Title: Can the Poor Be Organized? Experimental Evidence from Self-Help Groups in Rural India
Abstract: High coordination costs among the poor are considered a principal reason that the poor are more likely to be under-provided public goods and receive badly-functioning public services. In some countries, however, efforts are underway to organize the poor through “self-help groups” (SHGs - membership-based organizations that aim to promote social cohesion through a mixture of education, access to finance, and linkages to wider development programs. In cooperation with a local NGO, we randomly selected 32 of 80 villages in one of the poorest districts in rural India in which to establish SHGs for women. After two years of exposure to the intervention, women in treatment villages were more likely to participate in group programs, exerted greater control over household decisions, and displayed greater knowledge of local political institutions than women in control villages. To investigate the sources of cooperation further, we conducted a simple multi-round public-goods game in eight villages. We find that players who have been exposed to SHGs converge towards a cooperative equilibrium faster than those who have not. We also find that SHG women discount the risk of non-cooperation by others more than women in control villages. We conclude that SHGs and other membership-based organizations for the poor, where they promote collective action do so not by enforcing a commonality of tastes, but by reducing uncertainty surrounding cooperation.
Publication Year: 2011
Publication Date: 2011-01-01
Language: en
Type: article
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