DP12838 Dangers of a Double-Bottom Line: A Poverty Targeting Experiment Misses Both Targets

Author(s): Dean S. Karlan, Adam Osman, Jonathan Zinman
Publication Date: April 2018
Keyword(s): Corporate social responsibility, discrimination, double-bottom line, microcredit, Microfinance, Multi-tasking, poverty targeting, social business
JEL(s): D12, D22, D92, G21, O12, O16
Programme Areas: Public Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=12838

Two for-profit Philippine social enterprises, aiming to demonstrate corporate social responsibility by increasing microlending to the poor, incorporated a widely-used poverty measurement tool into their loan applications and tested the tool using randomized training content. Treated loan officers were instructed why and how to use the tool for targeting; control group training merely labelled the tool "additional household information". The targeting training backfired, leading to no additional poor applicants and lower-performing loans. Descriptive evidence suggests the targeting training exacerbated loan officer misperceptions and multitasking problems. Our results help explain why corporate social responsibility efforts are often siloed from core operations.