Faculty Research

Selective Knowledge: Reporting Bias in Microfinance Data
Answering surveys is usually voluntary, yet much of our knowledge depends on the willingness of households and institutions to answer. In this study, we explore the implications of voluntary reporting on knowledge about microfinance. We show systematic biases in microfinance institutions' choices about which survey to respond to and which specific indicators to report. The analysis focuses on data for 2,072 microfinance institutions from MixMarket and the Microcredit Summit Campaign databases for the years 2004-2006. In general, we find that financial indicators are more often reported than social indicators. The patterns of reporting correlate with the institutions' region of operation, mission, and size. The patterns in turn affect analyses of key questions on trade-offs between financial and social goals in microfinance. For example, the relationship between operational self-sufficiency and the percentage of women borrowers is positive in the Microcredit Summit Campaign data but negative in the MixMarket data. The results highlight the conditional nature of our knowledge and the value of supporting social reporting.

Capstone: In the Field

Local Economic Development Planning in Takeo, Cambodia (2011)

Faculty: Paul Smoke

Team: Arianna Butturovic, Yuk Chan, Maria Kolaitis, Alberto Orozco Ochoa

United Nations Capital Development Fund (UNCDF) supports development through microfinance, infrastructure investment, capacity building, and technical advisory skills. Recently, UNCDF and the Royal Government of Cambodia released a national “Local Development Outlook” report that evaluated local development trends (economic, social, demographic, and environmental) countrywide and offered recommendations for policy reform. The Capstone team was asked to build on this effort at the provincial level. The team first conducted a literature review and analysis on local economic development practices and then conduct­ed field research interviewing representa­tives of government, the private sector, and NGOs in Takeo province. The main task was to identify services and indus­tries with the greatest potential to pro­mote economic diversification in the province. As part of this work, the team developed a tool to evaluate services and industries by ranking various criteria according to the type of impact desired. The research will aid UNCDF and the local community in selecting value chains for further investigation and support produc­tion of a provincial development outlook.

Alumni in Action

Sean Maloney Chief of Staff Bureau for Africa at United States Agency for International Development (USAID)

For our May profile we caught up with Sean Maloney who is working in Washington, DC, and told us a bit about what he does: What is your current position and what do you do in your role? I work as the Special Assistant to the Assistant Administrator for Africa at the United States Agency for International Development (USAID). This position is extremely well suited to my interests, and I must admit that I am having a blast in spite of the grueling hours and (sometimes) daunting nature of a large bureaucracy.

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My portfolio includes all of Sub-Saharan Africa, so every day is an unpredictable adventure. Right this minute, the President's Global Hunger and Food Security Initiative, aka Feed the Future, is taking up a lot of my time. I work extremely closely with our interagency colleagues at the State Department and the National Security Council, particularly on the tricky issues like Somalia, or other situations that require extra attention from the Assistant Administrator. In January, I got to travel as part of the US Delegation to the African Union Summit in Addis Ababa. Then, I spent almost a month with our missions in Ethiopia, Kenya and Djibouti. I was able to experience some of the more innovative work we are doing in health, democracy and governance, agriculture, and education, and I spent time meeting with our NGO partners and with our US Military colleagues as well. I went to the Hill last week with our Deputy Assistant Administrator for Africa, Franklin Moore and Jonathan Pershing, the Deputy Special Envoy for Climate Change. They were called to testify before Congressman Donald Payne's sub-committee for Global Health and Africa on the status of climate change on the continent. It was an interesting and friendly hearing. (Our Legislative Affairs folks want to make sure I go back and see a not-so-friendly hearing!) How did you get there? Prior to moving to Washington, I ran the business operations for the Division of General Counsel at NYU. I worked at NYU for almost five years, two and a half of which were shared as an employee and student. As much as I hated working long hours and going to school at night (and writing papers all weekend long), I really wouldn’t be where I am had I not fallen into some good opportunities at NYU and gained valuable work experience and a stellar education at the same time. For example, my capstone client was the Congressional Research Service and we put together a report on China’s investment and “development” activities in Latin America, South-East Asia, and Africa. Just last week I worked on clearing a document on US-China cooperation on development---it felt good to use some knowledge that I gained directly through the Capstone project! Is anything that you learned at Wagner that has been particularly helpful? As I just told John Gershman and Paul Smoke, among the books constantly on my desk are: Stone’s Policy Paradox, Munger's book on Policy, Farmer’s Pathologies of Power, and various Rodrik, Carothers, and Steve Radelet papers. I sit in a weekly meeting with Radelet and called him last week out of the blue to ask a perplexing question about "doing development differently." I didn't think I'd get a hold of him, but I ended up having a great conversation with him, and I couldn’t have done that if I hadn’t been well versed in development politics and policy—courtesy of Wagner. Again, I have to applaud the capstone program. It seems like a pain, and it was, but I had a fantastic team and advisor, and our clients were amazing too. I worked on China and Africa for the project, so it really is the gift that keeps on giving. Let me also point out that I hated stats, but man, is that stuff useful for real policy work. I have to consume huge amounts of data, and I have to make sure anything that is passed on up the food chain is top quality. Stats, micro, and finance all really helped hone my analytical skills. I have to give a special shout-out to Diana Beck who briefly inspired me to get an Econ Phd… until I remembered that I hate math. And what have you learned since being on the job? I got to tag along to the Hill last week, as I already mentioned.. I had never been before and I think I imagined something totally different from the reality. As crazy as the testimony process seems, it really does work. Congress gets to learn about anything and everything from the experts themselves. That’s a pretty powerful tool that I didn’t appreciate before. On top of that, I knew nothing about climate change in Africa when I walked in there, but now I feel like I am totally clued in, and I have access to incredible resources whenever I need to know more. (The problem is finding the time). I’ve also learned a lot about trade-offs. When you’re a western volunteer in a developing country, or just a genuinely concerned citizen of the world, you wonder why we don’t just do more of everything to help those in need. The forces of politics, economics and culture make for a fierce system of trade-offs. Never have I felt such an urgent need to prioritize and put things in perspective—that’s really one of the eye-openers about this job. What are some of the challenges your agency faces, and how do you overcome them? USAID is undergoing some tremendous changes right now. We have an extremely talented and energetic Administrator who is bringing a bold vision and new, creative approaches to some of the things the Agency has been criticized for in the past. The President, Secretary of State, and the Congress are extremely supportive of our work, but we all know there are massive challenges, and we are working hard to address them. Budget is a perennial problem as we are funded by the taxpayer (and controlled by Congress). When I was out in rural Djibouti, a group of health volunteers who gather every day at a small, dusty clinic showed me the list of all of the people they consulted with over the past two years. It must have included every single person in three villages. This all-volunteer group had been provided with advanced training in health education through a very modest grant of USAID resources. They wanted to update their training and increase their ranks, but the project had ended. It’s a classic sustainability problem. We can’t fund things in perpetuity, but it is hard to see people turn small amounts of cash into big success stories, and then tell them you can’t find any more small amounts of cash. I’ve learned to let those examples energize me. When I’m frustrated at work, I just think about how much more transparent the aid world has become, and how much better donors are getting at coordinating and supporting country led-processes. We’re still making tons of mistakes, but I’ve seen improvement just in the time I’ve been at USAID. Frankly, I’m thrilled to be constantly challenged, perplexed, and engaged with tough issues.

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