81212 enGender Impact: The World Bank’s Gender Impact Evaluation Database Changing Households' Investment and Aspirations through Social Interactions: Evidence from a randomized transfer program Author(s) Karen Macours and Renos Vakis Contact rvakis@worldbank.org Country Nicaragua Organizing Voice and Agency, Education and Skills Theme Status Ongoing Intervention Cash Transfer Category Sector Social Protection Low aspirations can limit households’ investments and contribute to sustained poverty. Vice versa, increased aspirations can lead to investment and upward mobility. Yet how aspirations are formed is not always well understood. This paper analyzes the role of social interactions in determining aspirations in the context of a program aimed at increasing households' investments. The causal effect of social interactions is identified Abstract through the randomized assignment of leaders and other beneficiaries to three different interventions within each treatment community. Social interactions are found to affect households’ attitudes toward the future and to amplify program impacts on investments in human capital and productive activities. The empirical evidence indicates that communication with motivated and successful nearby leaders can lead to higher aspirations and corresponding investment behavior. Gender Gender Focused Intervention Connection Gender Women's Aspirations, motivation, school attendance, income, property Outcomes IE Design Randomized Control Trial Atencion a Crisis was a one year pilot program implemented between November 2005 and December 2006 by the Ministry of the Family in Nicaragua. It was implemented in the aftermath of a severe drought and had two objectives. First, it aimed to serve as a short-run safety net by reducing the impact of the aggregate shock on human and physical capital investments. Second, it intended to promote long run upward mobility and poverty reduction through asset creation by enhancing households asset base and income diversification capacity. This activity introduces a modification to the ongoing impact evaluation of "Atencion a Crisis". A Intervention complementary intervention was designed and randomized orthogonally to the original randomization design, with the aim of addressing identified information asymmetries through: (i) market information dissemination in randomly selected communities; and (ii) promoting social learning about basic business skill development through sharing of success-stories among women. Households were randomly assigned to three different intervention groups within randomly selected treatment communities. Leaders were also randomly allocated to one of the three interventions. The three interventions included 1. a basic CCT 2. the basic CCT plus a scholarship for occupational training and 3. the basic CCT plus a grant for productive investment. Intervention The cash transfer program was implemented from November 2005-December 2006. The vocational training Period program had not started until after the paper was written. The program targeted 6 municipalities in Northwest Nicaragua that had been affected by a drought and had Sample high rates of extreme poverty. 56 intervention and 60 control communities were randomly selected through a population lottery. 3000 household participated in the program. Last updated: 14 August 2013 1 enGender Impact: The World Bank’s Gender Impact Evaluation Database There were three treatment arms (1) a basic CCT (2) the basic CCT plus a scholarship for occupational Comparison training and (3) the basic CCT plus a grant for productive investment. The vocational training was delayed so conditions it was not implemented before the follow up survey was conducted. Additionally, there was a control group received no intervention. Unit of Household head analysis Evaluation The follow up survey was 2-3 months after the transfer. Period Participants who were in close proximity to leaders who received the largest program substantially increased the on human capital investment, income diversification and attitudes towards the future. Participants increased aspirations were driven by increased communication and motivation by female leaders. Effects are Results particularly large when participants and leaders receive the same program. Having an additional leader with a productive investment package increases school attendance by about 2.5%, reduces absences by about .85 days per month, increases income from non-agricultural activities by about $3.3 and increases the value of the animal stock by about $12. Primary study The study design does not allow analysis of the mechanisms of social effects generated by peers. limitations Funding Gender Action Plan, ESSD trust Fund, RRB grant, BASIS-AMA, Bank Netherlands Partnership Program Source Macours, K., Vakis, R. (2009) "Changing Households' Investment and Aspiration Through Social Interactions: Reference(s) Evidence from a Randomized Transfer Program in a Low-Income Country" World Bank Policy Research Working Paper No. 5137 Link to Studies http://siteresources.worldbank.org/EXTLACREGTOPPOVANA/Resources/social_dynamics_mar2508.pdf Microdata Last updated: 14 August 2013 2