Asia, Southeast

2013
Hanna, Rema, Vivi Alatas, Abhijit Banerjee, Benjamin A Olken, Ririn Purnamasari, and Matthew Wai-Poi. 2013. “Ordeal mechanism in targeting: theory and evidence from a field experiment in Indonesia”.Abstract

This paper explores whether ordeal mechanisms can improve the targeting of aid programs to the poor ("self-targeting"). We first show that theoretically the impact of increasing ordeals is ambiguous: for example, time spent applying imposes a higher monetary cost on the rich, but may impose a higher utility cost on the poor. We examine these issues by conducting a 400-village field experiment with Indonesia’s Conditional Cash Transfer program (PKH), where eligibility is determined through an asset test. Specifically, we compare targeting outcomes from self-targeting, where villagers came to a central site to apply and take the asset test, against the status quo, an automatic enrollment system among a pool of potential candidates that the village pre-identified. Within self-targeting villages, we find that the poor are more likely to apply, even conditional on whether they would pass the asset test. Exploiting the experimental variation, we find that self-targeting leads to a much poorer group of beneficiaries than the status quo. Selftargeting also outperforms a universal asset-based automatic enrollment system that we construct using our survey data. However, while experimentally increasing the distance to the application site reduces the number of applicants, it does not differentially improve targeting. Estimating our model structurally, we show that there are large unobserved shocks in the decision to apply, and therefore increasing waiting times to 9 hours or more would be required to induce detectable additional selection. In short, ordeal mechanisms can induce self-selection, but marginally increasing the ordeal can impose additional costs on applicants without necessarily improving targeting.

cid_working_paper_no._254_hanna_2012.pdf
Hanna, Rema, Vivi Alatas, Abhijit Banerjee, Benjamin A Olken, Ririn Purnamasari, and Matthew Wai-Poi. 2013. “Does Elite Capture Matter? Local Elites and Targeted Welfare Programs in Indonesia”.Abstract

This paper investigates the impact of elite capture on the allocation of targeted government welfare programs in Indonesia, using both a high-stakes field experiment that varied the extent of elite influence and non-experimental data on a variety of existing government transfer programs. Conditional on their consumption level, there is little evidence that village elites and their relatives are more likely to receive aid programs than non-elites. Looking more closely, however, we find that this overall result masks a difference between different types of elites: those holding formal leadership positions are more likely to receive benefits, while informal leaders are actually less likely to. We show that capture by formal elites occurs during the distribution of benefits under the programs, and not during the processes when the beneficiary lists are determined by the central government. However, while elite capture exists, the welfare losses it creates appear quite small: since formal elites and their relatives are only 9 percent richer than non-elites, are at most about 8 percentage points more likely to receive benefits than non-elites, and represent at most 15 percent of the population, eliminating elite capture entirely would improve the welfare gains from these programs by less than one percent.

cid_working_paper_no._255_hanna_2013.pdf
2012
Hanna, Rema, Vivi Alatas, Abhijit Banerjee, Arun G. Chandrasekhar, and Benjamin A. Olken. 2012. “Network Structure and the Aggregation of Information: Theory and Evidence from Indonesia”.Abstract

We use a unique data-set from Indonesia on what individuals know about the income distribution in their village to test theories such as Jackson and Rogers (2007) that link information aggregation in networks to the structure of the network. The observed patterns are consistent with a basic diffusion model: more central individuals are better informed and individuals are able to better evaluate the poverty status of those to whom they are more socially proximate. To understand what the theory predicts for cross-village patterns, we estimate a simple diffusion model using within-village variation, simulate network-level diffusion under this model for the over 600 different networks in our data, and use this simulated data to gauge what the simple diffusion model predicts for the cross-village relationship between information diffusion and network characteristics (e.g. clustering, density). The coefficients in these simulated regressions are generally consistent with relationships suggested in previous theoretical work, even though in our setting formal analytical predictions have not been derived. We then show that the qualitative predictions from the simulated model largely match the actual data in the sense that we obtain similar results both when the dependent variable is an empirical measure of the accuracy of a village’s aggregate information and when it is the simulation outcome. Finally, we consider a real-world application to community based targeting, where villagers chose which households should receive an anti-poverty program, and show that networks with better diffusive properties (as predicted by our model) differentially benefit from community based targeting policies.

cid_working_paper_no._246_hanna_2012.pdf
Alatas, Vivi, Abhijit Banerjee, Rema Hanna, Benjamin A. Olken, and Julia Tobias. 2012. “Targeting the Poor: Evidence from a Field Experiment in Indonesia.” American Economic Review 102 (4): 1206-1240. Publisher's VersionAbstract

This paper reports an experiment in 640 Indonesian villages on three approaches to target the poor: proxy-means tests (PMT), where assets are used to predict consumption; community targeting, where villagers rank everyone from richest to poorest; and a hybrid. Defining poverty based on PPP$2 per-capita consumption, community targeting and the hybrid perform somewhat worse in identifying the poor than PMT, though not by enough to significantly affect poverty outcomes for a typical program. Elite capture does not explain these results. Instead, communities appear to apply a different concept of poverty. Consistent with this finding, community targeting results in higher satisfaction.

american_economic_review_vol_102_no_4_hanna_2011_-_hks.pdf
Hanna, Rema, Sendhil Mullainathan, and Josh Schwartstein. 2012. “Learning Through Noticing: Theory and Experimental Evidence in Farming”.Abstract

Existing learning models attribute failures to learn to a lack of data. We model a different barrier. Given the large number of dimensions one could focus on when using a technology, people may fail to learn because they failed to notice important features of the data they possess. We conduct a field experiment with seaweed farmers to test a model of "learning through noticing." We find evidence of a failure to notice: On some dimensions, farmers do not even know the value of their own input. Interestingly, trials show that these dimensions are the ones that farmers fail to optimize. Furthermore, consistent with the model, we find that simply having access to the experimental data does not induce learning. Instead, farmers change behavior only when presented with summaries that highlight the overlooked dimensions. We also draw out the implications of learning through noticing for technology adoption, agricultural extension, and the meaning of human capital.

cid_working_paper_no._245_hanna_2012.pdf
2011
Singhal, Monica, and Benjamin A Olken. 2011. “Informal taxation.” American Economic Journal: Applied Economics 3 (4): 1-28. Publisher's VersionAbstract

Informal payments are a frequently overlooked source of local public finance in developing countries. We use microdata from ten countries to establish stylized facts on the magnitude, form, and distributional implications of this "informal taxation." Informal taxation is widespread, particularly in rural areas, with substantial in-kind labor payments. The wealthy pay more, but pay less in percentage terms, and informal taxes are more regressive than formal taxes. Failing to include informal taxation underestimates household tax burdens and revenue decentralization in developing countries. We discuss various explanations for and implications of these observed stylized facts.