The Power of Transparency: Information, Identification Cards and Food Subsidy Programs in Indonesia

Abhijit Banerjee, Rema Hanna, Jordan C. Kyle, Benjamin A. Olken, Sudarno Sumarto

NBER Working Paper No. 20923
Issued in February 2015
NBER Program(s):Development Economics, Public Economics, Political Economy

Can governments improve aid programs by providing information to beneficiaries? In our model, information can change how much aid citizens receive as they bargain with local officials who implement national programs. In a large-scale field experiment, we test whether mailing cards with program information to beneficiaries increases their subsidy from a subsidized rice program. Beneficiaries received 26 percent more subsidy in card villages. Ineligible households received no less, so this represents lower leakage. The evidence suggests that this effect is driven by citizen bargaining with local officials. Experimentally adding the official price to the cards increased the subsidy by 21 percent compared to cards without price information. Additional public information increased higher-order knowledge about eligibility, leading to a 16 percent increase in subsidy compared to just distributing cards. In short, increased transparency empowered citizens to reduce leakages and improve program functioning.

Supplementary materials for this paper:

• randomized controlled trials registry entry

Acknowledgments and Disclosures

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Document Object Identifier (DOI): 10.3386/w20923