Macours, K., and R. Vakis, 2008. “Changing households’ investments and aspirations through social interactions: Evidence from a randomised transfer program in a low-income country,” mimeo, Johns Hopkins University and World Bank.

This paper analyzes the role of social interactions in determining households’ responses to an asset transfer program. It analyzes whether investments and accumulation patterns are affected by the proximity to female leaders who themselves were also beneficiaries of the transfer program. We identify the role of female leaders through the randomized assignment of leaders and other beneficiaries to three different interventions within each community. This allows identifying the role of social interactions for the heterogeneity of program outcomes. We find large social spillover effects on human and physical capital accumulation and aspirations. Finally, we explore various mechanisms through which the social dynamics might play a role and investigate the relationship with the change in aspirations.

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Macours, K., N. Schady and R. Vakis, 2008. “Cash Transfers, Behavioral Changes, and the Cognitive Development of Young Children: Evidence from a Randomized Experiment" mimeo, Johns Hopkins University and World Bank.

This paper analyzes the impact of a randomized cash transfer program on cognitive development in early childhood in rural Nicaragua. We first show that a very large sample of children in our sample are delayed along various dimensions, including language, memory, and social skills, and that these delays are related to household per capita expenditure levels. We then show that the program had significant effects on cognitive outcomes, especially language. Program impacts are larger for older pre-school aged children, who were also more likely to be delayed. We analyze how the program affected several inputs into early childhood development that have been identified as key risk factors in the literature. Households randomly assigned to receive transfers increased the consumption of nutritious foods and provided more cognitive stimulation to children than those assigned to the control group. Moreover, we show that these impacts are not due to the cash component of the program only. The expenditure patterns of beneficiary households are significantly different from those of control households, indicating that households do not spend the cash received through the program in the same way as other income.

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