The GiveWell Blog

Banerjee/Duflo interview

Philanthropy Action (co-maintained by Board member Tim Ogden) has an interview up with Abhijit Banerjee and Esther Duflo, principals of the Poverty Action Lab (one of our favorite groups). This quote (from Esther Duflo) particularly resonated with me:

There is no evaluation yet of the impact of a microfinance loan – we have the first preliminary results ever of the impact of a plain vanilla, group lending microfinance model. That’s it. It is not as if there have been mixed results before now. The studies don’t exist. And that is microfinance, where there are already a hundred economists studying it.

Microfinance fortunately did not go out of fashion before [randomized evaluation] came into fashion, so we have a chance to have a meeting of minds here. But other things did. Take fertilizer subsidies: at first they were fashionable, now they are unfashionable. In the meantime we have not learned what fertilizer subsidies do. They might be good or bad, at this point I don’t know. They’re coming back in fashion, by the way. All of this without a single piece of evidence about whether a subsidy changes the demand for fertilizer. This is just one example of what to me is the biggest mistake, which is doing the same things over and over and over again without learning from the experience, whether it is fertilizer subsidies or microfinance.

I recommend the whole thing.


  • Joanne on January 24, 2009 at 9:32 pm said:

    I think microfinance has its benefits and its drawbacks. Certainly it allows people to get a leg up with few other options, but there also has to be incentives for success.

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