- Email: [email protected]
Experiments for development: Editor’s introduction
J. Japanese Int. Economies xxx (2014) xxx–xxx
Contents lists available at ScienceDirect
Journal of The Japanese and International Economies journal homepage: www.elsevier.com/locate/jjie
Editorial
Experiments for development: Editor’s introduction This issue includes six papers presented at the conference on ‘‘Experiments for Development: Achievements and New Directions’’ sponsored jointly by the Tokyo Center for Economic Research (TCER), the National Bureau of Economic Research (NBER), the Centre for Economic Policy Research (CEPR), and National Graduate Institute for Policy Studies (GRIPS). The conference was held at the GRIPS (Tokyo, Japan) on March 18–19, 2013. The papers have gone through the regular refereeing process of the journal and have been revised on the basis of comments and discussion at the conference, as well as comments from anonymous referees. The overarching theme of the conference was to evaluate the accomplishment of the experimental approaches in development economics, which have become very popular during the last decade or so. In conducting experiments in development economics, it is considered ideal to use randomized controlled trials (RCTs). In reality there are many political and sociological hurdles that make pure RCTs difficult to implement. Thus, many RCTs are planned but not fully implemented. In the first paper in this issue, Francisco Campos, Aidan Coville, Ana M. Fernandes, Markus Goldstein, and David McKenzie point out that there are still some valuable lessons that we can learn from the experiments that never happened. By critically reviewing seven matching grants that they attempted in Africa but failed to complete, they find that continued project delays, politicians’ reluctance to allow random assignment, and low program take-up were all responsible for the failure. The paper also specifies some root causes of these problems, which are found in both the politics of the country and the way the experiment is designed. The experiment in Kenya that the next paper by Yukichi Mano, John Akoten, Yutaka Yoshino, and Tetsushi Sonobe reports is also a failed RCT. Although it did not turn out to be a pure RCT, the authors still succeed in making some important findings. The experiment provided a management training program featuring the basics of KAIZEN to small enterprises in a metalworking cluster in Nairobi. KAIZEN is a management technique that is practiced by many Japanese firms and emphasizes reduction of wasted work time and materials. Even after controlling for the bias coming from self-selection into the management training, the authors find that the participants of the training program increased sales revenues and profits. The paper by Tomoya Matsumoto reports results from a successful experiment in Uganda. The experiment started by giving out seeds for hybrid maze and chemical fertilizers, both of which were used by only few farmers in Uganda, for free to randomly selected farmers in selected villages. Then, the author’s team organized two rounds of sales workshops (in 2009 and in 2011) of the hybrid maze seeds and the chemical fertilizers for all farmers in both treated villages, where some farmers received those inputs for free in the first stage of the experiment, and control villages. They find the demand for the new seeds and the new fertilizers was substantially higher for the farmers who initially received those inputs for free. The paper also finds that the farmers who did not receive the free inputs but live http://dx.doi.org/10.1016/j.jjie.2014.03.003 0889-1583/Ó 2014 Elsevier Inc. All rights reserved.
2
Editorial / J. Japanese Int. Economies xxx (2014) xxx–xxx
in the treated villages showed somewhat higher demand for those inputs than the farmers in the control villages. The author concludes that farmers learn to adopt new technologies through both their own experience and social networks. Thus, social networks play the role of promoting innovations in this context. Social networks can also impede innovation and economic growth in some other contexts, according to the paper by Alex Oo and Russell Toth. Their conclusion is based on an experiment in rural Vietnam where they asked market trader women to play a ‘‘market game,’’ which consist of three stages. In the first stage called ‘‘no competition module,’’ where each player is paid according to her own performance of an effort task (solving simple arithmetic problems in this experiment). This module allows the authors to get an idea about individual ability of the player. Then, a player is paired with another player to play the second stage called ‘‘competition module.’’ In this module, the player’s payoff now depends on her performance relative to her partner as well. If a player solved two or more problems than her partner, she would earn half of her partner’s earnings in addition to her own. Finally, the game has the ‘‘punishment module,’’ where a player can commit to eliminate the payoffs for both players if she ‘‘loses’’ the competition. The paper finds that many players indeed committed to ‘‘punish,’’ and this motivated high-ability individuals to underperform intentionally. The authors point out that the finding is consistent with the idea that social pressure retards economic growth and innovation in developing countries. The paper by Hisaki Kono also uses some games to understand individual behavior and group interactions in developing economies. In the game, a player is endowed with a debt obligation and (randomly assigned level of) income. Then, the player gets to decide if he indeed repays the debt or not. If the income is larger than the debt, the player pockets the difference. Even when the player’s income is higher than the debt, he can decide to default strategically. The author compares two variations of what happens when a player defaults. In the ‘‘individual liability’’ case, the player is prohibited from playing further rounds of games after the default. In the ‘‘joint liability’’ case, the defaulted player can continue playing if the group of players (of either two or six individuals in this game) successfully repays the debts collectively. When the players do not have any idea on other players’ incomes, the joint liability game unsurprisingly produces more defaults than the individual liability game. When a commonly observed signal of the income that each player receives is introduced, the probability of default in the joint liability game is found to become as low as the individual liability game if the signal is sufficiently precise. In the final paper of this issue, Alistair Munro, Bereket Kebede, Marcela Tarazona, and Arjan Verschoor also study the social dynamics and group decision making but in a different level. They examine investment decisions of married couples in India and ask how different gender roles in different regions of India influence the efficiency of household investment. By conducting experiments in three locations in India (a rural location in the North, an urban location in the North, and a rural location in the South), the authors confirm the stylized observation that women in South India exhibit more autonomy compared with their Northern counterparts. They also find that the inefficiency of family investment resulting from asset hiding is more prevalent in the South. They do not find any significant difference between rural and urban areas in the North. The paper concludes by suggesting a potential trade-off between women’s autonomy and efficiency of family decisions. We thank Jim Poterba of NBER, Fukunari Kimura of TCER, and Keijiro Otsuka and Tetsushi Sonobe of the GRIPS for their support for the conference. We appreciate the administrative assistance provided by Brett Maranjian of the NBER and Kazuko Yamamura of the GRIPS. We also want to thank our anonymous referees. We are most grateful to the authors for their contributions, as well as to the discussants, Maria Socorro Gochoco-Bautista, Takashi Kurosaki, Yukichi Mano, Bhanupong Nidhiprabha, Keijiro Otsuka, Masahiro Shoji, and Yoshito Takasaki, all of whom made this conference stimulating. In particular, we acknowledge a financial support from JSPS Core-to-Core Program, B. Asia-Africa Science Platforms, JSPS Grant-in-Aid for Challenging Exploratory Research to invite overseas discussants.
Editorial / J. Japanese Int. Economies xxx (2014) xxx–xxx
3
Shin-ichi Fukuda The University of Tokyo, Japan TCER, Japan Takeo Hoshi Stanford University, USA NBER, USA TCER, Japan
Contents lists available at ScienceDirect
Journal of The Japanese and International Economies journal homepage: www.elsevier.com/locate/jjie
Editorial
Experiments for development: Editor’s introduction This issue includes six papers presented at the conference on ‘‘Experiments for Development: Achievements and New Directions’’ sponsored jointly by the Tokyo Center for Economic Research (TCER), the National Bureau of Economic Research (NBER), the Centre for Economic Policy Research (CEPR), and National Graduate Institute for Policy Studies (GRIPS). The conference was held at the GRIPS (Tokyo, Japan) on March 18–19, 2013. The papers have gone through the regular refereeing process of the journal and have been revised on the basis of comments and discussion at the conference, as well as comments from anonymous referees. The overarching theme of the conference was to evaluate the accomplishment of the experimental approaches in development economics, which have become very popular during the last decade or so. In conducting experiments in development economics, it is considered ideal to use randomized controlled trials (RCTs). In reality there are many political and sociological hurdles that make pure RCTs difficult to implement. Thus, many RCTs are planned but not fully implemented. In the first paper in this issue, Francisco Campos, Aidan Coville, Ana M. Fernandes, Markus Goldstein, and David McKenzie point out that there are still some valuable lessons that we can learn from the experiments that never happened. By critically reviewing seven matching grants that they attempted in Africa but failed to complete, they find that continued project delays, politicians’ reluctance to allow random assignment, and low program take-up were all responsible for the failure. The paper also specifies some root causes of these problems, which are found in both the politics of the country and the way the experiment is designed. The experiment in Kenya that the next paper by Yukichi Mano, John Akoten, Yutaka Yoshino, and Tetsushi Sonobe reports is also a failed RCT. Although it did not turn out to be a pure RCT, the authors still succeed in making some important findings. The experiment provided a management training program featuring the basics of KAIZEN to small enterprises in a metalworking cluster in Nairobi. KAIZEN is a management technique that is practiced by many Japanese firms and emphasizes reduction of wasted work time and materials. Even after controlling for the bias coming from self-selection into the management training, the authors find that the participants of the training program increased sales revenues and profits. The paper by Tomoya Matsumoto reports results from a successful experiment in Uganda. The experiment started by giving out seeds for hybrid maze and chemical fertilizers, both of which were used by only few farmers in Uganda, for free to randomly selected farmers in selected villages. Then, the author’s team organized two rounds of sales workshops (in 2009 and in 2011) of the hybrid maze seeds and the chemical fertilizers for all farmers in both treated villages, where some farmers received those inputs for free in the first stage of the experiment, and control villages. They find the demand for the new seeds and the new fertilizers was substantially higher for the farmers who initially received those inputs for free. The paper also finds that the farmers who did not receive the free inputs but live http://dx.doi.org/10.1016/j.jjie.2014.03.003 0889-1583/Ó 2014 Elsevier Inc. All rights reserved.
2
Editorial / J. Japanese Int. Economies xxx (2014) xxx–xxx
in the treated villages showed somewhat higher demand for those inputs than the farmers in the control villages. The author concludes that farmers learn to adopt new technologies through both their own experience and social networks. Thus, social networks play the role of promoting innovations in this context. Social networks can also impede innovation and economic growth in some other contexts, according to the paper by Alex Oo and Russell Toth. Their conclusion is based on an experiment in rural Vietnam where they asked market trader women to play a ‘‘market game,’’ which consist of three stages. In the first stage called ‘‘no competition module,’’ where each player is paid according to her own performance of an effort task (solving simple arithmetic problems in this experiment). This module allows the authors to get an idea about individual ability of the player. Then, a player is paired with another player to play the second stage called ‘‘competition module.’’ In this module, the player’s payoff now depends on her performance relative to her partner as well. If a player solved two or more problems than her partner, she would earn half of her partner’s earnings in addition to her own. Finally, the game has the ‘‘punishment module,’’ where a player can commit to eliminate the payoffs for both players if she ‘‘loses’’ the competition. The paper finds that many players indeed committed to ‘‘punish,’’ and this motivated high-ability individuals to underperform intentionally. The authors point out that the finding is consistent with the idea that social pressure retards economic growth and innovation in developing countries. The paper by Hisaki Kono also uses some games to understand individual behavior and group interactions in developing economies. In the game, a player is endowed with a debt obligation and (randomly assigned level of) income. Then, the player gets to decide if he indeed repays the debt or not. If the income is larger than the debt, the player pockets the difference. Even when the player’s income is higher than the debt, he can decide to default strategically. The author compares two variations of what happens when a player defaults. In the ‘‘individual liability’’ case, the player is prohibited from playing further rounds of games after the default. In the ‘‘joint liability’’ case, the defaulted player can continue playing if the group of players (of either two or six individuals in this game) successfully repays the debts collectively. When the players do not have any idea on other players’ incomes, the joint liability game unsurprisingly produces more defaults than the individual liability game. When a commonly observed signal of the income that each player receives is introduced, the probability of default in the joint liability game is found to become as low as the individual liability game if the signal is sufficiently precise. In the final paper of this issue, Alistair Munro, Bereket Kebede, Marcela Tarazona, and Arjan Verschoor also study the social dynamics and group decision making but in a different level. They examine investment decisions of married couples in India and ask how different gender roles in different regions of India influence the efficiency of household investment. By conducting experiments in three locations in India (a rural location in the North, an urban location in the North, and a rural location in the South), the authors confirm the stylized observation that women in South India exhibit more autonomy compared with their Northern counterparts. They also find that the inefficiency of family investment resulting from asset hiding is more prevalent in the South. They do not find any significant difference between rural and urban areas in the North. The paper concludes by suggesting a potential trade-off between women’s autonomy and efficiency of family decisions. We thank Jim Poterba of NBER, Fukunari Kimura of TCER, and Keijiro Otsuka and Tetsushi Sonobe of the GRIPS for their support for the conference. We appreciate the administrative assistance provided by Brett Maranjian of the NBER and Kazuko Yamamura of the GRIPS. We also want to thank our anonymous referees. We are most grateful to the authors for their contributions, as well as to the discussants, Maria Socorro Gochoco-Bautista, Takashi Kurosaki, Yukichi Mano, Bhanupong Nidhiprabha, Keijiro Otsuka, Masahiro Shoji, and Yoshito Takasaki, all of whom made this conference stimulating. In particular, we acknowledge a financial support from JSPS Core-to-Core Program, B. Asia-Africa Science Platforms, JSPS Grant-in-Aid for Challenging Exploratory Research to invite overseas discussants.
Editorial / J. Japanese Int. Economies xxx (2014) xxx–xxx
3
Shin-ichi Fukuda The University of Tokyo, Japan TCER, Japan Takeo Hoshi Stanford University, USA NBER, USA TCER, Japan