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© 1995 International Bank for Reconstruction and Development / The World Bank

research-article

Does Participation Improve Performance? Establishing Causality with Subjective Data

Jonathan Isham, Deepa Narayan, and Lant Pritchett

Jonathan Isham is with the Department of Economics at the University of Maryland and the center of Institutional Reform and the Informal Sector (IRIS); Deepa Narayan is with the Environment Department at the World Bank; and Lant Pritchett is with the Policy and Research Department at the World Bank. This article was a background paper for World Development Report 1994. It is based upon a larger research project initiated and funded by the Participatory Development Learning Group, the UNDP-World Bank Water and Sanitation Program, and the Social Policy and Resettlement Division of the World Bank. The authors would like to thank John Blaxall, Antonio Estache, Peter Lanjouw, and Jim Tybout for helpful suggestions.

Data from 121 diverse rural water projects provide strong statistical findings that increasing beneficiary participation directly causes better project outcomes. Three possible econometric objections to these findings are addressed and answered. The subjective nature of the data does not preclude valid, cardinal measures of participation appropriate for statistical analysis. "Halo effects"—changes in the measurement of one variable because of the observed state of another variable—do not seem to induce a strong upward bias in the measurement of participation or project performance. Reverse causation is unlikely: estimation using instrumental variables, data on project timing, and documentation of case studies support the cause-effect relation between participation and better project performance.


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