A study shows how that anti-poverty programs are much more popular when socially well-connected citizens are the first to know about them.
Anti-poverty researchers and policymakers often wrestle with a basic problem: How can they get people to participate in beneficial programs? Now a new empirical study co-authored by two MIT development economists shows how much more popular such programs can be when socially well-connected citizens are the first to know about them.
The economists developed a new measure of social influence that they call “diffusion centrality.” Examining the spread of microfinance programs in rural India, the researchers found that participation in the programs increases by about 11 percentage points when well-connected local residents are the first to gain access to them.
“According to our model, when someone with high diffusion centrality receives a piece of information, it will spread faster through the social network,” says Esther Duflo, the Abdul Latif Jameel Professor of Poverty Alleviation at MIT.
“It could thus be a guide for an organization that tries to [place] a piece of information in a network.”
The researchers specifically wanted to study how knowledge about a program spreads by word of mouth, MIT professor Abhijit Banerjee says, because “while there was a body of elegant theory on the relation between what the network looks like and the speed of transmission of information, there was little empirical work on the subject.”
The paper, titled “The Diffusion of Microfinance,” is published in the journal Science. Banerjee, the Ford Foundation International Professor of Economics at MIT, is also a co-author of the paper. Along with Banerjee and Duflo, the other co-authors are Arun Chandrasekhar of Microsoft Research and Matthew Jackson, an economist at Stanford University.
Duflo and Banerjee are co-founders of the Abdul Latif Jameel Poverty Action Lab, or J-PAL, which is based at MIT and uses empirical field experiments to develop new strategies for poverty alleviation.
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