Targeting and serving the poor: Three essays on development economics

Chowdhury, Md Reajul Alam

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https://hdl.handle.net/2142/115378 Copy

Description

Title

Targeting and serving the poor: Three essays on development economics

Author(s)

Chowdhury, Md Reajul Alam

Issue Date

2021-12-21

Director of Research (if dissertation) or Advisor (if thesis)

Winter-Nelson, Alex E

Doctoral Committee Chair(s)

Winter-Nelson, Alex E

Committee Member(s)

• Crost, Benjamin
• Lyons, Angela C
• Viswanathan, Madhu
• McKague, Kevin

Department of Study

Agr & Consumer Economics

Discipline

Agricultural & Applied Econ

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

Micro and Small Enterprises · Access to Finance · Informal Sector. Ultra-poor, Impact heterogeneity, Machine Learning, Aspirational messaging, willingness-to-pay, fortification.

Abstract

This dissertation combines three research papers on improved targeting in development and policy interventions that seek to increase uptake of health products among low-income consumers and support micro-enterprises (MEs) development as poverty alleviation tools. The first chapter evaluates whether a financial policy to improve bank density in underserved areas in India benefited micro and small enterprises. The branch expansion policy targeted districts classified as underbanked, based on their ex-ante branch density, making the policy intervention suitable for a regression discontinuity design. Using a large nationally representative survey on informal MSEs located in districts within a narrow window around the threshold, this paper shows that enterprises in districts classified as underbanked witnessed large increases in revenue, gross value-addition, and productive capital in the aftermath of the reform. There was no change in credit access (from the bank and non-bank sources) for MSEs in underbanked districts. Our analyses reveal potential spill-over from industry linkages with formal enterprises. The second chapter applies recently developed ML methods to characterize the microentrepreneurs from extremely poor households who benefit (and who do not) from their participation in the Ultra-poor Graduation (UPG) model – a popular poverty alleviation program. Though previous studies have shown a large degree of heterogeneity in the treatment effect of the UPG model, the question of why some households benefit while others do not remains unanswered – mostly due to the limitations of conventional econometric models that do not allow using a rich set of baseline variables for treatment effect heterogeneity investigation. Applying recently developed machine learning methods on a large-scale RCT dataset from Bangladesh, this chapter address this problem and characterizes the UPG program participants who benefit and who do not. The results indicate a trade-off between wealth and consumption gains: some beneficiaries focused on accumulating assets while others increased their consumption. When profiling the top gainers on these two outcomes, the analyses show opposing characteristics between these two groups. The characteristics of the top gainers identified in this research can be used for improved targeting to maximize the impact of the UPG program on the desired dimension. Alternatively, the characteristics of those who failed to benefit can be used to customize the program interventions for balancing the asset and consumption trade-off. Finally, the third chapter, through a randomized control trial (RCT) setup, tested the individual and joint impacts of two types of messaging on the willingness to pay for fortified rice among low-income Bangladeshi consumers. The first type of messaging anchored the rice with a well-known high-value aspirational product. The second type established the credibility of its health benefits by connecting it to a well-known public distribution program. Drawing on insights from the marketing and consumer behavior literature, we argue that messages which position a product as aspirational or establish the credibility of its health benefits can increase consumer demand for the product. Indeed, the measured impact on WTP when both messages were combined was sufficiently large to elicit a price premium for fortified rice that would cover the cost of fortification. This paper contributes to the literature by presenting new evidence on the role of information in stimulating demand for a credence good.

Graduation Semester

2022-05

Type of Resource

Thesis

Copyright and License Information

Copyright 2022 Md Reajul Chowdhury

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