Practical Sampling for Impact Evaluations

AADAPT Workshop South AsiaGoa, December 17-21, 2009

Practical Sampling for Impact Evaluations

Presenter’s name

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Introduction How do we construct a sample to credibly detect a

meaningful effect? Which populations or groups are we interested in and where do

we find them? How many people/firms/units should be interviewed/observed

from that population? How does this affect the evaluation budget?

Warning! Goal of presentation is not to make you a sampling expert Goal is also not to give you a headache. Rather an overview: How do sampling features affect what it is

possible to learn from an impact evaluation?

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Outline1. Sampling frame

What populations or groups are we interested in? How do we find them?

2. Sample size Why it is so important: confidence in results Determinants of appropriate sample size Further issues Examples

3. Budgets

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Sampling frame Who are we interested in?

a) All SMEs?b) All formal SMEs?c) All formal SMEs in a particular sector?d) All formal SMEs in a particular sector in a particular region?

Need to keep in mind external validity Can findings from population (c) inform appropriate programs

to help informal firms in a different sector? Can findings from population (d) inform national policy?

But should also keep in mind feasibility and what you want to learn Might not be possible or desirable to pilot a very broadly

defined program or policy 4

Sampling frame: Finding the units we’re interested in Depends on size and type of experiment

Lottery among applicants Example: BDS program among informal firms in a particular area Can use treatment and comparison units from applicant pool If not feasible (50,000 get the treatment), need to draw a sample to

measure impact Policy change

Example: A change in business registration rules in randomly selected districts

To measure impact on profits, cannot sample all informal businesses in treatment and comparison districts.

Will need to draw a sample of firms within districts.

Required information before sampling Complete listing all of units of observation available for sampling

in each area or group Tricky for units like informal firms, but there are techniques to

overcome this 5


What populations or groups are we interested in How do we find them?


3. Budgets

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Sample size and confidence Start with a simpler question than program impact

Say we wanted to know the average annual profits of an SME in Dakar. Option 1: We go out and track down 5 business owners

and take the average of their responses. Option 2: We track down 1,000 business owners and

average their responses.

Which average is likely to be closer to the true average?

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Sample size and confidence:

5 firms 1,000 firms

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Profits Number of firms$0 - $1,000 1$ 1,001 -$5,000 2$5,001-10,000 1$10,001, - $15,000 0$15,001 + 1

Profits Number of firms$0 - $1,000 70$ 1,001 -$5,000 150$5,001-10,000 650$10,001, - $15,000 125$15,001 + 5

Sample size and confidence Similarly, when determining program impact

Need many observations to say with confidence whether average outcome of treatment group is higher/lower than in comparison group

What do I mean by confidence? Minimizing statistical error

Types of errors Type 1 error: You say there is a program impact when there

really isn’t one. Type 2 error: There really is a program impact but you cannot

detect it.

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Sample size and confidence Type 1 error: Find program impact when there’s none

Error can be minimized after data collection, during statistical analysis Need to adjust the significance levels of impact estimates (e.g. 99% or

95% confidence intervals)

Type 2 error: Cannot see that there really is a program impact In jargon: statistical test has low power Error must be minimized before data collection Best method of doing this: ensuring you have a large enough sample

Whole point of an impact evaluation is to learn something Ex ante: We don’t know how large the impact of this program is Low powered ex-post: This program might have increased firms’

profits by 50% but we cannot distinguish a 50% increase from an increase of zero with any confidence

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Calculating sample size

There’s actually a formula. Don’t get scared.

Main things to be aware of:1. Detectable effect size2. Probability of type 1 and 2 errors3. Variance of outcome(s)4. Units (firms, banks) per treated area

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Detectable effect size Smallest effect you want to be able to distinguish from zero

A 30% increase in sales, a 25% decrease in bribes paid

Larger samples easier to detect smaller effects

Do female and male entrepreneurs work similar hours? Claim: On average, women work 40 hours/week, men work 44

hours/week If statistic came from sample of 10 women & 10 men

Hard to say if they are different Would be easier to say they are different if women work 30 hours/week

and men work 80 hours/week But if statistic came from sample of 500 women and 500 men

More likely that they truly are different 12


How do you choose the detectable effect size? Smallest effect that would prompt a policy

response Smallest effect that would allow you to say that a

program was not a failure This program significantly increased sales by 40%.

Great - let’s think about how we can scale this up. This program significantly increased sales by 10%.

Great….uh..wait: we spent all of that money and it only increased sales by that much?

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Type 1 and Type 2 errors Type 1

Significance level of estimates usually set to 1% or 5% 1% or 5% probability that there is no effect but we

think we found one Type 2

Power usually set to 80% or 90% 20% or 10% probability that there is an effect but we

cannot detect it Larger samples higher power

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Variance of outcomes Less underlying variance

easier to detect difference can have lower sample size

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Variance of outcomes How do we know this before we decide our

sample size and collect our data? Ideal pre-existing data often ….non-existent Can use pre-existing data from a similar population Example: Enterprise Surveys, labor force surveys

Makes this a bit of guesswork, not an exact science

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Further issues

1. Multiple treatment arms2. Group-disaggregated results3. Take-up4. Data quality

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Further issues Multiple treatment arms

Straightforward to compare each treatment separately to the comparison group

To compare treatment groups requires very large samples Especially if treatments very similar, differences between the

treatment groups would be smaller In effect, it’s like fixing a very small detectable effect size

Group-disaggregated results Are effects different for men and women? For different sectors? If genders/sectors expected to react in a similar way, then

estimating differences in treatment impact also requires very large samples

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Who is taller?Detecting smaller differences is harder

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Further issues Group-disaggregated results

To ensure balance across treatment and comparison groups, good to divide sample into strata before assigning treatment

Strata Sub-populations Common strata: geography, gender, sector, initial

values of outcome variable Treatment assignment (or sampling) occurs within

these groups

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Why do we need strata?

Geography example = T = C

Why do we need strata? What’s the impact in a particular region? Sometimes hard to say with any confidence

Why do we need strata? Random assignment to treatment within

geographical units Within each unit, ½ will be treatment, ½ will be

comparison.

Similar logic for gender, industry, firm size, etc

Further issues Take-up

Low take-up increases detectable effect size Can only find an effect if it is really large Effectively decreases sample size

Example: Offering matching grants to SMEs for BDS services Offer to 5,000 firms Only 50 participate Probably can only say there is an effect on sales with

confidence if they become Fortune 500 companies

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Further issues

Data quality Poor data quality effectively increases required

sample size Missing observations Increased noise

Can be partly addressed with field coordinator on the ground monitoring data collection

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Example from Ghana• Calculations can be made in many statistical packages – e.g. STATA, OD

• Experiment in Ghana designed to increase the profits of microenterprise firms

• Baseline profits– 50 cedi per month.– Profits data typically noisy, so a coefficient of variation >1 common.

• Example STATA code to detect 10% increase in profits: – sampsi 50 55, p(0.8) pre(1) post(1) r1(0.5) sd1(50) sd2(50)– Having both a baseline and endline decreases required sample size (pre and post)

• Results– 10% increase (from 50 to 55): 1,178 firms in each group– 20% increase (from 50 to 60): 295 firms in each group.– 50% increase (from 50 to 75): 48 firms in each group (But this effect size not realistic)

• What if take-up is only 50%?– Offer business training that increases profits by 20%, but only half the firms do it. – Mean for treated group = 0.5*50 + 0.5*60 = 55– Equivalent to detecting a 10% increase with 100% take-up need 1,178 in each group instead

of 295 in each group 26


What populations or groups are we interested in How do we find them?


3. Budgets

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Budgets

What is required?

Data collection Survey firm Data entry

Field coordinator to ensure treatment follows randomization protocol and to monitor data collection

Data analysis28

Budgets How much will all of this cost?

Huge range. Often depends on Length of survey Ease of finding respondents Spatial dispersion of respondents Security issues Formal vs informal firms Required human capital of enumerator Et cetera….

Firm-level survey data:$40-350/firm Household survey data: $40+/household Field coordinator: $10,000-$40,000/year

Depends on whether you can find a local hire Administrative data: Usually free

Sometimes has limited outcomes, can miss most of the informal sector

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Summing up The sample size of your impact evaluation will

determine how much you can learn from your experiment

Some judgment and guesswork in calculations but important to spend time on them If sample size is too low: waste of time and money because

you will not be able to detect a non-zero impact with any confidence

If little effort put into sample design and data collection: See above.

Questions?30

Documents

Practical Sampling for Impact Evaluations