Esther Duflo: uncertainty

Transcript context

…As I understand the paper, there’s a cost-benefit ratio of 133 percent to 433 percent across six countries. That’s enormous. What exactly about the mentor makes the difference as opposed to just giving people cash? What is the mentor or the coach actually teaching? Just from this particular experiment, it would be hard to tell because one could say, “Well, you should try to do cash only, and then we can see. ” But subsequently Abhijit and Dean Karlan were involved in an experiment in Ghana where they just gave goats. They call it a goat drop paper. Just goats were given, without the coaching. And there, they find very clearly that the coaching makes a big difference, that people who you give just assets to have more assets, but it doesn’t serve as a springboard for more activities. So descriptively, what the coach does is two things. Number one is avoid the temptation of liquidating the assets quite early. If you give people cows and they don’t feel confident using them, then the easiest thing to do is to sell them. And then they have cash, but they don’t have the productive asset anymore. The second thing is to provide the complementary human capital for taking care of your assets. For example, when people are given cash — some people are given cash to start a petit business — but have no idea even how to go to the market because the poorest person in a village is also excluded from productive activities. They have not really been working. Or if they have been working, it’s in very local circumstances. They really have no idea. So the coaches are physically taking them to the market. This is how you take the bus, this is where you buy the trinkets that you’re going to sell in the village, and this is how you bargain for your trinkets and then come back with the trinkets and sell them. So there is an amount of technical skills, if you will. The third component, which is harder to quantify but probably very important as well, is confidence training. They are meeting in groups. Those are people who have not been involved in productive activities, often are living off alms or very petit works. They are making them confident that they can do it. How scalable is the coaching in your opinion?…

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