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This has been a banner year for gathering real evidence about microfinance. There have been two randomized control trials (in India and the Philippines) of the standard microcredit product released, the publication of Portfolios of the Poor with its groundbreaking survey work, and several more studies using rigorous methodologies looking at various aspects and variants of microfinance including savings, vocational training, group vs. individual liability, comparing men and women, and even revisiting the most often cited prior studies and discovering that the positive effects found were probably errors.

All of the evidence from these rigorous studies points if not to a precise conclusion, at least in the same general direction: the story we’re all familiar with about microfinance isn’t really true. First let me say in no uncertain terms that the evidence does not point to harm—where there is a difference it tends to be positive. At the same time, large numbers of poor women are not escaping poverty by starting businesses with a small loan. The evidence (all drawn from the studies linked above) we have tells us:

* Borrowers aren’t much more likely to start a new business
* Many borrowers do not invest significantly in business goods
* Most borrowers do not raise their incomes dramatically
* Borrowers don’t spend more on food or education
* Women are not better users of capital than men
* Group liability does not necessarily have an impact on repayment rates

But does all of this research matter? Will it change what donors believe about microfinance?

In other words, is microfinance more like autism or Hormone Replacement Therapy?

To explain, consider the history of the belief in a relationship between vaccination and autism. More than a decade ago now there were several studies done that showed a link between the MMR vaccine and autism. Those studies had, in hindsight, glaring and obvious methodological flaws. Since then there have been a flood of high quality, large-scale studies with gold-standard methodologies which have shown no link whatsoever between vaccination and autism (for a great survey of the history of autism research see this). A recent survey in the UK suggests that the incidence of autism has remained constant for decades (it’s just terminology and diagnosis that has changed). How many minds have been changed by the research? To an outside observer it certainly seems as if the answer is zero. The anti-vaccine crusaders are as vocal as ever.

On the other hand, you have the example of hormone replacement therapy. A very well-done study a number of years ago concluded that HRT held health benefits for post-menopausal women, helping them avoid not only discomfort but bone loss and heart disease. Then a second, even better study was run that showed that HRT, in fact, raised the incidence not only of heart disease but of stroke and invasive breast cancer (for a good review of the history of research about HRT see this). What was the result of this research? The use of HRT stopped nearly instantaneously. One study was enough to change everyone’s mind and permanently change the practice of medicine. As far as I know there are no large, well-funded organizations of post-menopausal women demanding the return of HRT.

In the case of autism, evidence hasn’t made a whit of difference in many people’s beliefs and practices. In the case of HRT, evidence changed everyone’s minds immediately. Now that we are starting to have evidence on microfinance, will it change minds and practice? Will microfinance behave like HRT? Or will the microfinance industry behave more like autism, with an ever loyal army of defenders of the mythic masses of entrepreneurial women who climb out of poverty on the back of a $100 loan?

It’s a non-trivial question. The perpetuation of the myth of vaccination causing autism is bad for everyone, including those who espouse it. They and their children, friends and neighbors are now more exposed to potentially life-altering diseases. It also distracts funding and research from pursuing the actual causes of and treatments for autism. If supporters of microfinance dig in their heels and continue to peddle the myth, harm will also be done. That harm will come in the form of misdirected donations, missed opportunities for innovation and experimentation, and in the form of large numbers of poor people with continued limited access to the financial services that will make the most difference to them. The biggest risk is that it will do harm because as the gap between the reality and the myth of microfinance becomes clearer, more and more people will reject microfinance entirely for “failing.”

This isn’t a plea to shut down microfinance, nor an attempt to unfairly tarnish it. It’s a plea to recognize what microfinance really does and to figure out how to make it more effective—and that requires rejecting the myths and taking the evidence seriously. That’s why I hope microfinance is more like HRT than autism.

On a related note, I’d be very interested to hear any opinions on why some things are susceptible to evidence and others are not. I’m at a loss to explain the different reactions to research on autism and HRT. What do you think?


While I don’t know much about HRT or autism, I imagine the anti-vaccine movement is still going strong because of nebulous nature of autism and the stigma attached to autistic children. I think parents of autistic children want something to blame for their child’s autism, and vaccines are an easy culprit. By placing blame on something, they no longer have to feel helpless about the condition of their child.

As for HRT, I assume it was was only promoted as a medication to help mitigate health problems. Once it was determined that it didn’t work, and it actually hurt more than it helped, people had no issue dropping it. There was no social pressure attached to it at all.

As for microfinance, I think it probably will go the way of vaccines, in that it will be around for a while, maybe forever. It seems to me that microfinance is too broad and complex to ever have enough negative evidence to put it to rest, especially since no evidence so far has seen a detrimental impact from microfinance. I do agree with you that it isn’t the silver bullet that everyone thinks, but it isn’t something that can just be pushed aside by any amount of studies.

October 29, 2009

I’d point to one difference. The message of the good HRT study is: *don’t* use HRT. The message of the good vaccine studies is: *do* use vaccines. That’s a really big asymmetry. I suspect behavioral economists could help us understand the different responses to information about high risks of action vs. high risks of inaction.

I’m not sure what that implies for microfinance.

October 30, 2009

Well, you have it wrong!! The difference is simply that the “conventional wisdom” norm in the vaccination world was to vaccinate, and vaccination rates have been 90+% for many years, scares aside. So the high quality evidence about autism and vaccines supported something that was already being done, and that was continuing to be recommended by doctors, for good reason. While there does indeed remain a certain hardcore of vaccine resisters, the vast majority of parents get their kids immunized. Even at the peak of the vaccine scare(s), national rates stayed high. If the norm had been not to immunize because of fear of autism, it is unlikely that the epidemiologic studies showing no effect would have raised the rates very much.

In the case of HRT, it is indeed true that quite a lot of its use was halted. This seeming adherence to evidence only occurs when seemingly or purportedly helpful therapies are shown to be actually harmful. If the WHI showed simply no effect of HRT, I believe that economic and medical forces would have continued its use. Even now, it has hardly been stopped in its tracks. There are quite a few doctors who believe - perhaps correctly - that initiating HRT for just a few years shortly after menopause for symptom relief is helpful, but not after age 60. The WHI did not completely close the door on that possibility. According to the NYT, 15-20% of woman now get HRT, which is higher than the roughly 7-10 % of kids not being immunized with the MMR or DPT, only a portion of which are due to autism fears. So more folks adhere to vaccination guidelines than avoid HRT. By large majorities, people believe the vaccine evidence, and fewer believe that HRT is harmful to them, at least when they are young.

So, the bottom line is that you have your numbers and analogy wrong, although the spirit is right. People do react to evidence differently (particularly evidence of harm vs. evidence of benefit), but this is not the example to show it.

October 30, 2009

Thanks to Steve for 1) sharing some great data, and 2) pointing out the “evidence of harm vs evidence of benefit” distinction.

The one place I would quibble very minorly with Steve is that the numbers of the vaccine avoiders seem (and I emphasize seem) to be growing while the research points in the other direction. Perhaps its time to shift the public conversation to the evidence of harm from Hib, measles and other diseases.

October 30, 2009

I have a nonprofit in the Philippines. I have been politely telling my friends back in America that the money does not go where they think it does. I have been trying to tell them the money they give for children does not go to that child. But they don’t want to hear that. I am just a nay sayer.
Its extremely difficult to raise money in this economy and these NGO’s who use slick Hollywood techniques are not helping.

November 10, 2009

I may be your only visitor who knows about both hormone replacement and microfinance.

Your comments on hormone replacement therapy reflect the unfortunate reality that in dissecting statistics, a little knowledge is a dangerous thing.

It’s true that many women did jump off HRT when they read the onerous headlines about a measurable increase in breast cancer with hormone replacement therapy.

I followed your link to the 2002 study on heart disease, which is dangerously out of date.

The bottom line on HRT is that when women begin taking hormones at the onset of menopause, they live longer.  The major big picture focus on HRT is do they benefit women who begin taking them around age 50, or at the onset of menopause.

Details of a massive investigation of HRT are printed in the November 2009 American Journal of Medicine, but informed doctors have holistically counseled women on the benefits HRT since that report a couple years ago.

“Writing in the article, Shelley R. Salpeter, MD, states, “It is clear that these findings need to be interpreted in the light of potential benefits and harms of hormone therapy. The available evidence indicates that hormone therapy in younger postmenopausal women increases the risk of breast cancer and pulmonary embolism and reduces the risk of cardiovascular events, colon cancer, and hip fracture. The cardiovascular benefit is a result of a small absolute increase in stroke and a greater reduction in coronary heart disease events. The total mortality benefit for younger women seen in the randomized trials and observational studies indicates that the reduction in deaths from coronary heart disease, fracture, and colon cancer outweighed the increase in deaths from breast cancer, stroke and pulmonary embolism. In addition to this mortality benefit, hormone therapy in younger women provides an improvement in quality-of-life measures, at least in the first few years of treatment.“

Given the reality that women are the primary beneficiaries of microfinance—being family focused and not drinking the loan money says Dr. Muhammad Yunus— I want to caution you not to jump too quickly to the bottom line on microfinance.

You talk about the harmful effects of HRT with statistical confidence. Reality is that the whole patient actually lives longer. 

Let us not make the same mistake with microfinance, where the stakes are frankly much higher . . . unless we consider all the American women who may have shortened their lives by saving beautiful breasts instead of living longer.

With so much misinformation out there about HRT, it would be great if you would investigate your assertion more fully and print a retraction if you agree with my point. I suggest not in comments, where most people and search engines will struggle to find it.

If you find the references are incorrect, pls let me know. Like you, I don’t want to misrepresent the facts.

Peace and good for you blogging the philanthropy topic, Anne

November 10, 2009


having looked through the links you provided, I am unpersuaded that the conclusions you draw are the only correct ones. In fact, the page from Science Daily you link to provides links to a number of other studies that contradict the study you point to.

That however gets into a debate about observational studies vs RCTs and the value of meta-analysis. And that’s not the point of this post.

The point of this post is that certain ideas and behaviors are changed by data and others are not. The fact that the WHI study changed behavior is what is interesting here—not the discussion of the relative merits of various studies on HRT.

The question surrounding microfinance in this regard is that will the increasing availability of data have an impact on the practice of MFIs and of donors.

November 10, 2009

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