Description: Replicating Replication : Due Diligence in Roodman and Morduch’s Replication of Pitt and Khandker (1998)

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Replicating Replication : Due Diligence in Roodman and Morduch’s Replication of Pitt and Khandker (1998)

"The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence," by David Roodman and Jonathan Morduch (2011) is the most recent of a sequence of papers and postings that seeks to refute the findings of the Pitt and Khandke...

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Bibliographic Details
Main Authors:	Pitt, Mark M., Khandker, Shahidur R.
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	AGRICULTURE ALGEBRA BIASES CALCULATION COEFFICIENTS CONSISTENT ESTIMATES CONSTANT TERM CONSUMPTION FUNCTION COVARIANCE CRITICAL VALUES DATA MATRICES DEPENDENT VARIABLE DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DUMMY VARIABLE DUMMY VARIABLES ECONOMETRIC ANALYSES ECONOMETRIC ANALYSIS ECONOMETRIC METHODS ECONOMETRIC MODEL ECONOMETRIC MODELING ECONOMETRIC THEORY ECONOMETRICS ENDOGENOUS VARIABLES EQUATIONS ERROR ERROR TERM ESTIMATION COMMANDS ESTIMATORS EXOGENOUS REGRESSORS EXOGENOUS VARIABLES EXPERIMENTATION F-TEST FINITE SAMPLES FIXED EFFECTS HYPOTHESIS TESTING INDEPENDENT VARIABLE INDEPENDENT VARIABLES INSTRUMENTAL VARIABLES INSTRUMENTAL VARIABLES REGRESSION JOURNAL OF ECONOMETRICS KURTOSIS LARGE NUMBER LEAST SQUARES REGRESSION LOG-LIKELIHOOD FUNCTION MATHEMATICS MATRICES MATRIX MAXIMUM LIKELIHOOD MAXIMUM LIKELIHOOD ESTIMATION MAXIMUM LIKELIHOOD METHOD MEAN VALUE MOMENT CONDITIONS NONLINEARITY NORMAL DISTRIBUTION 0 HYPOTHESIS NUMBER OF OBSERVATIONS OUTLIERS PANEL DATA PARAMETER VECTOR POLITICAL ECONOMY POSITIVE EFFECTS PRECISION PREDICTION PROBABILITIES PROBABILITY PROBABILITY VALUE RANDOM SAMPLING RANDOM VARIABLE RANDOM VARIABLES REASONING REGRESSION EQUATION REGRESSION MODEL RESEARCH PAPERS RESEARCH REPORT RESEARCH WORKING PAPERS SAMPLE DESIGN SAMPLE SIZE SET OF VARIABLES SIMULATION SIMULATIONS SIMULTANEOUS EQUATIONS SKEWNESS SLOPE COEFFICIENTS STANDARD DEVIATION STANDARD DEVIATIONS STANDARD ERRORS STATA STATA CODE STATISTICAL THEORY STATISTICALLY SIGNIFICANT EFFECT T-RATIO T-RATIOS TEST STATISTIC TEST STATISTICS VALIDITY WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2012/11/16985792/replicating-replication-due-diligence-roodman-morduchs-replication-pitt-khandker-1998 http://hdl.handle.net/10986/12111

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Summary:	"The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence," by David Roodman and Jonathan Morduch (2011) is the most recent of a sequence of papers and postings that seeks to refute the findings of the Pitt and Khandker (1998) article "The Impact of Group-Based Credit on Poor Households in Bangladesh: Does the Gender of Participants Matter?" that microcredit for women had significant, favorable effects on poverty reduction. In this paper the authors show that these latest Roodman and Morduch claims are based on seriously flawed econometric methods and theory and a lack of due diligence in formulating models and interpreting output from packaged software. On the basis of Roodman and Morduch's preferred two-stage least squares regression, an alternative calculation of the standard errors would lead one to conclude that the problem with Pitt and Khandker is that they underestimate the positive and statistically significant effect of women's credit on household consumption. As in their previous efforts, the methods of Roodman and Morduch are shown to bias the findings in the direction of rejecting the results of Pitt and Khandker. We also further examine two aspects of our instrumental variable approach that have been attacked by Roodman and Morduch. The first is the validity of the exclusion restrictions underlying the use of interactions between program choice and the set of exogenous variables (including the village fixed effects) as instruments. The second is the application of the "one-half acre" program eligibility rule. The authors show that identification does not require both of these, and present new results dropping each assumption in turn. The results originally reported in the Pitt and Khandker paper hold up extremely well in this new analysis.