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Presentation at "Impact Evaluation for Financial Inclusion" (January 2013) CGAP and the UK Department for International Development (DFID) convened over 70 funders, practitioners, and researchers for a workshop on impact evaluation for financial inclusion in January 2013. Co-hosted by DFID in London, the workshop was an opportunity for participants to engage with leading researchers on the latest research methods of impact evaluation and to discuss other areas on the impact evaluation agenda.
Citation preview
Stefan Dercon DFID(UK)
Acting on Evidence The case of microfinance
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
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Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
Overview
1. Stating the Problem: Using Evidence to Inform Action 2. The Compelling Case 3. The Hard Core Case 4. The Religious Case 5. The Keynesian Case With illustrations from microcredit and microfinance
1
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
Stating the Problem
• Development business: – driven by a passionate identification of need – a commitment to spend cash and time sensibly on achieving
change • The business in practice
– Those controlling the purse want the best ideas to spend the marginal £ on
– A commitment to changing lives, including via financial inclusion
– Variety of outcome indicators (incomes, financial security, stability, broader development outcomes)
– Financial inclusion: a theory of change that this leads for many if not all people to positive outcomes in terms of the above
2 © 2010 The Actuarial Profession � www.actuaries.org.uk
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
My question
• How do we and can we use evidence, not least from impact evaluation, to inform these decisions? – Starting from how decision making typically works – Acknowledging the state and nature of evidence
• Evidence has always mattered – it is the way we produce and use it, that has changed
• and let’s not forget: the importance of evidence was not invented in the last 1990s.
3 © 2010 The Actuarial Profession � www.actuaries.org.uk
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
The Compelling Case
Develop the strategic case and need: • “get a compelling story” with good foundations in theory and
experience • get examples to prove the point
4 © 2010 The Actuarial Profession � www.actuaries.org.uk
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
The compelling case Feature Microcredit Microinsurance Roots in experience and evidence of problem
Poor strapped of cash, including to invest in their own activities; Existing credit sources restricted, or even exploitative.
Poor face vast array of risks, such as drought, health, etc. Informal risk sharing and management imperfect.
Theory of the market
Good reasons for its failure and for substantial consequences, justifying to act
Good reasons for its failure and for substantial consequences justifying to act
Narrative • Poor so provide cash • Encourage them to invest • But ensure they repay
• Disaster looms around the corner • Protect against disaster • So they do more positive things
Development narrative
Responsibility, Enterpreneurship = positive, easy sell
Security, Rights, Protection = more negative, difficult sell
- Large take-up not difficult - Much traction - Evidence on problem and
market failure
- Take –up problematic - Limited traction - Evidence on problem and
market failure 5
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
The compelling case Feature Microcredit Microinsurance Roots in experience and evidence of problem
Poor strapped of cash, including to invest in their own activities; Existing credit sources restricted, or even exploitative.
Poor face vast array of risks, such as drought, health, etc. Informal risk sharing and management imperfect.
Theory of the market
Good reasons for its failure and for substantial consequences, justifying to act
Good reasons for its failure and for substantial consequences justifying to act
Narrative • Poor so provide cash • Encourage them to invest • But ensure they repay
• Disaster looms around the corner • Protect against disaster • So they do more positive things
Development narrative
Responsibility, Enterpreneurship = positive, easy sell
Security, Rights, Protection = more negative, difficult sell
- Large take-up not difficult - Much traction - Evidence on problem and
market failure
- Take –up problematic - Limited traction - Evidence on problem and
market failure 6
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
The compelling case Feature Microcredit Microinsurance Roots in experience and evidence of problem
Poor strapped of cash, including to invest in their own activities; Existing credit sources restricted, or even exploitative.
Poor face vast array of risks, such as drought, health, etc. Informal risk sharing and management imperfect.
Theory of the market
Good reasons for its failure and for substantial consequences, justifying to act
Good reasons for its failure and for substantial consequences justifying to act
Narrative • Poor so provide cash • Encourage them to invest • But ensure they repay
• Disaster looms around the corner • Protect against disaster • So they do more positive things
Development narrative
Responsibility, Enterpreneurship = positive, easy sell
Security, Rights, Protection = more negative, difficult sell
- Large take-up not difficult - Much traction - Evidence on problem and
market failure
- Take –up problematic - Limited traction - Evidence on problem and
market failure 7
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
The compelling case Feature Microcredit Microinsurance Roots in experience and evidence of problem
Poor strapped of cash, including to invest in their own activities; Existing credit sources restricted, or even exploitative.
Poor face vast array of risks, such as drought, health, etc. Informal risk sharing and management imperfect.
Theory of the market
Good reasons for its failure and for substantial consequences, justifying to act
Good reasons for its failure and for substantial consequences justifying to act
Narrative • Poor so provide cash • Encourage them to invest • But ensure they repay
• Disaster looms around the corner • Protect against disaster • So they do more positive things
Development narrative
Responsibility, Enterpreneurship = positive, easy sell
Security, Rights, Protection = more negative, difficult sell
Result - Large take-up not difficult - Much traction - Evidence on problem and
market failure
- Take –up problematic - Limited traction - Evidence on problem and
market failure 8
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
The compelling case Feature Microcredit Microinsurance Roots in experience and evidence of problem
Poor strapped of cash, including to invest in their own activities; Existing credit sources restricted, or even exploitative.
Poor face vast array of risks, such as drought, health, etc. Informal risk sharing and management imperfect.
Theory of the market
Good reasons for its failure and for substantial consequences, justifying to act
Good reasons for its failure and for substantial consequences justifying to act
Narrative • Poor so provide cash • Encourage them to invest • But ensure they repay
• Disaster looms around the corner • Protect against disaster • So they do more positive things
Development narrative
Responsibility, Enterpreneurship = positive, easy sell
Security, Rights, Protection = more negative, difficult sell
Result - Large take-up not difficult - Much traction - Evidence on problem and
market failure
- Take –up problematic - Limited traction - Evidence on problem and
market failure 9
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
The Compelling Case
Develop the strategic case and need: • “get a compelling story” with good foundations in theory and
experience • get examples to prove the point
It is the world we still largely live in…
10
© 2010 The Actuarial Profession � www.actuaries.org.uk
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
Overview
1. Stating the Problem: Using Evidence to Inform Action 2. The Compelling Case 3. The Hard Core Case 4. The Religious Case 5. The Keynesian Case With illustrations from microcredit and microfinance
11
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
The Hard Core Case
• Let’s decide all spending on the basis what works • Get some help from bright sharp minds to help us decide what
works: doing the full cost-benefit analysis • Get high quality methods to get at outcomes and impacts of our
interventions • Ensure clear cost information • Find out what ‘has high return’ in development terms, • Invest in highest return for marginal £
12 © 2010 The Actuarial Profession � www.actuaries.org.uk
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
How feasible?
Pro: • Forces us to use all evidence to get average and distribution of
impact • Humility and possibility of transparency about what we know
and don’t know • Avoids ‘bias’ of example as in compelling case • And huge incentives to invest in more evidence to improve
13 © 2010 The Actuarial Profession � www.actuaries.org.uk
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
How feasible?
• The problem with evidence – the gold in the gold standard is at times impure – “external validity” of the experiments
• More crucially: – Evidence is vastly incomplete
– Cost curves and impact curves and scale? – Context specificity and complexity of interventions – Evidence is by its nature “with margin of error”
– While pressures of need remain
14 © 2010 The Actuarial Profession � www.actuaries.org.uk
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
Example of microcredit
• Microcredit is probably one of the most researched and evaluated interventions
• When focused on impact of the poorest, hard to find strong evidence of positive impact, in systematic way – E.g. systematic reviews by DFID – but still below 30 studies
to be included – Roodman’s book – sourced more widely – Or CGAP recent notes
• But each microcredit intervention is a bit different, different political economy, economy, institutions.
• Hard to include in CBA
15 © 2010 The Actuarial Profession � www.actuaries.org.uk
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
Example of microinsurance
• Evidence much thinner • Many studies suggesting uptake problems • But enough ‘not to act’? Wait for another 10 years?
16 © 2010 The Actuarial Profession � www.actuaries.org.uk
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
Overview
1. Stating the Problem: Using Evidence to Inform Action 2. The Compelling Case 3. The Hard Core Case 4. The Religious Case 5. The Keynesian Case With illustrations from microcredit and microfinance
17
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
The religious case
• The evidence from impact evaluation is flawed – Let’s attack the evidence
• Evidence of no evidence is enough to justify? • Policy making by example
– Compelling case squared – Comms dominating evidence or caution
• “millions of clients cannot be wrong” – Average impact, distribution of impact
18 © 2010 The Actuarial Profession � www.actuaries.org.uk
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
Overview
1. Stating the Problem: Using Evidence to Inform Action 2. The Compelling Case 3. The Hard Core Case 4. The Religious Case 5. The Keynesian Case With illustrations from microcredit and microfinance
19
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
The Keynesian case
“when the facts change, I change my mind” J M Keynes • Decision making as “error-correction”: use evidence to change
course • When to act?
– Negative role of evidence: if you fail to find any impact in various attempts, become more cautious
– Note this is average impact – direct resources to find out who may be negatively affected (and don’t just look for the positive stories and examples)
• Always be open about learning
20 © 2010 The Actuarial Profession � www.actuaries.org.uk
Colour palette for PowerPoint presentations
Actuarial Bright Green R148 G166 B31
Actuarial Slate R32 G44 B52 *
Secondary Olive Green R120 G162 B47
Secondary colour palette
Primary colour palette
Secondary Bottle Green R0 G147 B127
Secondary Turquoise R0 G138 B176
Secondary Aqua Blue R26 G160 B170
Secondary Pastel Green R126 G205 B195
Secondary Light Purple R123 G149 B174*
Secondary Purple R97 G107 B156
Secondary Ecru R186 G163 B171
Secondary Yellow R215 G176 B18
Secondary Orange R213 G135 B43
Secondary Red R238 G52 B36
Secondary Rubine Red R226 G1 B119
*This colour reference is for screen presentations only
conclusions
• Always a business where “compelling case” matters • we cannot get full information on what works as guide to
development – – evidence will always be less than perfect due to its nature
and nature of problems we want to address – so hard core view is not quite achievable
• But we should guard us to “religious” fanaticism against reason and the misuse of example-based evidence.
• Move towards an ‘error-correction’ model of evidence?
21 © 2010 The Actuarial Profession � www.actuaries.org.uk