Lessons from Lima

Spending a week in Lima was a great opportunity for Giordano and I to work with the other people at IPA Peru. In addition to getting feedback and advice on aspects of our project from seasoned randomized trial researchers, we had a series of interesting presentations by each of the IPA Associates on their respective projects. It really brought home how much we have to learn in the development field, and the vast range of opportunities for research and improvement that exists in microfinance alone, not to mention other poverty interventions. Each study requires an impressive amount of detail and careful thought and planning. One person is working on a social networks project in Lima, which involved physically mapping how people are connected and to what degree in certain poor communities. The resulting map is being used to measure the price people are willing (or not) to pay for taking a loan through someone closer to them in the social network. So for example, if they want to take out a loan sponsored by a friend, they pay a slightly higher interest rate than doing so through a stranger or more distant relative. Other projects measure the effect of incentives, such as adding health education to a microfinance loan package, and how the use of gain and loss frames and the threat or promise of higher or lower interest affects repayment. Another project examines the affect of different interest rates, as does our project with Arariwa, but combines it with positive and negative incentives. Partner organizations include Prisma, Freedom from Hunger, Manuela Ramos, and Caja Municipal. In addition to academic contribution and to policy change, I would hope and expect that through these partnerships, the organizations we work with are given an opportunity to better their products, sustainability and breadth of service.


Things are moving along in the Arariwa project. We’re continuing to prepare the loan officer training, as well as getting the initial census survey data organized and entered. Its amazing that there are communities relatively close to Cusco that don’t even exist on any maps or in any official documents. We had 3 surveys done by each of the 16 surveyors repeated by another surveyor, and in crosschecking the first few, we’re a bit nervous about some information discrepancies. It is clear that the surveyors did talk to the same people, but we’re finding some substantial differences in the answers. We have to balance that we know that to some extent this is fairly normal (especially considering that some of these people aren’t even sure about answers to questions such as their age) with our concern for the validity of our study results. It will take crosschecking the rest of the surveys and thinking through the overall results before we can determine what this means for the study. One of my goals next week is to talk to and maybe accompany more loan officers at Arariwa and attend another village bank meeting to learn as much as possible about the processes and issues that arise for MFIs in starting and maintaining the banks. In addition to my own learning process, another reason for me to gain more knowledge in this area is to anticipate any problems that we may have in enforcing our randomization zones that correspond with different interest rates, and to brainstorm in advance ways to mitigate and solve them.