Last updated on May 6, 2011
Last week, Jean-Marie Baland (who was my colleague while I was on research leave at the University of Namur last year, and who is himself on leave at Harvard this year) was visiting Duke. One of the two talks Jean-Marie gave was about “The Distributional Implications of Group Lending,” in which him and his coauthors show that in most cases, group lending is more beneficial to the middle class than it is to the poor.
During one of the many conversations I’ve had with Jean-Marie last week, I asked him what had motivated him and his coauthors to look at that particular question. He explained that the literature’s heavy focus on repayment rates had pushed him to think beyond repayment rates and about the welfare impacts of group lending.
Being Busy Is Not Necessarily Being Productive
The broader point behind Jean-Marie’s approach is that repayment rates are not very informative. In an effort to build up their reputation as credit-worthy, a borrower could take out a loan, sit on the borrowed money, and repay it when it is due. Consequently, repayment rates tell us nothing about whether microfinance and group lending actually make people better off: they only tell us whether microfinance institutions (MFIs) are good at reducing default rates. But while a reduction in default rates may mean that MFIs make more loans, it tells us nothing about what these loans actually accomplish.
This reminds me of the first piece advice usually offered by productivity bloggers and “lifehackers“: Do not confuse busyness with productivity. In other words, I can spend all my morning responding to email, and it may make me feel productive, but it will not contribute positively to my research productivity.
(Oddly enough, this is very similar to Jean-Marie’s own approach to productivity: he does not check email when he is at home or on vacation; he only starts doing math once he has carefully thought through the setup of the problem he wants to study; etc.)
Incidentally, Tom Murphy over at A View from the Cave had a post on the related topic of confusing success with failure. Discussing a Harvard Business Review infographic titled “When Failure Looks Like Success,” Tom writes:
“Looking at water projects in Bangladesh, this shows how solutions were found that ended up being failures leading to a cycle of success looking like failure. The lesson is simple, but it highlights the importance of strong monitoring and evaluations after a project has been installed:
‘The organizations did not fully assess their projects’ impacts. Because they measured success only by the number of wells built and the decline of waterborne illnesses, they missed early signs of the arsenicosis crisis. And they were slow to spot the social problems the painted wells created. They should have developed broader measures of community health and continually monitored them over time, in partnership with the communities.'”