Substitution Bias and External Validity: Why an Innovative Anti-Poverty Program Showed No Net Impact

Posted: 23 Aug 2012 Last revised: 29 Aug 2014

Jonathan Morduch

New York University (NYU) - Robert F. Wagner Graduate School of Public Service; New York University (NYU) - Department of Economics

Shamika Ravi

Brookings Institution

Jonathan Bauchet

New York University (NYU) - Robert F. Wagner Graduate School of Public Service

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Date Written: August 11, 2011

Abstract

The net impact of development interventions can depend on the availability of close substitutes to the intervention. We analyze a randomized trial of an innovative anti-poverty program in South India which provides “ultra-poor” households with inputs to create a new, sustainable livelihood. We find no statistically significant evidence of lasting net impact on consumption, income or asset accumulation. Instead, income from the new livelihood substituted for earnings from wage labor. A very similar intervention made a large difference elsewhere in South Asia, however, where wage labor alternatives were less compelling. The analysis highlights the roles of substitution bias and dropout bias in shaping evaluation results and delimiting external validity.

Suggested Citation

Morduch, Jonathan and Ravi, Shamika and Bauchet, Jonathan, Substitution Bias and External Validity: Why an Innovative Anti-Poverty Program Showed No Net Impact (August 11, 2011). NYU Wagner Research Paper No. 2134779. Available at SSRN: https://ssrn.com/abstract=2134779 or http://dx.doi.org/10.2139/ssrn.2134779

Jonathan Morduch

New York University (NYU) - Robert F. Wagner Graduate School of Public Service ( email )

The Puck Building
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New York University (NYU) - Department of Economics ( email )

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HOME PAGE: http://www.nyu.edu/projects/morduch

Shamika Ravi (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

Jonathan Bauchet

New York University (NYU) - Robert F. Wagner Graduate School of Public Service

The Puck Building
295 Lafayette Street, Second Floor
New York, NY 10012
United States

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