The Power of Transparency: Information, Identification Cards and Food Subsidy Programs in Indonesia

45 Pages Posted: 9 Feb 2015

See all articles by Abhijit V. Banerjee

Abhijit V. Banerjee

Massachusetts Institute of Technology (MIT) - Department of Economics

Rema Hanna

Harvard University - Harvard Kennedy School (HKS)

Jordan Kyle

Columbia University

Benjamin A. Olken

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Society of Fellows

Sudarno Sumarto

SMERU Research Institute

Date Written: February 2015

Abstract

Can governments improve aid programs by providing information to beneficiaries? In our model, information can change how much aid citizens receive as they bargain with local officials who implement national programs. In a large-scale field experiment, we test whether mailing cards with program information to beneficiaries increases their subsidy from a subsidized rice program. Beneficiaries received 26 percent more subsidy in card villages. Ineligible households received no less, so this represents lower leakage. The evidence suggests that this effect is driven by citizen bargaining with local officials. Experimentally adding the official price to the cards increased the subsidy by 21 percent compared to cards without price information. Additional public information increased higher-order knowledge about eligibility, leading to a 16 percent increase in subsidy compared to just distributing cards. In short, increased transparency empowered citizens to reduce leakages and improve program functioning.

Suggested Citation

Banerjee, Abhijit V. and Hanna, Rema and Kyle, Jordan and Olken, Benjamin A. and Sumarto, Sudarno, The Power of Transparency: Information, Identification Cards and Food Subsidy Programs in Indonesia (February 2015). NBER Working Paper No. w20923. Available at SSRN: https://ssrn.com/abstract=2562195

Abhijit V. Banerjee (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Room E52-252D
Cambridge, MA 02142
United States
617-253-8855 (Phone)
617-253-6915 (Fax)

Rema Hanna

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Jordan Kyle

Columbia University ( email )

Benjamin A. Olken

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-391
Cambridge, MA 02142
United States
617-253-6833 (Phone)
617-253-1330 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
617-588-1407 (Phone)

Harvard University - Society of Fellows

Cambridge, MA 02138
United States

Sudarno Sumarto

SMERU Research Institute ( email )

Jl. Tulung Agung No. 46
Jakarta, 10310
Indonesia

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