The Effect of Cash Transfer Programs on Height-For-Age and Weight-For-Age of Infants in Rural Ecuador: A Quantile Regression Approach

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1 MSc in Economics Faculty of Economics and Business University of Amsterdam The Effect of Cash Transfer Programs on Height-For-Age and Weight-For-Age of Infants in Rural Ecuador: A Quantile Regression Approach Mauricio Chavez Gomez ( ) Master Thesis Supervisor: Prof. dr. H. Oosterbeek 1

2 Table of Contents 1 Introduction Literature Review Cash Transfer Programs Quantile Regression for Assessing Anthropometric Measures Height-for-Age, Weight-for-Age and its Implications for Children Empirical Approach Intention-to-treat (ITT) Quantile Treatment Effect (QTE) Data Results Conclusion REFERENCES

3 1 Introduction Cash transfer programs have been used as a strategy for reducing poverty for more than 15 years already. Other goals of these programs include health, schooling and nutrition improvements for children (Fiszbein et al. 2009). Departing from these goals, it is natural that one may ask: how effective are cash transfer programs in improving these conditions? The present thesis addresses one dimension of this question by asking: What is the Effect of Cash Transfer Programs on Height-for-Age and Weight-for-Age of Infants in Rural Ecuador? More than 100 million people benefit from cash transfer programs around the world (only in Brazil and Mexico, beneficiaries add up to more than 60 million people) with coverage proportions that can reach the 40% of the population for some countries. In terms of money, this intervention can cost up to a 0.5% of the country GDP as in Brazil and Ecuador (Fiszbein et al. 2009). From this perspective, it is important to evaluate if this policy is having the expected results in the dimensions it is intended to improve, as significant amounts of resources are allocated to it. One of the dimensions in which positive results are expected is child nutrition. Undernutrition is a major health problem around the world (as major as to be included in the Millenium Development Goals) due to the negative consequences that it can have for children, as for example: higher mortality rates (Caulfield et al. 2004), reduced mental development (Ruel & Hoddinott 2008), poorer school achievement (Grantham-McGregor & Ani 2001), among others. Unicef et al.(2012) estimate that more than 150 million children around the world suffer from low Height-for- Age (stunting), while more than 100 million suffer from low Weight-for-Age (underweight). If policy makers expect that cash transfers can reduce the incidence of undernutrition, then it is important to thoroughly evaluate these programs. Proper evaluation will allow deciding if complementary interventions are actually needed for fighting against this problem. There is an extensive body of literature evaluating the impact of cash transfer programs. Fiszbein et al. (2009) survey this literature and for the specific outcomes, results are mixed. Positive impacts on children s height are found in Colombia and Mexico whereas in Brazil, Honduras, Nicaragua and Ecuador no impact is found. These evaluations have been carried through the use of Ordinary Least Squares (OLS) in a Randomized Controlled Trial (RCT) design; except for the one in Colombia which used a Differences-in-Differences with Propensity Score Matching approach. The contribution of the current work on the reassessment of the Ecuadorian cash transfer program lies on the utilization of Quantile Regression Methods. Quantile Regression (QR) has the advantage of being robust to outliers and more informative than OLS. This approach was originally proposed by Koenker & Bassett (1978) as the Least Absolute Deviations method, in which the minimization of the absolute values of the errors yields the median. While the mean of a distribution will move along with outlying observations, the median will remain in the same place. For this reason, the optimality of the mean estimation is dubious when the 3

4 distribution is non-gaussian, making QR more robust and superior in this case. From this, it is straightforward that the normality assumption is not needed to consider the QR estimation unbiased, in contrast to OLS which heavily relies on it. The use of Quantile Regression (QR) allows analyzing the impact of the program at different points of the conditional distribution of the outcome, whereas with Ordinary Least Squares only the mean impact is obtained. This gives a better overview of the results, and the analysis of different quantiles is highly useful in assessing health related outcomes. For this type of indicators, it is common to find the most vulnerable individuals in the tails of the distribution; therefore, raising an interest on having information about the impact of the intervention on different quantiles. Although the main interest is the effect of the cash transfer program, this empirical tool also helps to have a more detailed idea of the associations of the outcome variables with the control variables for the different points of the distribution. This allows not only answering the question Does it matter? but as well For whom and how much does it matter? In addition, Quantile Treatment Effects (QTE) are also estimated. QTE gives the chance of instrumenting the variable of interest in order to eliminate endogeneity. In this case, self-selection is the potential source of endogeneity since in spite of being randomized into the treatment group, only 84% of the subjects actually took the program. The empirical exercise shows that the program has no effect on Height-for-Age at any quantile. In contrast, for the Weight-for-Age indicator, the estimation shows that the program has a negative effect of roughly 13% of a standard deviation at the 75 th percentile. With respect to the set of covariates, positive associations are found between the outcome variables and the education years of the mother whereas negative associations are found between the outcomes and the amount of people in the household. In addition, signs of vulnerability for younger children are observed since being in the age group of 0-12 months in baseline is associated with having up to approximately 40% and 50% of a standard deviation less in Height-for-Age and Weight-for-Age respectively. The remainder of this thesis is organized as follows. The next section provides a literature review on the relevant issues concerning this topic. Section 3 describes the empirical approach. Section 4 the data used. Section 5 shows the main findings and section 6 gives a final summary and conclusions. 2 Literature Review 2.1 Cash Transfer Programs By the year 2010, at least three regions in the world namely Sub-Saharan Africa, South Asia and Latin America and Caribbean- had implemented cash transfer programs in order to confront several problems related to poverty and the associated vulnerability of the poorest. These three regions include more than 20 countries with most of them located in Latin America and Caribbean with programs like: Bolsa Familia for Brazil; Familias en 4

5 Acción for Colombia; Bono de Desarrollo Humano for Ecuador; Oportunidades / Progresa for Mexico; Juntos for Peru, among others (ELLA 2011). Cash transfer programs have been implemented with the aim of reducing inequality, stopping intergenerational transmission of poverty and also improving health, schooling and nutrition for children (Fiszbein et al. 2009). The pathway through which these objectives are attained partially lies on the conditionality that can be attached to these cash transfer programs. More specifically, these programs are usually designed with conditions that need to be accomplished in order for the households to receive the transfer. Examples of these conditions are: children attending a minimum of school days, health checkups and receiving dietary supplements; pregnant women attending perinatal controls; parents attending meetings in relevant topics for development (nutrition, for example) and others. If these conditions actually contribute to reach the desired outcomes is not subject of this thesis, though some interesting positions can be found in Baird et al. (2011); de Brauw & Hoddinott (2011) and Freeland (2007). In the specific health case, the evidence of mean impacts of cash transfer programs on anthropometric measures is mixed. In the World Bank s Policy Research Report Conditional Cash Transfers Reducing Present and Future Poverty prepared by Fiszbein et al. (2009), Mexico and Colombia show a positive impact of their program on Height-for- Age while the programs in Brazil, Honduras and Nicaragua show no impact on this outcome variable. For the rural Ecuador case, Fernald & Hidrobo (2011) show that the cash transfer has no effect on Height-for-Age and hemoglobin levels for children aged between 12 and 35 months. Likewise, on assessing the effect of the Ecuadorian program on physical measures (hemoglobin, height and fine motor control), Paxson & Schady (2010) find no effect; although, when the sample is disaggregated by income and age, there are some modest effects as the authors mention. As seen in this sub-section, the impact of cash transfer programs on anthropometric measures such as Height-for-Age and Weight-for-Age is mixed; and, in the particular case of study (Ecuador) it is rather inexistent. Nonetheless, all the treatment estimations are only mean estimates while the attempt of the present thesis is to find estimations at different quantiles of the outcome variable. The advantage of using the Quantile Regression methodology would be to verify if at least for the Ecuadorian case- there is no impact at the tails of the weight and height distributions. This would be of better interest than just a mean effect, considering the severe health problems that can arise from being located in the tails of these distributions. 2.2 Quantile Regression for Assessing Anthropometric Measures As many authors coincide, more than 90% of all of the empirical research lies in the estimation of mean effects. Therefore, it is difficult to find studies using methodologies as Quantile Regression (QR), in which an impact is analyzed along the whole distribution of 5

6 the outcome variable. The fields of application of QR are varied. Yu et al. (2003) survey several topics in which the methodology in its different forms can be or is applied: reference charts in medicine as for example growth charts-; survival analysis for example expected time of survival of a heart transplant patient-; financial value at risk; income studies in labour economics; hydrology modeling rainfalls for water provision, for instance-; and, detecting heteroskedasticity. Other applications relate to improvements in the education field and many others use this empirical tool in order to assess inequality usually income inequality among different groups. From the few studies addressing a somewhat similar research question and using the QR methodology, I mention two of them. In Variyam et al. (2002) the authors try to find the association between sociodemographic variables like income, race, or region; the intake of macronutrients and anthropometric measures for a sample of the US population. The motivation for using QR is the fact that the most affected individuals by problems derived from the intake of macronutrients are not the ones around the mean of the distribution but those on the tails high fat consumption or low protein consumption, for example. As the authors also explain, an OLS type of method would be appropriate if the impact of the explanatory variables were the same for every individual in the outcome variable; but usually this can t be assumed with medical related issues. Aturupane et al. (2008) find a similar motivation to use the methodology as the one used in this thesis and in the previously mentioned article. In their study, they try to find the determinants of child weight in Sri Lanka. The authors state that there are several interventions that may not impact the average child, hence the importance to assess them for the ones that are at the bottom of the nutritional distribution (who usually are the ones with more risk). They also state that the QR method does not simply answer if policy intervention can affect nutrition on children but more specifically and more relevant, the method allows them to answer who are the ones that are actually being influenced by the intervention. In their preferred specification they use variables such as child s age, sex, birth order, expenditure, among others; and, their outcomes of interest are Height-for-Age and Weight-for-Age for children under 5 years old. Although the study addresses an interesting research question, the way the methodology is used would be analogous to just using OLS on a cross-section with potentially endogenous variables (this method is also used in the study for comparison purposes). Consequently, the study does not look for a causal relation but only for correlations of the explanatory variables with the outcomes at different quantiles of the distribution. Although there are good reasons which will be presented in section 3- for using QR to address the present research question, to my own knowledge and as the scarce literature shows-, cash transfer programs have not been analyzed under this approach. 6

7 2.3 Height-for-Age, Weight-for-Age and its Implications for Children Chronic malnutrition or stunting is understood as the delay or reduction on child s potential growth over time, which can be the result of a prolonged nutritional deprivation or severe illnesses with consequences to cognitive and organ development. On the other hand, underweight corresponds to a low Weight-for-Age which can be a consequence of past or present undernourishment (Nutrition Works et al. 2011). A child is stunted if his or her Height-for-Age is two standard deviations or more below the median of the world s referential measures. Likewise, a child is underweighted if his or her Weight-for-Age is 2 standard deviations below the median. In 2011 about 165 million children under 5 years old around the world suffered from stunting with the 90% of this group being concentrated in Asia and Africa; roughly 100 million children around the world suffer from underweight (UNICEF et al. 2012). The usual mechanisms through which stunting or underweight can cause serious impairments in the cognitive development of children, or even death, are deficiencies in vitamins and minerals. Lack of zinc is associated with deaths by diarrhea, pneumonia, malaria and measles. In a study conducted by Caulfield et al. (2004) using data from 10 cohort studies, it is stated that roughly more than half of deaths for the causes mentioned before can be attributed to undernourishment or low Weight-for-Age. In addition, Ruel & Hoddinott (2008) refer to iodine and iron deficiencies primarily affecting mental development and functioning as well as vitamin A deficiencies leading to blindness or death. Furthermore, iron deficiency leading to anemia can affect the structure of the central nervous system creating cognitive problems and inducing behavioral issues such as children isolating themselves due to a limited movement capacity and being more fearful, tense or unhappy (Grantham-McGregor & Ani 2001). Although the consequences of undernourishment seem to be widely understood in medical terms, it is more complicated to trace down its effects on other variables of interest such as school performance or academic attainments. This is mostly due to the scarce amount of studies that can actually state causal relationships in the light of statistical inference. Many of the existing studies can t be interpreted as causal as it is not clear, for example, if undernourished children perform worse in school because of their lack of nutrients or if it is confounded by their general disadvantaged situation (Glewwe & King 2001). Even though many studies do not have a causal interpretation, it is worth mentioning some interesting associations that have been found. Grantham-McGregor & Ani (2001) in a review of previous studies on the effect of iron deficiency on cognitive development, show that anemic children older than 2 had poorer cognition and school achievement than their non-anemic counterparts. Furthermore, anemic children before the age of 2 do not necessarily catch up with non-anemic ones even after receiving iron supplements. As a critique to this type of studies, Pollitt (2001) states that cognitive development scales that 7

8 have been designed in order to search for this associations do not have the adequate characteristics to compare development of children in the first two years of life, which casts doubt on their results. Nevertheless, he recognizes that iron deficiency can indeed affect some mental functions in early and late development. Mendez & Adair (1999) inspect the relationship between stunting in the first 2 years of life and cognitive development of the same children at the age of 8 and 11. The authors use data from the CEBU Longitudinal Health and Nutrition Study in Philippines with more than 2000 subjects. Delayed initial enrolment, higher rates of absenteeism, repetition of grades and lower cognitive test scores are found among the kids who were stunted by the age of 2. An interesting finding of this study is the fact that the gap of test scores between stunted and non-stunted children is smaller at age 11 than at age 8, showing the possibility of a catch-up. In the same vein, using a panel dataset Alderman et al. (2006) find that better Height-for-Age scores are related to higher school attainments, starting school earlier and being taller later on in life. The empirical approach of this study consists on a maternal fixed effects instrumental variables approach, exploiting the exposure of some siblings of the same family to a civil war and a drought in rural Zimbabwe. Finally, in an unusual Randomized Controlled Trial (RCT), using a sample of 555 children in a Kenyan school, the impact of dietary intervention on cognitive development was studied by Whaley & Sigman (2003). The treatment group received meat, milk or an energy supplement during 21 months while the control group received no intervention. Children who received the meat and energy treatment had better achievements in arithmetic ability. Only-meat treated kids had the best outcomes in tests regarding comparisons, analogies and perceptual details. Although the actual mechanisms of the effects that have been reviewed in this sub section are not completely clear; it is indeed clear that nutrition in early childhood remains to be a critical issue that needs prior attention. Failure to address the undernutrition problem can expose children to all the unwished outcomes reviewed in this section. 3 Empirical Approach Quantile Regression was originally proposed by Koenker & Bassett (1978) as an alternative for the ordinary least squares method in the presence of outliers. As in OLS, the quantile regression method departs from the minimization problem of the loss function namely, the minimization of the prediction errors. One of the main differences lies in the characterization of the loss function: while OLS finds the parameter that minimizes the squared of the errors, QR as presented by Koenker & Bassett (1978) minimizes the absolute value of these deviations. Therefore, the method was named as Least Absolute Deviation when the quantile of interest is the 0.50 th quantile or, in other words, the median. 8

9 More formally, If as a function of is the estimation of, then the error of estimation or loss function will be ( ) with. As just above mentioned, OLS will minimize the square of the error, ( ), while the Least Absolute Deviation will minimize its absolute value, ( ). In the same way that the sample mean is defined as the solution to the minimizations of the sum of squared residuals, the solution to the minimization of the sum of absolute residuals yields the median (Koenker & Hallock 2001). OLS assumes that the data is distributed in a symmetrical way, and in this case the mean and the median will be the same. In case of asymmetry, the mean of the dependent variable will move along with outlying observations therefore invalidating the inference process that is derived from the estimation of the parameters. Nonetheless, the median will remain located in the same place; this is the foundation of the robustness of the method to outliers. This also implies that no assumptions about the distributional form of the errors shall be made. For the present thesis, it is not only the median effect to be analyzed, but also the corresponding effects at different quantiles than the 0.50 th. More generally, my interest is on, the Conditional Quantile Function (CQF) at different quantiles given a set of predictors, which is represented as: ( ) ( ) (1) where the infimum requires that the cumulative distribution function of given, ( ) is equal or greater than the quantile of interest. Assuming integrability and not necessarily a linear relationship of the outcome variable with the regressors -as noted in Angrist et al. (2006)-, the CQF problem is solved through: ( ) (2) With representing the weighting function of the errors which in contrast to the OLS weighting function- is asymmetrical except when the quantile of interest is the 50 th as it is defined as: ( ) { ( ) ( ) (3) so that a weight of ( underestimation. ) is used in overestimation, and similarly a weight of ( ) for 9

10 The use of quantile regression is justified if it is expected that the effect of the regressors on the response variable is not the same at different points of the conditional distribution of the outcome. If it were expected that the regressors have the same effect along the whole distribution, then a mean estimation suffices. This is known in the quantile regression terminology as a location shift as the regressors move the average, and the other parts of the distribution move in the same way, only shifting the complete distribution. For the anthropometric indicators under analysis, it is expected that the regressors have different effects along the distribution of the outcomes. For example, the cash transfer may not have a significant impact at the center or right tail of the distribution (the well-nourished children) as these children might have attained their growth potential already; in contrast, it may have a significant effect for those located in the left tail of the distribution (the undernourished children) as they haven t attained their appropriate height or weight. In the same way, it can be the case that an extra member in the household is more problematic for those in the lower quantiles than for those in the upper ones. Indeed, a QR approach is more suitable in this case than just a mean estimation approach, for all the relevant information that is not obtained when using the latter. 3.1 Intention-to-treat (ITT) As mentioned before, I am interested on the effect of the cash transfer program on Height-for-Age and Weight-for-Age of children in rural Ecuador. It must be specified that since roughly 84% of the assigned to treatment group actually took the program, the effect sought is the Intention-to-Treat (ITT). ITT estimates become of interest when as in this case- there is partial compliance of the treatment. This means that due to dubious exogeneity of actually receiving treatment and in order to avoid making unfounded assumptions-, the only causal effect that can be for sure interpreted is that of offering treatment to individuals. This effect is assumed to be exogenous given baseline characteristics. Consequently, the relationship to be modeled in the solving minimand of the Conditional Quantile Function, is defined: where represents the outcome of interest for the th child in the sample, refers to the randomization of individual to treatment or control group, the set of covariates, and the error term. As it is seen, it is not the status of actually receiving the treatment which is used for the estimation, but if the individual was initially assigned to treatment or control group. The th quantiles of interest are 0.05, 0.25, 0.50, 0.75 and The first two are relevant since for the sample used they are close to the cutoff points of three and two standard deviations below the mean of the anthropometric measure respectively. Two standard deviations below the mean is indicated as moderate undernutrition while three standard (4) 10

11 deviations below the mean as severe undernutrition. The 0.50 th quantile or median estimator is useful in this case to be compared with an OLS or mean estimator. To use an OLS estimator as a benchmark will allow to have an idea on the strength of outlying observations for biasing the estimation. In addition, to compare the mean estimator with estimations at different quantiles will help to understand the usefulness of the method. If all the coefficients obtained through QR are very similar to the ones obtained through OLS, then there is not really useful information lost if only a mean estimation were used. On the other hand, if the coefficients differ across quantiles and from the mean estimator, then QR is very useful to have a better overview of the relationship between predictors and outcomes. An important consideration must be mentioned with respect to the interpretation of results. As Angrist & Pischke (2008) point out, the estimations obtained through the use of Quantile Regression refer to effects on distributions rather than effects on individuals. For example, if the cash transfer had a positive significant effect on the fifth percentile of the conditional Weight-For-Age distribution, it is not necessarily that those infants are now better nourished. It is more accurate to state that those who are badly nourished receiving the treatment, are not as badly nourished as they would be in the case of not having received it. Thus, it is possible to say that they are better off after the treatment, but not that they are now in an upper quantile of the distribution due to the intervention. 3.2 Quantile Treatment Effect (QTE) The advantages of QR over OLS do not prevent it from yielding biased estimations in presence of endogeneity. The basic QR has been analogously compared to be an OLS type of estimation in the sense that its interpretation can t be causal if there are endogenous variables. Partial compliance is a relevant source of endogeneity. One can t rule out the possibility that the group of actual treated and non-treated is not as if randomly assigned. Consequently, differences in unobservables could be biasing the estimation, invalidating any causal interpretation of the effect. For example, it could be that the children in actual beneficiary households were more (less) prone to catch up in height or weight than their non-beneficiary households counterparts, overestimating (underestimating) the true effect. For the present case, a take-up of about 84% of the initially-assigned-to-treatment group could cast doubt on considering that the estimation obtained by regular OLS is unbiased and consistent. The voluntary component in program take-up could be translated in obtaining estimates that reflect the effect of the treatment plus systematic differences between the treated and non-treated groups. Abadie et al. (2002) propose a Quantile Treatment Effect (QTE) estimation analogous to the Instrumental Variable (IV) estimation in order to deal with endogeneity. As a matter of fact, the QTE estimator makes use of the same foundations as the Local Average Treatment Effect (LATE) estimator: independence of the instrument from the outcome, relevance of the instrument in explaining the endogenous variable, and monotonicity 11

12 (which means that there are no defiers in the experimental population). The QTE problem departs from assuming that there exist a and a such that, ( ), (5) where is a binary indicator of the actual treatment status; and the treatment status given that the instrument is equal to 1 or 0 respectively. Equation (5) states that it is possible to find a that represents the difference between the potential outcome given that the treatment was received,, and the potential outcome given that the treatment was not received,, at the different conditional quantiles for the compliant population. Regarding this, an important point is made in Abadie et al. (2002): although a difference in average is the same as an average difference, the parameter of interest in equation (5) does not represent the conditional quantile of the distribution of ( ). In other words, the Quantile methodology allows examining the difference in the conditional distributions of the potential outcomes given an intervention, not really the conditional distribution of the effect of the intervention. The estimation of (5) would be straightforward if the compliant population would be identified; nevertheless, since one can never observe the counterfactual, the true population of compliers is not identified. More specifically, the compliers are the ones for whom the treatment status and the instrument take the same value, but one never gets to observe the treatment status for the same individual if the instrument had taken the opposite value. Under the IV framework, the QTE estimator is built upon the Abadie Kappa theorem which gives an approximation of the causal effect of the treatment for the compliant population by the use of a weighted minimization of errors including covariates. The weighting scheme or kappas takes into consideration that the unconditional average treatment effect is a weighted average of the effects on compliers, always takers and never takers and that the complying group can be somehow found throughout these weights; hence, making it possible to estimate the parameter of interest for the compliers. The compliant population is the center of interest of this estimation, since for them the treatment status (which is potentially endogenous) can be replaced by the instrument (which is assumed to be exogenous conditional on the X covariates), so that the estimation has a causal interpretation as the treatment would be no longer related to the potential outcomes. Following Angrist & Pischke (2008), the QTE estimator results from the minimization of the weighted errors given the monotonicity assumption of the IV framework. This problem can be transformed into the minimization of double weighted errors: the QR weights and the Abadie Kappa weights. Formally expressed, ( ) 12

13 ( ) (6) with ( ) ( ) ( ) ( ) (7) When = 1 and = 0 the second term of (7) is different than zero; this represents the always-takers, as although the randomization did not assign treatment, they took it. In the opposite case, the third term of (7) is different than zero representing the never takers, as even though the randomization assigned them to treatment, they did not take it. The third case of this weighting scheme is when = 1 and = 1 or = 0 and = 0 in which the second and third term will be zero yielding a weight of 1 for these observations as they represent the complying group. The denominators of the second and third terms represent the probability of being randomized to control and treatment groups given the set of covariates. For the available data, there is a very low proportion of treated individuals that were initially randomized to control group (about 3%). Due to this very low proportion, it can be assumed that there are no always-takers. Consequently, this weighting scheme in the QR minimand will yield the Quantile Treatment Effect on the Treated at the different th quantiles. The quantiles of interest are the same as the ones denoted in the previous section. Finally, IV estimation will also be conducted as a benchmark for the QTE estimation. 4 Data Ecuador established its cash transfer program in 1998 with the name Bono Solidario in the middle of an upcoming economic crisis that would lead to the collapse of a substantial part of the banking system and finally adopting the US currency instead of the national one. This cash transfer program was redesigned in 2003 when it changed its name to Bono de Desarrollo Humano. The beneficiaries were means-tested in order to qualify for the program. This redesign gave the chance to implement an impact evaluation as families which had not received the cash transfer before became eligible as they belonged to the first two quintiles of the poverty index calculated for redesigning the program, called the Selben- and it would be made available progressively. Six provinces were chosen in order to carry the impact evaluation: 3 in the coast and 3 in the highlands containing 77 rural and 41 urban parishes. Baseline survey was conducted between the last and the first quarter of years 2003 and 2004 respectively, while first follow up was conducted between the last third and first month of the years 2005 and

14 I had access to the rural sample of the survey conducted for evaluating the program hence, all the analysis hereafter refer to the rural group-, which served as a basis for the final sample that Paxson & Schady (2010) used for estimating the effect of the cash transfer in Ecuador. More specifically, while the sample contains children up to 6 years old in baseline, Paxson & Schady (2010) only use children between 36 and 72 months in baseline. This is due to the fact that one of their main interests is the effect of the cash transfer on cognitive tests scores, and children younger than 36 months could not be administered with the corresponding tests. It is important to remark as they do as wellthat since the sample is restricted to households that have no kids older than 72 months and that had not been beneficiaries of the program before, it can t be considered as representative of all the actual beneficiaries of the Bono. The original rural sample contains 2806 children no older than age 6 whose household is classified in the first two quintiles of the Selben Poverty Index designed by the government for improving the targeting of the cash transfer. As mentioned before, these children have no siblings older than 72 months and the household had not received the cash transfer before. Beside the 2806 observations, there are 593 that were born between baseline and first survey and are not considered as part of this study. Failure to re-interview the household on first survey accounts for roughly the 7% of the sample. In addition, there are problems with missing information and failure to measure height and/or weight for some observations. In order to lose the least possible amount of observations for the analysis, one sample for each outcome is used. The Height-for-Age sample contains 2221 observations with full information in the outcome measure and in the respective covariates. Likewise, the Weight-for-Age sample contains 2375 subjects with the required measures. Table 1 describes baseline characteristics for the observations in the height and weight samples. The upper panels of the table show the comparison among the ones that were originally randomized into treatment and control groups for each sample. The lower panels depict the comparison made among the ones that were actually treated and not treated. As treatment take-up was not mandatory for those who were randomized into it, balancing tests are performed taking into consideration not only initial randomization (which is supposed to be completely exogenous) but also the actual treatment status. From this information it must be remarked that on average, all the children in the height sample (left panels) have low height-for-age about 1.2 standard deviations below the mean. It shall be remembered as well that the cutoff for considering this measure a real threat to health is 2 standard deviations below the mean. Mothers of children in the sample are relatively young (around 23 years old), with approximately primary education completed and roughly a 75% of them living with their husbands or partners. I must precise that the variable Log of imputed per capita expenditure was not part of the survey but instead calculated in Paxson & Schady (2010). They regressed log expenditure 14

15 on measures of household characteristics and goods ownership from another survey to eligible households in different parishes. These coefficients were then used to impute the monthly expenditure for the present dataset. Except for the child gender in which there is a significant difference at a 10% level of confidence, randomization seems to have actually produced balanced control and treatment groups. Likewise, the actual treated and non-treated groups seem to be well balanced, except for a significant difference in the log of per capita expenditure at a 10% level of confidence. It is logical to expect that people who need the intervention the most, will actually receive it if there is some voluntary component for participating in the program. The latter finding is not considered troublesome, as when using a probit model for the balancing of baseline characteristics (not reported), the p-value of the imputed log per capita expenditure exceeds conventional significance levels. Regarding the significant difference in the child s gender, it must be stated that one advantage of using Z-scores is that they are sexindependent as they have been already standardized with respect to their reference population. Hence, there is no inconvenient with having a difference in gender between treatment and control groups. The right panels of Table 1 are analogous to its left panels: the same type of information is found with the difference that it draws it from the sample used for the Weight-for-Age analysis. The indicators are quite similar to the ones in the Height-for-Age sample. Children have on average a Weight-for-Age almost one standard deviation below the mean. Their mothers are relatively young with roughly primary education completion, living with their husbands or partners in about 3 out of 4 cases. In the same way as with the Height-for-Age sample, treatment and control groups seem to be well balanced. Significant differences at 5 and 10% levels for child gender and log of imputed per capita expenditure appear when the groups are analyzed by randomization and by actual treatment status respectively. The variables presented as baseline characteristics except for the anthropometric measures in baseline, mother living with her partner and the log of per capita expenditure- will also serve as the set of controls for the different specifications. Children, mother and household related information will control for initial characteristics that can affect the outcome in any way and could be confounded with the effect of the program. Although, this in principle- is not very likely to happen as randomization has proven to be independent of any other characteristic. Successful randomization rules out any omitted variable bias that could arise (at least theoretically). 15

16 TABLE 1 Baseline Descriptive Statistics for Treatment and Control Groups in Height and Weight Samples Height Sample Weight Sample (1) Treated (2) Control (3) Difference (Std. Error) (1)-(2) (4) Treated (5) Control (6) Difference (Std. Error) (1)-(2) A. By Randomization Height-for-Age (0.1251) (0.1587) Child is male * ** (0.0191) (0.0185) Child's age in months (0.8106) (0.7094) Mother's Education Years (0.3048) (0.2989) Mother's Age (0.2765) (0.2687) Mother lives with husband (0.0294) (0.0294) Log of imputed per capita exp (0.0377) (0.0382) Total HH members (0.1654) (0.1707) Obs B. By Actual Treatment Height-for-Age (0.1017) (0.1493) Child is male (0.0200) (0.0196) Child's age in months (0.6609) (0.6012) Mother's Education Years (0.2704) (0.2635) Mother's Age (0.2472) (0.2477) Mother lives with husband (0.0276) (0.0268) Log of imputed per capita exp * * (0.0336) (0.0356) Total HH members (0.1523) (0.1557) Obs Notes:A different sample is used for each outcome variable in order to make the most of the available observations. *,** and *** indicate 10%, 5%, and 1% significance levels respectively. All children are up to 6 years old. Clustered standard errors at parish-level in parentheses. 16

17 Controls in randomized trials are mostly used in order to improve the preciseness of estimation. The basic specification of the model includes the above mentioned variables as controls. In addition, a second specification is analyzed replacing the child s age by a dummy indicating the age group of the children in baseline (0-12, 13-24, 25-36, 37-72). Including different age groups is of particular interest since children up to 36 months are more vulnerable to undernutrition than their older counterparts. This is because growth rates until this age are specially high (Martorell 1999) and therefore undernutrition will have a more notable effect at this stage rather than in another one. In addition, stature attained by the age of 3 (or 36 months) has shown to be a strong determinant of stature attained in adulthood (Hoddinott & Kinsey 2001), thus making this age disaggregation even more relevant. 5 Results Table 2 presents the results of the Intention-to-Treat estimates obtained through OLS and QR for the Height sample using two different specifications. The basic specification on panel A uses controls for children s characteristics (age and gender), mother s characteristics (age and education) and household s characteristics (quantity of family members). Treatment effects for this specification are not significant and their magnitudes do not exceed a 7.1% of a standard deviation. OLS and the median estimator (50 th percentile) for the treatment effect differ substantially: the former more than doubles the latter, which could be interpreted as having heavy tails in the distribution downwardly biasing the mean estimator obtained through OLS. On the other hand, since both coefficients are not significant and their confidence intervals partially overlap, the latter statement is only a possibility. Although not significant, it is in a certain way puzzling to find the wrong signs in the estimations (except at the 95 th percentile in column (6)): it would be expected that a cash transfer program has a positive effect on an anthropometric indicator rather than a negative one. From the variables containing children related information, the gender of the child is never significant, while the age of the child is significant at the 5 th, 25 th, and 95 th percentiles. The first two percentiles of this variable have a positive sign and the last one a negative sign. Normally, one would expect positive signs in the age of the child coefficient as it is well known that height increases with age, specially and rapidly in the early stage of life (this could be the case at the 5 th and 25 th percentiles). Children in the 95 th percentile have a very high Height-for-Age; thus, this negative association between the child s age and the outcome variable could be a sign that these kids receive less attention since they look healthy. Therefore, as they age they show a slight decrease in their growth rates. With respect to the variables indicating mother related information, the education of the mother is always significant at a 1% level with mean and median estimators quite close to each other, with only a difference of units. Coefficients for this variable are up to almost 8.5% of a standard deviation. This is a substantial magnitude considering that a 17

18 mother with complete high school (12 years of education) will be associated with having a child with a Height-for-Age about one standard deviation higher than a child with an uneducated mother. The age of the mother is never significant except at the 25 th percentile in which the coefficient is significant at a 10% level. From this variable, it is interesting to see that the coefficients have negative signs except at the 75 th percentile. One would expect to have a positive association between the age of the mother and the anthropometric measure, perhaps since an older mother could mean a more mature person or with more experience or awareness to properly take care of a child. Nevertheless, it must also be taken into consideration that the mothers from the sample are quite young (23 years old on average), and that an older mother could also mean a mother with more children; hence, with less resources to appropriately take care of them. Finally, the variable indicating the amount of household members is always significant (except at the 5 th percentile) with the expected negative sign. A negative sign is expected in this variable since more members in the household can be translated into fewer resources for everyone, unless most of its members actually have a source of income to share with the household; but, this does not seem to be the case. Panel B uses the same controls as Panel A, but replaces the age of the child by a set of 3 dummy variables indicating the age group to which the child belongs: 0-12 months, months and months. As mentioned before, the inclusion of these dummies is of special relevance in order to check if younger children are indeed more vulnerable to undernutrition as the literature states. The excluded group for this age disaggregation is that of the children aged months in baseline; hence, the coefficients for these dummy variables shall be interpreted with respect to this group. The treatment effect for this specification does not change substantially with respect to the specification on Panel A: mean estimator (OLS) is about twice as high in magnitude than the median estimator (50 th percentile), the coefficients remain insignificant and with negative signs for every quantile, and all of them show a lower magnitude than the coefficients estimated with the basic specification. Likewise, mother and household related variables show almost the same results as in the basic specification: the education of the mother is always significant with a positive association with the outcome variable and similar coefficients to Panel A; the age of the mother is only significant at the 25 th percentile with a negative sign and the same magnitude in the coefficient; and, the amount of members in the household is always significant (except at the 5 th percentile) with negative signs and coefficients with similar magnitudes to those previously estimated. 18

19 TABLE 2 OLS and Quantile Regression Intention-to-Treat Estimates of Cash Transfer on Height-for-Age A. Basic Specification Variable (1) OLS (2) 0.05 (3) 0.25 Quantile (4) 0.50 Treatment Effect (0.0447) (0.0926) (0.0581) (0.0563) (0.0602) (0.0818) Child's age in months ** 0.004** *** (0.0013) (0.0026) (0.0016) (0.0016) (0.0019) (0.0029) Child is male (0.0414) (0.0872) (0.0548) (0.0533) (0.0573) (0.0829) Mother's Education Years 0.083*** 0.069*** 0.084*** 0.081*** 0.076*** 0.076*** (0.0074) (0.0151) (0.0094) (0.0102) (0.0108) (0.0120) Mother's Age * (0.0053) (0.0110) (0.0064) (0.0070) (0.0081) (0.0078) Total HH Members *** *** *** *** *** (0.0093) (0.0172) (0.0118) (0.0116) (0.0134) (0.0232) B. Age Disaggregated Specification Quantile Variable (1) OLS (2) 0.05 Treatment Effect (0.0447) (0.0884) (0.0583) (0.0562) (0.0593) (0.0851) Child is male (0.0413) (0.0858) (0.0546) (0.0529) (0.0565) (0.0863) Child is 0-12 months * *** *** ** ** (0.0804) (0.1550) (0.0955) (0.0911) (0.0975) (0.2319) Child is months * *** (0.0590) (0.1215) (0.0808) (0.0777) (0.0805) (0.1151) Child is months 0.136*** ** 0.157** 0.263*** (0.0498) (0.1041) (0.0674) (0.0663) (0.0680) (0.0936) Mother's education years 0.082*** 0.074*** 0.089*** 0.078*** 0.076*** 0.076*** (0.0073) (0.0140) (0.0093) (0.0102) (0.0106) (0.0121) Mother's age * (0.0053) (0.0103) (0.0064) (0.0069) (0.0078) (0.0080) Total HH members *** *** *** *** ** (0.0093) (0.0171) (0.0118) (0.0115) (0.0126) (0.0240) Notes: Dependent variable is Height-for-Age Z Score measured on first follow-up. Robust standard errors reported in parentheses. Due to sampling, clustered standard errors at parish level might be more suitable; nonetheless, only robust standard errors are used for making them comparable across methods. The use of clustered standard errors in OLS estimation does not change the significance level of any variable except for in which it goes from 10% to 5%. *,** and *** indicate 10%, 5% and 1% significance levels respectively. (3) 0.25 (4) 0.50 (5) 0.75 (5) 0.75 (6) 0.95 (6)

20 With respect to the child related variables, the gender of the child is never significant (as in the basic specification) and the set of dummy variables for the different age groups shows interesting results. For the dummy indicating the 0-12 months age group, coefficients are significant for OLS and every quantile except at the 0.95 th. Mean and median estimators for this variable are not very far from each other, but some noticeable differences appear across quantiles. At the 5 th percentile, being in the 0-12 months age group is associated with having approximately 40% less of a standard deviation in Heightfor-Age than the months age group. In the same way, for the 25 th, 50 th and 75 th percentiles, this associations range from 20% to roughly 29% less of a standard deviation than the reference group. Although the ones located at the 50 th percentile and onwards do not suffer from malnutrition, the coefficients show that their actual growth potential has not been attained. For the dummy indicating that the child belongs to the months age group, the coefficients are only significant at the 5 th and 25 th percentiles of the Height-for-Age conditional distribution, indicating an association of about 20% less of a standard deviation than their months age group counterparts. Finally, the dummy indicating that the child belongs to the months age group shows significant and positive coefficients for the mean estimator and at the 50 th, 75 th and 95 th percentiles. The associations shown by these variables are in line with the vulnerability of younger children referred in the literature: the coefficients for the 0-12 months age group are the highest in magnitude with negative sign, specially for those who are initially in the worse nutritional status (5 th percentile); and, as one moves to older children (i.e. the months age group), the coefficients become smaller in magnitude and insignificant in most of the cases. More generally, if one compares the coefficients across the age groups at the different quantiles, the tendency is that the reduction in the anthropometric measure becomes smaller as the age group increases. Table 3 is analogous to table 2 as it shows the Intention-to-Treat estimates of the cash transfer using OLS and QR but for the sample taken into consideration for the Weight-for- Age indicator analysis. For the basic specification on panel A, the treatment effect is not significant at conventional levels; mean and median estimators are close to each other and negative signs accompany all the coefficients except the one at the 25 th percentile. The child s age is always significant and positive in this specification, although the coefficients account for less than a 1% of a standard deviation. The gender of the child and the age of the mother are never significant, whereas the education of the mother is always positive and significant at 1% level for OLS estimation and for every quantile. Finally, the variable indicating the amount of members in the household is significant in the OLS estimation and for every quantile except at the 0.05 th, showing a negative association between the quantity of household members and the outcome variable. Panel B of Table 3 includes the same set of controls as the ones used in panel B of table 2, with the replacement of the child s age by the set of dummies indicating the age group of the child. 20

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