I’ve been meaning to read for the last month this new paper by Orazio Attanasio and co-authors, which is the latest in the still small number of studies to carry out a randomized experiment to measure the impact of microfinance. David Roodman was quick to give his thoughts on it in this post, but I thought I’d also summarize it briefly for you and offer my thoughts.
Diseases like malaria, diarrhea and intestinal worms plague hundreds of millions of people in the developing world. A major puzzle for development researchers and practitioners is why the poor do not purchase available prevention technologies that could reduce the burden of these diseases. While much of the recent literature has focused on price elasticities of demand and behavioral explanations, another potential explanation is that liquidity constraints prevent the poor from undertaking profitable health investments.