Broader Gains To Digitalization: Public Goods (MNS - Smartcards, PDS/Aadhar , Field (social norms on women), Barnwal (LPG Subsidy)

Question 1

Muralidharan, Niehaus, Sukhtankar (MNS)

Answer 1

Randomise rollout of smartcards to see impacts on LEAKAGES AND CORRUPTION.

Remember by Messi Suarez Neymar for smartcards

Question 2

Findings on smartcard adoption

Answer 2

Little adoption, and even if adopt, people may not actually use it.

(Different Higgins where rapid large scale rollout, caused large adoption, compared to this small slow adoption)

Question 3

Smartcard payment experience (2)

Answer 3

Payments disbursed faster

Payments more predictable (less variability in payment days)

So good!

Question 4

Findings in program leakage

Answer 4

Lower leakages (so less corruption)

Question 5

Main pro of study

Answer 5

First order stochastic dominance - everyone is improving their lives (UNLIKE HIGGINS WHERE SUPERMARKETS LOST PROFITS WHILE CORNER SHOPS BENEFITED FROM THE DEBIT CARDS IN MEXICO)

Less leakages and corruption (less over-reporting money)

Question 6

New case:

MNS also explored Aadhaar: why was it controversial
1 pro, 2 cons

Answer 6

It is a biometric ID rollout to 1.24bn people, 91% of population in India

Pro: reduces corruption and leakages

However undermines right to life, poor people like beggars are registered doing nothing, so excluded from the system since cannot have an ID since do not have an address etc.

Also privacy concerns

(SO CONTROVERSIAL WHETHER FULL DIGITALISATION IS GOOD)

Question 7

MNS also studied PDS: what is the PDS is India

Answer 7

Public distribution system: government provide subsidised food grains

Question 8

What was the problem with PDS?

Answer 8

High rates of leakages (42%!)

E.g dealers steal grains for themselves n sell on normal markets.

Question 9

2 phases of digitization in this case to prevent this high leakage (42%!)

Answer 9

Aadhar authentication for each transaction - prove you are entitled to the grain, and the correct amount.

Reconciliation - government track disbursal properly to ensure distributed properly

Question 10

2 ways it can reduce leakages

Answer 10

Cannot divert to transfers in the name of people who don’t claim (ghosts) since Aadhar authentication required.

Increase bargaining power of beneficiaries, as without authentication dealers wont get future disbursals (so have to SELL to beneficiaries)

Question 11

2 potential adverse impacts (2)

Answer 11

Dealers may pass on squeezed rents by reducing quantities transferred to those who do seek benefits e.g saying goods are spoilt

Bargaining power effect could actually strengthen dealer

Question 12

Summary of results MNS for PDS (3)

Answer 12

Authentication (ABBA) had no impact, despite less ghosts, since dealers would still try squeeze rents (claiming spoilt goods)

Increased transaction costs for beneficiaries (e.g dealer would say scales broken so have to make multiple trips)

Increased probability of not getting any benefits by 2.4%

(So digitalisation through authenticiation wasn’t that good)

Question 13

MNS summary findings

Answer 13

Control group was better than the treatment (with ABBA and reconciliation) !!!

19% drop in disbursed value for controls 78% of which fall in leakage.
compared to 37% in treatment, 66% drop in leakage.

(Contrary to predictions)

Question 14

Why was this?

Answer 14

Shadow costs of attempting to control corruption, were higher than direct costs.

While ghosts fell (good) , dealers passed on rent squeeze e.g claiming spoilt goods, so eliminated benefits of ABBA etc, making transaction costs for beneficiaries increase, and increased P of getting benefits by 2.4% as mentioned!!)

Question 15

Field et al: FPRST : Women wage control

Answer 15

Scheme offered 100 days of work at a fixed wage to any household that requests employment.

Linked to the gender take up of bank accounts:

Experiment to see the control of wages women have, since payments were transferred to bank accounts, and most bank accounts were owned by a male household head, and so women have little control over their money

Question 16

Research design in FPRST : what were the 5 groups?

Answer 16

Control group,
Bank accounts (women got their own bank account)
Bank accounts + direct deposit (money paid into their acc)
Bank accounts + training (on how to operate the bank acc)
Bank account + direct deposit + training

Question 17

Findings on female labour supply

Answer 17

Only bank acc + deposit + training group had a significant impact on female labour supply in the short run.

However in the long run effects are insignificant

Question 18

Findings on empowerment

Answer 18

No effects on women empowerment

Question 19

Findings on social norms

Answer 19

The bank account + direct deposit + training group caused a shift in norms, an improvement, husbands accepted women as workers.

Question 20

So what is ruled out (3)

Answer 20

Saving constraints: since all get accounts, and saw no effect on non-NREGS (people not on the employment scheme) deposits

General equilibrium wage effects: No shifts in private sector wages

Other fixed costs

Question 21

Barnwal

Answer 21

Studies Indias DBT (direct benefit transfer) policy : transferring directly to beneficiaries

Question 22

Research design

Answer 22

Dual pricing 2 extreme prices

One subsidised price of LPG (cooking fuel) p-s

Other price is taxed p+t

Differences in price were subsidised directly into peoples (who were eligible via Aadhar verification) bank accounts

Question 23

How much leakages currently in LPG

Answer 23

15% (industry overeport amount distributed, keep supply short and thus price high!)

Question 24

Impact on leakages

Answer 24

Fell during enforcement of DBT , increased after policy terminated

Question 25

Impact on delivery

Answer 25

Delays increased but then fell overtime

(Technology adoption takes time and has initial costs)

Question 26

Impact of black market

Answer 26

Higher prices in black market led to increased formal commercial sales (since DBT gave people benefits of paying formally)