THE STATE OF ATAI AND NEXT STEPS

RACHEL GLENNERSTER

ATAI Matchmaking Conference – May 2013

Agriculture and poverty

What explains low take up

£ Not available or not known about? ¢  Why no market for intermediaries to inform?

£  Not profitable? ¢  If no market inefficiencies, if people not taking up

suggests not profitable, should not promote £  But there are market inefficiencies

¢  which inefficiencies are most important and what are the most cost-effective ways to overcome them

From Adoption to Impact

£  ATAI tests take-up of proven technologies

£  But debate about impact of many technologies

£  DFID through Gates funding studies on impact—on output, consumption, nutrition ¢  1-2 large studies ¢  add ons to existing studies with strong take up

Market inefficiencies

1.  Credit markets 2.  Risk markets 3.  Information 4.  Externalities 5.  Input and output markets 6.  Labor markets 7.  Land markets

Complementarities in addressing multiple barriers?

Credit markets

Credit market inefficiencies

¢  Many technologies require upfront investment ¤ High interest rates, minimum balances, and lack of collateral

¢  Lenders face risks too ¤  Small farmers hard to monitor and may have limited liability ¤ Correlated risks, long repayment cycles ¤  Leads to high interest rates

¢  Need innovations that reduce risk in lending to the poor

ATAI Credit Market Research

¢  Collateralized lending (Jack et al) ¤ Can substituting collateral for cosignatory requirement

increase take up of loans and technology?

¢  Financial Access in India (Field, Pande, Robert) ¤ Does access to microfinance increase technology adoption?

Through what channels?

¢  One Acre Fund in Kenya (Miguel, Burke) ¤ Can better storage act as saving instrument, and increase

take-up?

¢  BRAC in Uganda (Bandiera et al) ¤ Does combining credit with agricultural extension more

effectively promote adoption that extension alone?

Risk markets

Risk market inefficiencies

¢  Adopting a new technology can be risky… ¤ First adopters may face particularly high risk as may

take many years to understand returns in new context

¢  Informal insurance prevalent, but correlated risk

¢  Formal insurance should help solve the problem but ¤  Insurance markets have major problems, eg people

know if they are risky, being insured may change effort (moral hazard and asymmetric information)

¤ Are insurance products too hard to understand? ¤ Willingness to pay for insurance?

ATAI Risk Market Research

¢  Two different approaches to addressing risk: ¤ Weather insurance (Ethiopia and Ghana) ¤ More resilient crops (drought and submergent tolerant)

¢  How does changing price and mixing insurance and credit promote take up of insurance

¢  What are yields of risk reducing varieties

¢  Does reducing risk (though insurance or new varieties) change how farmers invest: ¤  increase investment? ¤  take on more risky crops elsewhere?

Information

Information inefficiencies

¤  If information is valuable why cant an entrepreneur sell it?

¤  Information may be very local, need experimentation £ neighbors can see results, ie experimentation is a public good you

are not paid for.

¤ Benefits of some technologies (eg better ways to plant) cannot be “captured” by a seller

¤ People may not be able to tell good information from bad £ How to we signal credible information?

¤ Psychology suggests how we receive information may be important

ATAI Information Research

¢  What are efficient ways to get information to farmers: ¤ Mobilizing social networks, how to target, rate of

spillovers (Beaman et al, Cole and Fernando) ¤ Using existing intermediaries with long term relations

and financial interest (Casaburi et al) ¤ Mobile phones (Cole and Fernando), SMS services

(Casaburi et al) ¤ Demonstration plots (Duflo et al) ¤ Subsidizing experimentation vs training (Ashraf and

Jack, Glennerster Kimmins, and Suri )

Areas of little ATAI research

1.  Credit markets 2.  Risk markets 3.  Information 4.  Externalities 5.  Input and output markets 6.  Labor markets 7.  Land markets

Externalities

¢  Some technologies generate benefits to others ¤ Ex. Tree planting, conservation agriculture

¢  How can a farmer best be rewarded for the benefits they generate when they take up a technology?

¢  ATAI Externalities Research ¤ How can payment and information help in the adoption

of environmentally beneficial farming? (Ashraf and Jack)

Inefficiencies in Input and Output Markets ¢  Farmers don’t buy improved inputs because cant tell quality ¢  Not a big enough market for new crop—fixed cost of set up ¢  No price difference for quality as quality hard to measure ¢  Good and bad quality produce is pooled, giving an

incentive to free ride

¢  ATAI Input/Output Market Research ¤  Can social pressure be used to increase milk quality in India?

(Banerjee, et al) ¤  Can contracts with traders be developed that can increase the

quality of produce? (de Janvry, and Casaburi and Reed)

ATAI Input and Output Research

¢  Can social pressure be used to increase milk quality in India? (Banerjee, et al) ¤ How can cheaper testing of quality be introduced most

effectively? ¤ Does posting quality results reduce watering of milk?

¢  Can contracts with traders be developed that can increase the quality of produce? (de Janvry, and Casaburi and Reed) ¤ Do price signals get effectively pass through to farmers? ¤ Do intermediaries invest in farmers quality?

Labor and Land Markets

¢  Does that lack of labor at the correct time restrict adoption of technology?

¢  ATAI Labor Research £ Does choice of technology differ by the gender of the labor

using the technology in the household? (Ashraf et al) £ Can credit for and increased mobility of labor affect

adoption? (Jack et al.)

¢  Land ¤ Do constricted labor markets reduce the ability of

farmers to make investments in technology? ¤ No current studies by ATAI (MCC doing some)

ATAI Current Research Focus

¢ ATAI Brainstorming Conference Feb 2013

¢ Two prominent areas of focus: ¤ Behavioral Marketing ¤ Value Chains

Behavioral Marketing

¢  How can we use the lessons from behavior economics to increase adoption of technologies?

¢  Many agricultural technologies have qualities people find it hard to invest in ¤  Short run costs, long run benefits ¤  Benefits hard to see (eg fortification, drought tolerance) ¤  Taste—hard or easy to change?

¢  Research Opportunities ¤ Vary marketing messages, using lessons from psychology ¤  Psychology suggests bundling hidden or long term benefits

with immediate and visible attributes

Value Chains

¢  How can smallholder farmers be brought into value chain?

¢  How can equity along the value chain be increased? ¢  Can better contracts be designed that solve issues

¤  farmers not being able to commit to side sell ¤ Traders know more about price, farmers about quality

¢  How do we increase quality? ¤ Certification? ¤  Improved price signals

¢  Does integrated credit, information, and sales help farmers or make them more open to exploitation?

Value Chains

¢  Research Challenges ¤ Value chains are large and complicated ¤ Difficult to know what unit to randomize (farmer? Trader?

Market?)

¢  Potential Research Opportunities ¤ Different farmers or traders get different contracts, ¤ Farmers or traders get different information ¤ Can randomize intermediaries ¤ Organizational form: how do you organize a cooperative

—hard but fascinating and very valuable

Conference Objects

¢  Identify important questions that can be answered through rigorous impact evaluation ¤ preference for RCTs

¢  Find matches of researchers and practitioners interested in the same issues in similar regions/countries

¢  Identify possible opportunities where these questions could be tested

Conference Objects II

¢  Realism check of opportunities ¤ are they at an early enough stage, ¤ are they of sufficient scale to provide sufficient sample

size

¢  Studies that are submitted to and funded by ATAI that fill our knowledge gap

Conference Approach

¢ Examples of effective collaborations

¢ Practitioners share their projects and priorities

¢ Researchers share their research agenda

¢  In depth conversations between researchers and practitioner

Conference Approach

¢ Initial sorting based on written input from both sides

¢ Note many researchers and practitioners are country constrained

¢ After hearing each other, request matches for tomorrows conversations

¢ Presentations of early work by new researcher/practitioner groups