IndiaSpend ResearchWire - April 2


In today’s edition, we discuss when in-kind benefit transfers could be preferred over cash, whether we should reopen schools, the impact of crime on early marriage among girls, the additional costs faced by India’s women entrepreneurs, a brilliant piece on the limitations of numbers and one on the power of negative thinking.

If you have missed any of our earlier editions, you can read them here.

Give them the money? Not always

While there exists enough evidence to support cash transfers (giving people money) and it has become easier to do so with large investments in direct benefit transfer systems, is cash in hand always better?

Research by Lucie Gadenne and others finds that there exist very plausible conditions where the recipients may prefer in-kind transfers (things) over cash. When market prices for commodities fluctuate widely—as they often do in developing countries with fragmented markets and fragile supply chains—people are less likely to want to hold cash and watch its value erode as prices go up. 

When prices fluctuate, in-kind transfers work as insurance against price risk.

For instance, India’s Public Distribution System (PDS) is found to significantly affect a poor household’s calorie intake, i.e. people no longer need to eat less when food prices go up.

Note though that their results don’t mean in-kind transfers are always better than cash transfers (far from it), but that there exists a scenario (fluctuating prices) through which they may have an edge; and this needs to be factored into the design of social protection programmes. A good blog on this research is here.

Should we reopen schools?

Read this blog by Rafael E. De Hoyos and Jaime Saavedra of the World Bank who argue that as countries make up their minds about reopening schools, there are two main criteria that should inform the decision: (1) health risks from reopening schools and (2) learning costs from keeping them closed.

All the evidence from high-income countries indicates that the health risks associated with opening schools are lower than the risks of opening restaurants, bars and markets—already open in many countries.

At the same time, school closures mean not just learning losses in the short and medium term, but also longer-term effects on health, child marriage, early pregnancy, life expectancy, future incomes, and life trajectories—especially for the poorest. 

While their evidence is from rich countries (US and Europe) where schools were relatively quick to reopen, I’d think the underlying lesson is even starker for a country like India

“By keeping schools closed while assuming that remote learning is a good substitute for face-to-face learning, we are simply making the poorest children pay for this with less learning today and less well-being tomorrow.”

Marriage is the answer to all your problems

A new working paper by Warwick University’s Sudipa Sarkar finds that parents who live in areas with greater crime are likely to marry their daughters off at an early age—to protect their ‘chastity’ from sexual violence.

In case it needs to be said, there is no impact on sons. 

The results hold when the crimes are gender-related (“eve-teasing”, rape, molestation) and not when they are gender-neutral, such as theft and robbery. They are also more pronounced in societies where female chastity is highly valued and rewarded, such as in conservative households that practice purdah, and in North India more than in South India. 

The complete paper is linked above and a blog with the main findings is here. For early marriages in India more generally, tune into this short podcast on how child marriages increased in India during the pandemic.

What data cannot do

In a fantastic New Yorker piece, mathematician Hannah Fry reminds us that even as we live in a world defined, driven, and deciphered by numbers, it would serve us well to know that numbers have limitations.

“Numbers are a poor substitute for the richness and color of the real world.”

Using examples from the worlds of policy, economics, railways, prisons, aquariums and more, Hannah weaves a delightful story about the power and perils of relying on algorithms and data-driven solutions to complex, real-world problems. The piece is long, but the writing is fun, clear, and easy to read. 

I will not try to summarise it; if you click on one link from this fortnight’s ResearchWire, let it be this one.

Twice as expensive

New research by Gaurav Chiplunkar and Pinelopi K. Goldberg finds that women entrepreneurs in India face twice the entry and business registration costs as their male counterparts. And once they get in, they face higher costs of expanding their business. 

They do find it easier to hire female workers, possibly because women feel more comfortable working for other women; or because the men in their families may be more amenable to ‘letting them’ work for a female boss. 

If these extra costs are removed, the share of female-owned firms would go up by nine times and women’s real wages will increase.

If you’re tired of people recommending policies that only help women, let me point out that there’s something in it for everyone. As the floor opens for competition, lower-productivity male-owned firms will be squeezed out by higher-productivity female-owned firms, generating substantial welfare and productivity gains for the economy as a whole. 

The paper does not specify exactly which policy changes can remove the barriers but does point out that many of these are not legal or policy-led anyway, but persist thanks to norms and attitudes that are far more difficult to measure or change. And that’s really the tricky bit, isn’t it? 

You can read the paper here.

Be negative

Finally, are you someone who always finds flaws in something and can identify a million ways in which a great idea may fail? Read Tim Harford on why the world needs more people like you (and me!)—and the power of negative thinking.

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Amee Misra
Contributing Editor, IndiaSpend
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