Said (Lahore School), Uzma Afzal (University of Nottingham) Ginger Turner (World Bank)

This paper examines the characteristics that determine demand for microinsurance when individuals have personal or observed experience with a rare weather event: the severe 2010 flooding in Pakistan. Using a sample of 384 individuals (192 in flood-affected and 192 non-affected villages matched using pre-flood propensity data), we combine post-flood survey data with behavioural experiments to test the impact of prior loss experience on willingness to purchase insurance. In the framed experiment setting, we allow participants to choose insurance payments through many rounds of random flood losses, testing whether experiment behaviour is significantly related to real-world experience or observation and whether individuals change insurance demand after experiencing losses.

We find that 2010 flood-affected individuals demand significantly more insurance than non-affected individuals, and that both personal losses and observations of others' losses are significant determinants of demand, when controlling for location-specific flood propensity, pre-flood mitigation, information sources, post-flood assistance, exogenous changes in assets, potential migrant attrition and other household characteristics.

Having prior experience with less severe floods before the 2010 event also increases insurance demand, although the effect disappears when controlling for 2010 flood. Contrary to expectation, household beliefs that insurance is non-Islamic are not found to be a significant barrier to take-up.

Published Article: Turner, Ginger and Said, Farah and Afzal, Uzma, Microinsurance Demand After a Rare Flood Event: Evidence From a Field Experiment in Pakistan (August 4, 2014). Geneva Risk and Insurance Review, Vol. 39, No. 201-223, 2013.

RESEARCH