Welfare, Work, and Wellbeing: Evidence from an Informal Settlement in Kenya

2014-09-22

2014-10-03

Outcomes I: Expenditures

During the course of the experiment, PBK accepted the vouchers distributed during the experiment and redeemed the value of the vouchers for any item (or the set of restricted items), according to the instructions on each voucher. Vouchers were labeled with ID numbers reflecting the individual’s unique identifier, the treatment group, and the date of issuance in a manner that was not transparent to subjects.

Every time a subject paid for his/her purchases with vouchers, PBK Nonic Supermarket staff stapled the receipt to the voucher. Next, a Busara research assistant with experience conducting randomized field experiments and familiarity with the local culture reviewed the vouchers and attached receipts for errors. The research assistant then collected all vouchers at the end of the day and returned them to the Busara office.

Participants could redeem their vouchers anytime from the start of the experiment until a week after the experiment concluded. This timeline gave participants up to three full weeks to redeem their vouchers. Through this partnership with PBK Nonic Supermarket, we were able to track the proportion of the vouchers spent on essential versus non-essential goods, along with the voucher type (Self or Family, conditional or unconditional), amount spent, date redeemed, and other information associated with the subject. This data served as basis for the analysis on consumption.

Outcomes II: Baseline, Daily, and Endline Surveys

Three survey types were administered during the study. First, on the initial day of the study, participants completed a Baseline survey. The Baseline survey asked questions related to people's current emotions (using a PANAS scale), weekly spending habits, employment, household characteristics, familiarity with the PBK Nonic Supermarket, and decision-making power within the household.

Second, every day of the study after the initial day, participants completed a Daily survey that asked the same “current emotions” questions from the Baseline survey, but did not include the additional questions in the Baseline survey.

Third, at the end of the study participants completed an Endline survey, which asked a series of questions on self-esteem, general happiness, and optimism. The Endline survey was designed to measure overall life satisfaction and wellbeing, rather than incidental happiness, enabling us to distinguish between “fleeting” effects of the treatments on wellbeing as opposed to longer run effects on disposition. The Endline survey also asked about family dynamics, income levels, how subjects approached spending the vouchers, and how they felt about their consumption decisions.

Outcomes III: Effort and Worker Productivity

Two measures of effort and productivity were collected. First, for all treatment groups, attendance and timeliness was tracked by on-site field officers. Second, for the Work treatment only, the productivity of each worker was measured by: 1) weighing of the amount of lentils and rice sorted in the work period; 2) keeping track of the precise time spent sorting for each subject; and 3) computing grams sorted per minute as a proxy for productivity/efficiency.

Subjects
The subjects in this experiment were 432 individuals living in the Kawangware area of Nairobi, Kenya, selected at random for recruitment to the study from the subject pool maintained by the Busara Center for Behavioral Economics.

Study Design
The field experiment was conducted in Kawangware, an informal settlement located approximately 15 kilometers from the Nairobi city center. Participants were randomly assigned to three treatment groups, described below, located in three different community halls. Each community hall hosted four sessions per day at the same times each day: 9:30 AM, 11:30 AM, 1:30 PM, and 3:30 PM.
After subjects were recruited by phone, they were asked to select one of four time slots during the day for their participation in the study. Once participants were confirmed for a given time slot, they were randomly assigned to one of the three treatment groups and notified of the location where they had to report every day. The assignment to one of three treatment groups were not known to the participants prior to arrival at the location. This design helped avoid any selection bias stemming the time of day that people chose for their participation in the study.

Treatment Groups
Subjects were randomized into three main treatment groups, namely:
1. Work: People who worked in the treatment location for one hour each day in exchange for a daily payment of two unconditional PBK Nonic Supermarket vouchers.
2. Wait – Unconditional: People who waited in the treatment location for one hour each day in exchange for a daily payment of two unconditional PBK Nonic Supermarket vouchers.
3. Wait – Hybrid: People who waited in the treatment location for one hour each day in exchange for a daily payment of one unconditional PBK Nonic Supermarket voucher and one conditional PBK Nonic Supermarket voucher that could be used for “basic” food items only (Maize/wheat flour, rice, sugar, or cooking oil).

The total face value of the vouchers provided each day to the subjects was therefore across treatments, and was an amount slightly higher than an average daily wage for most participants.

Randomization done on the computer.

Individual level randomization.

No

Clustered within each timeslot individuals signed up for (so that we had equal numbers of people in each session).

432 individual subjects

144 Wait Unconditional; 144 Wait Hybrid; 144 Work

PreAnalysis Plan

PreAnalysis Plan v2

Restrictions like work requirements and constraints on voucher transfers are often used in social welfare systems, but little empirical evidence exists on their impact on wellbeing. We conducted a 10-day randomized experiment with 432 individuals living below the poverty line in the Kawangware settlement of Nairobi, Kenya, testing two elements of social welfare design: workfare versus welfare and restricted versus unrestricted vouchers. Participants were randomly assigned to a “Work” condition, involving daily work for unrestricted vouchers, or one of two “Wait” conditions, involving daily waiting for vouchers that were either unrestricted or partially restricted to staple foods. We find that working improved psychological wellbeing relative to waiting, suggesting that the means of implementing welfare programs may have important effects on individuals beyond the impact of monetary benefit alone. Furthermore, although the restrictions were inframarginal, partially restricted vouchers crowded-in spending on staple foods, suggesting the existence of a “flypaper effect” in spending from restricted vouchers.

Bhanot, S.P., J. Han and C. Jang. 2018. Workfare, Wellbeing and Consumption: Evidence from a Field Experiment with Kenya’s Urban Poor. Journal of Economic Behavior and Organization, 149, 372-388.

https://doi.org/10.1016/j.jebo.2018.01.007