Education: Small changes can make a big difference

Recently I read a New York Times editorial written by Richard Nesbitt, a leading social psychologist who teaches at the University of Michigan. In this article, Nesbitt discusses the power that small influences can have on children’s success in school and educational growth. For example, taking students through life-planning exercises, in which they detail obstacles they will face and how they plan to overcome these challenges, can help improve student performance. This example is further explained in the article excerpt below.

“Daphna Oyserman, a social psychologist at the University of Michigan, asked inner-city junior-high children in Detroit what kind of future they would like to have, what difficulties they anticipated along the way, how they might deal with them and which of their friends would be most helpful in coping. After only a few such exercises in life planning, the children improved their performance on standardized academic tests, and the number who were required to repeat a grade dropped by more than half.”

Several other innovative practices, such as asking students to complete writing assignments that detail their most important values to more intensive early education efforts (which included teacher visits to students homes for 90 minutes each week) similarly improved disadvantaged students’ performance.

In the context of India, there are fundamental issues, such as teacher attendance, that need to be addressed. But that said, there are approaches that can, and are, being taken to improve educational performance for students. For example, Neerja Raman discusses three schools that are using unique strategies to teach and inspire their students in her blog. Below are quick descriptions of two of the organization Ms. Raman highlights:
1. Riverside School in Ahmedabad – Focuses on social justice and experiential learning to help both affluent and poorer students understand the impact of their actions.
2. Manzil – A youth empowerment and learning center in New Delhi. Operating out of the founder’s home, Manzil is a unique resource designed for local low-income youth. It offers classes in traditional subjects, but also fosters the creative arts and leadership capacity building to provide a more holistic approach to critical thinking and learning.

I am not sure how well these programs work, but it’s worth evaluating leading educational innovations such as these to learn more about approaches that should be scaled up in India. Moreover, it makes sense for us to think a little outside the box when trying to come up with ways to improve student educational attainment. As Nesbitt demonstrates in his Times article, small changes can make a big difference.

I'd love to hear about other innovative education programs in India that any of you are aware of . . .

Bridging the Gap between Microfinance Research and Practice

This weekend the Centre for Micro Finance hosted ten Indian scholars from across the country for the Microfinance Researchers Alliance Program's (MRAP) inaugural workshop.

The purpose of MRAP is the narrow the gap between Indian academics interested in studying and researching microfinance, and the needs and problems that face practitioners in the field. The program will last for three years with the objective of building the capacity of participants to produce high-quality research that is relevant to the sector.

The first workshop focused on how to choose a relevant research question and how to design a rigorous questionnaire. Participants brainstormed on and discussed the topics with CMF Executive Director Justin Oliver and Program Head Amy Mowl as well as with each other. Next steps for the program include site visits for participants with practitioners to nuance their knowledge of microfinance issues. MRAP is funded by the Ford Foundation.

Should Randomistas Rule?

After a brief lull, the debate over randomistas seems to have revived itself. Martin Ravallion’s interesting short article, 'Should the Randomistas Rule?', is a sharp indictment of the tendency to allow the method to overcome the questions we need to ask of development interventions. I highly recommend the article for a thorough read, and shall leave you with some highlights: (1) Randomizing the selection of projects and locations for randomized control trials (RCT) is unlikely; (2) variations in ‘take-up’ in treatment populations a serious problem and challenge claims of internal validity; (3) spill-over effects and ‘corruption’ of control populations is also a serious challenge to the robustness of the study; and (4) the problems with external validity, a criticism that has been done to death when arguing against RCTs

However, the point I found most striking is probably one of the most obvious ones (that my dumb brain probably knew but never articulated): An intervention tested using an RCT ‘mixes low-impact people with high-impact people’; and in complete contrast, an actual intervention will tend to have higher representation from the high impact type of people because it will be non-random and scaled up. This then completely alters the nature of the intervention itself and its potential for change through the positive externalities it creates.

Strategic Honesty

Apparently, the cynical view that bureaucrats always extract the maximum amount in bribes and other forms of fraud is incorrect. They tend to be a bit more strategic than that. According to a new paper by Paul Niehaus and Sandeep Sukhtankar,

We study dynamic incentives for corruption in one of the world's largest public transfer programs, India's National Rural Employment Guarantee Act. We uncover large-scale embezzlement along multiple margins: theft from beneficiaries and theft from taxpayers. Using changes in statutory program benefits as instruments, we then test a simple, dynamic model of rent extraction. We find evidence for a “golden goose" effect: when expected future opportunities for rent extraction are high, officials extract less rent today in order to preserve tomorrow's opportunities.

Aside from the main conclusion described above, the paper is notable in that it is first effort (to my knowledge) to estimate one form of corruption (labour corruption) in NREGA across an area larger than a single block. While the overall estimates of the incidence of labour corruption are extremely high (you’ll have to read the paper to find out exactly how high), it’s important to remember that this is for an area in Orissa in which social audits had already revealed very high levels of corruption. Further, the fact that Paul and Sandeep are able to get a reasonably accurate estimate of this form of corruption does at least stand as a testament to the transparency measures included in the program.

Lastly, my favourite sentence from the paper:

Hence, out of the original sample of 1; 938 households, we were unable to make attempts to reach 439, mainly due to an incident which caused tensions between a mining company and locals in Rayagada and a polite request by Maoists to not enter certain areas of Koraput.

The Bourgeois and “Loose” Rise Up: Plus Other Links

- As a hedonist, I am absolutely loving the Indian upper class reaction to “the un-Hindu acts of violence against pub-going women in Mangalore by the Sri Ram Sene.” Now if only we could translate this sort of political consciousness and creativity (i.e sending pink panties to Pramod Muthalik, chief of the Sene) to corruption or providing healthcare.

- The Business Standard, which is quickly surpassing The Hindu as my favorite Indian daily, ran another fun article about V-Day protests in which Kishore Singh encourages his daughter to go out drinking and throw her shoes Iraqi journalist style at any one who tries to stop her. The column is written as an open letter to the Sri Ram Sene. An excerpt below:

As further proof of my shamefulness (or shamelessness, if you prefer), I’ve let her order a dress just for the party this evening. I haven’t seen it yet, but once again — for your sake, of course — I hope it’s sufficiently provocative to draw your ire. But remember, diminutive though she might look, my daughter is fully capable of throwing the boots she intends to also wear tonight, with deadly accuracy. I hope you have trained your army of hooligans to duck, and duck fast — we don’t want the upholders of Indian morality to get injured in the line of duty, do we?

- Thomas Friedman must be all starry eyed about Indians. First they explain to him how fix the financial crisis, and then only a few days later how to save the environment.

- James Surowiecki of the New Yorker describes the behavioral economics behind the tax rebates in the recently passed stimulus and why Obama may have it right.

- Statistics on internet usage by Indians from The Hindu.

- Its what we have all been waiting for. L.K. Advani has finally entered the blogosphere. Honestly though, it is quite engaging.

Easterly blog

Aid community watch out!! Easterly enters the blogosphere.

Scroll down to see his post on the refugee-run at Davos.

The Rs. 500 Laptop: What is it Good For?

I'm late in talking about the new $20 Sakshat laptop, but I wanted to mention two issues that seem to have been overlooked in the euphoria over what some are calling a "revolution in education" (and the initial scepticism): The political economy of distribution; and the effectiveness of using laptops in education to begin with.

While the idea of producing a laptop is great for general access to computing in India and across the developing world, providing these laptops through public channels creates issues of its own. We're struggling to identify the best way to deliver wages for work completed through the NREG, do we expect these "irregularities" to disappear when we are disbursing laptops? The "how" of implementation is just as important as the "what."

Regardless of distribution issues, our main concern should be whether computers in the classroom actually improve educational outcomes and learning. The evidence so far is unbelievably ambiguous (The good news, the bad, and worse [all PDFs]). Before throwing money into scaling up what is admittedly a very exciting development, maybe we should be sure whether the idea works?

Links I liked

• Finally, a group brave enough to stand up to the annual display of immorality that is Saint Valentines Day. At least someone’s got their priorities straight.
• Angus Deaton questions the gospel of randomized evaluations. In my opinion, randomized evaluations are the worst method of gathering information on program effectiveness -- except for all the other methods that have been tried. Deaton gives some good reasons why results from randomized evaluations may not be as watertight as many assume, but reading his article didn't lead me to fundamentally alter that opinion.
  
• America's fiscal deficit miraculously plugged
  

Qoute of the Day

The main difference between a farmer today and a farmer 50 years ago is that today’s farmer has a mobile phone.

Made by Dr Ganeshan, principal scientist at the Indian Institute of Horticulture Research, during a seminar at IFMR on knowledge dissemination in agriculture.

Inclusive Growth

As you can probably soon tell from this post, I am a newcomer to the bloggers' field, but am taking a risk and trying to overcome this fear of unkown by posting something now.

I wanted to share a brief note which I recently prepared on "Inclusive Growth" answering the following four questions by summarizing what has been written on this topic:

1. What is Inclusive Growth

2. How to measure it

3. How has India fared against these measures, and

4. What works

Below is the Executive Summary, but if anyone is interested, I can e-mail a copy of the paper upon request. A better developed version will be posted on the CDF website.

India’s post 1990’s economic growth has made it one of the world’s fastest growing economies in the world. Its GDP growth rates of up to about 9% in the last few years is historically unparalleled except by the neighboring China. With the rapid growth rates, however, come new challenges and new questions. One such challenging question concerns the spread of the benefits of growth across different segments of society.
To ensure that growth has been well distributed, India’s Planning Commission has made Inclusive Growth their explicit goal in the eleventh five-year plan. The concept of Inclusive Growth has dominated discussions across India. Its popularity has sparked intense discussions among politicians, economists, policymakers and the general public. In addition, Inclusive Growth has been the focus of studies by bilateral and multilateral aid agencies such as the UN, World Bank, Asian Development Bank, Foundations such as the ICICI Foundation, NGOs, and Civil Society Organizations alike. For instance, UNDP recently called “What is Inclusive Growth” the “million dollar question.”
Despite all the attention that Inclusive Growth has received in the last few years, there lacks a precise and agreed upon definition of the term. Overall, the literature is divided between two concepts a) whether the benefits reach the poor and b) whether the benefits reach the poor proportionately more than it reaches the non-poor. By the first definition, India may have performed quite remarkably in the last two decades, although the magnitude is hotly debated. By the second definition, India’s performance against inclusive growth seems more lackluster. Gini coefficient, a measure of income inequality, indicates that income inequality in India has increased both at an overall level as well in almost all of the states both for urban and rural areasTo address these challenges going forward, evidence suggests that there are a number of macro and micro level interventions that are poverty reducing and thus conducive to Inclusive Growth. At macro level, there is little doubt about the usefulness of the augmented Washington Consensus (Rodrik, 2006). At micro level, evidence suggests that improving the following factors will help accelerate poverty reduction: reduction of inequality, not limited to income inequality, access to public infrastructure and services especially health and education, access to markets, accountability and voice, good governance, and the role of civil society organizations, women empowerment.

Yet Another Exciting Initiative from the IFMR Trust Guarantee Company

Masuta Producers' Company Limited

The purpose of the proposed partnership between IFMR Trust and Masuta is to put in place a lending and operating structure that will sharply reduce the cost of funding for the producers of tasar.
The pilot phase will constitute funding for 13 MBTs (Mutual Benefit Trust) having approximately 300 women producers within a pocket in Jharkhand state.
The total funding requirements in the pilot phase is estimated to be Rs.75 lakh, which includes Rs.40 lakh for cocoon purchasing by producers and Rs.35 lakh for working capital requirement of MPCL (Masuta Producers' Company Limited).
The entire financing amount of Rs.75 lakh will be made directly to women producers of MBT. The women members (each “Client”) will be enrolled so as to capture detailed information like name, address, occupation, purpose of loan, amount of loan sanctioned and total amount produced. The system will also record movement of cash and inventory on a periodic basis. The cost of enrollment will have to be included in the total cost of providing the loans.


Structure of the Loan: IFMR Trust will structure the loan as a “commodity backed financing product” under which:

a. The cocoons will be stored in warehouses managed by Masuta (the “Commodity”).
b. Warehouse receipts will be issued by Masuta which certify the quantity and quality of the Commodity being held (the “Collateral” will consist of the specific Warehouse Receipt and the Commodity underlying such Warehouse Receipt)
c. The loan will be extended to each woman MBT producer and is secured by the respective Collateral1 (the “Warehouse Receipt backed Loan”)
d. As the Loans are made for the purpose of direct agriculture2 and fit the necessary criteria, they should benefit from cheaper interest rates available for “direct agriculture priority sector” eligible assets.
e. The warehousing of raw material and work in progress will be managed by Masuta.
-- Masuta will provide a guarantee on the quality, quantity and storage of the Collateral to the lender
f. Masuta will provide the administrative services related to the loan such as disbursements, documentation, data collection, information systems, collections and collateral management
g. The Loans will be pooled into portfolios (the “Warehouse Receipt Loan Portfolio”) and purchased by the IFMR Trust Guarantee Company at a mutually agreed price, provided the origination process meets the underwriting guidelines for warehouse receipt backed loans

Capital structure:
- Masuta will provide the equity contribution which finances the construction and operation of the warehouses. Masuta already owns the existing warehouses, however, additional warehouses will likely be required in the expansion of this programme after the pilot.
- Masuta will fund the first loss pieces (expected to be in the region of 10 to15 %) of the Warehouse Receipt Loan Portfolio.
- Debt financing will be provided via purchase of warehouse receipt backed loan portfolios that fulfill IFMR Trust Guarantee Company’s underwriting guidelines. These guidelines will be developed jointly with Masuta and in keeping with industry standards.
7. The detailed terms and conditions for the Warehouse Receipt backed Loan such as pooling of assets, lending processes and repackaging of the Warehouse Receipt Loan Portfolio into securities will be worked out by IFMR Trust.

Current Financing Structure:





Repayment Undertaking:
a. The member MBTs assess their annual requirements of cocoons well ahead of its harvest and inform Masuta.
b. The microfinance branch within Masuta takes loans from banks and other institutions and does bulk procurement of raw materials i.e. tasar cocoons. Masuta purchases cocoons on behalf of the MBTs making full payment on their behalf and providing the supply of the tasar cocoons to each MBT.
c. The loans are generally 6 month to 24 months in duration and are unsecured.
d. In Masuta’s books, the price of cocoons is advanced to the MBT's account.
e. Yarn is produced by producers from cocoon and sold to Masuta. Masuta makes payment to producers.
f. Principal plus interest amount of loan is reduced from final payment and balance amount is paid to producers by Masuta. Masuta takes 'undertaking' from MBTs for it.
g. Masuta pays principal plus interest amount to bank.
h. There is no separate corporate loan for Masuta's own working capital requirement currently.

Proposed Financing Structure:






i. IFMR Trust will extend the Rs.75 lakh loan directly to the 13 MBTs for cocoon purchasing and working capital requirements of Masuta3. The use of proceeds will be as follows:
a. Rs.40 lakh for cocoon purchasing by producer members of each MBT. This loan will be secured by the Commodity and the Warehouse Receipt (the “Warehouse Receipt backed Loan”)
b. Rs.35 lakh to be on lent to Masuta by MBT for its working capital requirements. This loan will be secured by the yarn inventory and receivables from end buyers of tasar silk yarn (the “Working Capital Loan”).
ii. Repayment of the loan
1. The Warehouse Receipt backed Loan will be repaid via sale proceeds of silk yarn from Masuta to the MBT.
2. The Working Capital Loan will be repaid via the sale of silk yarn by Masuta to the end buyer.
3. MBT will outsource raw material(cocoon) procurement process to Masuta.
d. Masuta will provide 'guarantee' on the entire loan amount given to MBTs.
Benefits for Masuta:
a. Steady availability of working capital financing will enable Masuta and the producer’s cooperatives to scale up its operations via long term financial planning
b. Reduction in the cost of funding by
o risk pooling
o structuring loans that are eligible as “direct agriculture priority sector assets”
c. Streamlining of processes and operations will reduce variable costs and mitigate operational risk
d. Diversification in sources of funding to mainstream capital markets investors

Links For Your Reading Pleasure

its been awhile since Ive posted. here are some links ive come across recently you may find interesting.

call me a skeptic. Launced today, coming soon to India - a $10 laptop. So says Wired. (Though FT.com had it at $20). Called the "Sakshat", it seems significantly lower then the now well known $100 Laptop per child.

A Stimulus Package for the World. NYT Op-Ed from Bob Zoellick

This one isn't India specific, but a nice article in NY Review of Books on the financial 'crisis'. (Hey there are enough microfinance posts on here, we can deal with the occasional interesting link)

Arvind Panagariya in FP on "India's Secret Financial Weapon"

Amartya Sen (The New Republic) on the Universal Declaration of Human Rights.

In my free time, I dont seem to get around to much non-fiction these days. But a good book Im wrapping up soon is Helen Epstein's "The Invisible Cure: Why We Are Losing the Fight Against AIDS in Africa" (amazon link). Heres a link to the review from Bill Easterly in NY Review of Books (from CGD website), and a post on the book from the Centre for Global Development.

Optimizing Microfinance Delivery Channel: Scope and Limits

There is has always been an intense debate within the sector on the scope and limit of optimizing microfinance delivery channels for microfinance ‘plus’ services. This debate focuses mainly on how much practitioners can leverage the microfinance supply chain to address other needs (like health, education etc) of clients. Questions on the topic include, what works and what does not work and in what context? What would be the predicted impact on the microfinance supply? What are the risks that might be associated with it? What would be the implications on MIS, and HR requirements? All of these are big questions that have yet to receive appropriate answers. The recently organized conference by CMF-CAB on “Microfinance: From Research to Practice” gave some insights on the subject.

Mr. Daniel Kopf, RA, (CMF) shared preliminary results of the research project on ‘Fighting Malaria with Microfinance: Impact on Health and Productivity and Determining Willingness to Pay.’ The experimentation of tying-up the ‘insecticide treated bed nets’ with loan contract to address the malaria issues of BISWA (a NGO-MFI) clients in 150 villages across five districts of Orissa brought some optimistic insights. The study tries to answer the question of whether selling ITNs on loan contracts to microfinance clients increases ownership and usage and improves health outcomes? Could distributing nets freely to their clients be an efficient use of resources for MFIs, or an efficient use of grant funding? Could ITNs increase the repayment ability and debt capacity of microfinance clients? And could microfinance distribution channels be used to provide badly needed health products?

The preliminary result shows nearly 60% of SHG members offered the opportunity to buy ITNs through micro-credit did purchase at least one net. A market for ITNs sold on credit exists and it is possible this delivery mechanism could be a powerful tool. However, until now, self-reported data on net usage does not indicate that those who purchased nets are more likely to use them than those who were given the nets for free.

Consumer Preference: Given the choice of purchasing nets on cash and paying no interest versus paying 20% interest and being given a year to make repayment, 97% of nets purchased were purchased on credit. Approximately half the purchased nets were bought with the additional treatments facilities at a cost of 30 more rupees, while the other half were bought without such additional treatment. Analysis of household traits and beliefs has led the researchers to believe that the choice of contract may be random. The implication of this would be that perhaps BISWA should have only offered the contract that included two re-treatments and purchasing decisions would not have been greatly affected.

Social Networks and Community Effects: During the study it was observed that supplying nets through SHGs may have an impact on the community beyond just SHG members. These impacts could include raising the profile of the MFI or bank which delivered nets, and creating a new customer base because of the improved health of other community members.

Lessons learned from ITN sales are that loan officers’ capacities and skills influence success. Staff incentives, substantial training or parallel structure may be needed. Perhaps the product should be integrated into current loan structure; perhaps sale should de done concurrently with distribution of loan, particularly if the product being sold is inexpensive compared to the larger loan. Collecting small repayments can be expensive and time consuming for loan officers. For very inexpensive products it may only make sense to offer the product on cash, and not take on the transaction costs of offering the product on credit.

The CAB-CMF conference hosted two expert practitioners who raised significant concerns and reactions to the study. Mr. Breloff, SKS, raised his concern on the risk associated with microfinance plus services where the MFI has to deal with a third party like insurance company or ITN supplier. The key task in such a context is to maintain the quality of plus-services (in such case, which is often the third party’s responsibility). Additionally, the requirement of capacity building of credit officers, adjustment at management and information system, and managing the regulatory risk are some of the key aspects that also must be taken into account. Also, in dealing with non-core products, credit officer often struggle with the logistic and educating clients.

Dr. Datta, IGS, used the economic logic of using microfinance distribution channels to provide multiple services. The transactions costs that come from loan officers visiting villages or certain areas of a city are relatively fixed. If this staff member can provide many services instead of just one (e.g., credit), than the distribution channel is more efficient because the fixed costs would remain relatively constant. Moreover, customer loyalty may increase from receiving many services through one provider. That said, there are on-the ground realities that could negate the possible benefits of a microfinance institution (MFI) providing multiple services.

This insightful session brought a wide range of perspectives on the subject. Personally, I believe that microfinance clients desperately need microfinance plus services along with timely credit assistance, despite the concerns and debates. Even though less than a decade ago, NGOs and MFIs were still struggling to manage basic credit assistance, the sector has grown exponentially to have the capacity to manage credit operations as well as expand outreach, portfolio and profitability. If the sector can emerge from the initial difficulties to efficiently manage microfinance activities, then why couldn’t we absorb and similarly triumph over the challenges of incorporating microfinance plus services? If successful, this would not only help to the client but might also ensure better business prospects for the MFIs in the long term. Why can’t the sector (NGO-MFIs, MFIs) incorporate such services into their business plans, assess future risk and come out with proper strategy to address such issues? It is not impossible to evaluate microfinance plus services from a business perspective.

From the client’s perspective, my understanding is that the key component to successful delivery is client participation and ownership. Therefore, what will their long term ownership be if the services do not cater to their larger, livelihoods needs?

Though the sector has unanswered questions and concerns on this regard, I am optimistic and look forward to more MFIs debuting a holistic package of microfinance and plus services to fulfill the bigger objectives of MF sector. Also, the state and multilateral agencies, policy makers and networking bodies have a bigger role to provide an enable environment for such movement.