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impact assessment

Impact Assessment Meets the Market

David McKenzie's picture

Rigorous impact evaluations are one of the most important tools we have for understanding “what works” in development. Impact evaluations compare the outcomes of a program or policy against an explicit counterfactual of what would have happened without the program or policy. This kind of evaluation has been gaining more recognition recently, particularly since Esther Duflo, a professor at MIT and a pioneer in this field, received the prestigious John Bates Clark Award. But her work and that of others in the field has focused primarily on health and education. That is starting to change, with finance and private sector development finally getting their due.

In a recent overview paper, I examine why impact evaluations have been slow to occur in the areas of finance and private sector development, and provide examples of successful cases where it has occurred. I suggest key barriers to their use, including (1) a lack of experience with these methods by operational staff working in these fields; and (2) a perception that many of the policies being implemented are not amenable to evaluation.