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

57 Pages Posted: 6 Sep 2013

See all articles by Jonathan Morduch

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

Purdue University - Department of Consumer Sciences and Retailing

Date Written: July 2013

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.

JEL Classification: O1, J2, C1, I3

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 (July 2013). NYU Wagner Research Paper No. 2317322. Available at SSRN: https://ssrn.com/abstract=2317322 or http://dx.doi.org/10.2139/ssrn.2317322

Jonathan Morduch (Contact Author)

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

The Puck Building
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New York, NY 10012
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(212) 998-7515 (Phone)

New York University (NYU) - Department of Economics ( email )

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

Shamika Ravi

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

Jonathan Bauchet

Purdue University - Department of Consumer Sciences and Retailing ( email )

West Lafayette, IN 47907
United States

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