Painting the Impact Picture: What Method is Best?

> Posted by Elisabeth Rhyne
At next week’s Microfinance USA conference, I have the honor of leading a session on one of the hottest topics in microfinance these days: impact. Interest in impact has surged recently because of the big press coverage garnered by the researchers associated with MIT’s Poverty Action Lab and their new randomized controlled trials. At the session we’ll talk about how these new studies work (in layman’s terms – I’m no econometrician) and what their results are showing about microfinance.
To start off, I’d like us to consider all the ways we can learn about the impact of microfinance. Like these:

  • The seeing-is-believing method – otherwise known as talking to clients or anecdotal evidence.
  • The market method – if customers pay for the services, they must value them.
  • The institutional method – sustainable institutions that serve the poor are prima facie contributions to more inclusive societies.
  • The anthropological approach – talking intensively to clients in a structured way that allows inferences to be drawn. Recently the Financial Diaries approach has done this.
  • The simple quantitative-survey approach – used for years despite suffering from many design flaws.
  • And finally, the experimental-design approach, a statistically rigorous model patterned after medical drug trials, which is capturing today’s headlines.

I think we learn from all of these methods.  It’s like we are painting a picture using different kinds of paint and brushes. Gradually, our picture takes on shape, color and texture, and ultimately all these elements come together to convey meaning.
At our session, I want to move beyond the often divisive arguments about which research method is better than others and look instead at the emerging painting, which is complex. The title of the session is Microfinance: Miracle or Myth.  Of course you can guess that my answer is, something else.