As part of our interview series, we ask renowned experts in the field about the future of research in development economics, and for their advice to young researchers. For this interview, we got the opportunity to talk to Prof. Jing Cai.
Jing Cai is an Associate Professor in the Department of Agricultural and Resource Economics at University of Maryland. Her research focuses on the diffusion and impact of financial innovations, and identifying ways to improve the growth of micro, small, and medium enterprises.
ETRM: Your research has two main streams: one is the diffusion of financial tools, and the other one is the management of small and medium enterprises. What inspired you to follow these research agendas?
Jing: The main goal of my research is to see how to improve productivity and household income in developing countries. When I was a graduate student, I became very interested in how to reduce barriers for rural people to adopt new technologies or new financial products. I had a great opportunity because China was introducing a weather insurance product, but they faced a lot of problems in encouraging take-up. I found that very surprising because we all know that agricultural production faces a lot of weather risks, so there’s great uncertainty and fluctuation in income. It is also difficult for them to get any loans from the from the bank. But even with all those problems, a lot of farmers just don’t want to buy insurance.
I started collaborating with the insurance company to conduct a series of experiments on adoption of financial tools. During the process I had conversations with local governments on different topics. One of their main interests was creating jobs and most of the labor force usually are hired by private firms, especially manufacturing firms. Whereas I was working on household level topics, I got interested on how to improve the growth of those private firms, especially the smaller enterprises. So, this is how I started these two areas of research.
ETRM: Thanks for your answer! Something we noticed is that in many of your papers you collaborated with Chinese companies and public institutions. How did you achieve those collaborations?
Jing: It is important to convince them that your results can benefit their business or give them insights on future policy changes. To give you an example related to the insurance project, the insurance company had the incentive to collaborate because they wanted to improve the take-up. But they may not trust that a graduate student can offer something valuable. So, I started with a very small-scale study where I introduced a menu of contracts for farmers to choose from. Normally they just have a very basic contract with a very low premium but also the max payout is low. When talking with families, I noticed that many didn’t want to buy because they felt the product was not useful, it’s only enough to cover their production cost. I proposed offering contracts with higher premium and higher payout but still including the basic contract as an option.
In the beginning the county government was not willing to do that because those higher premium higher pay contracts would need to offer more subsidy and they wouldn’t have the physical capacity to support a bigger scale. But because the study was very small scale, they allowed me to do it. What I found is quite interesting: offering the options increased take up strictly however many farmers didn’t pick those additional contracts with higher premium and higher pay. Instead, a majority took the basic one. This is a context effect: the existence of other contracts might make the basic one more attractive as it is cheaper and there is choice flexibility, encouraging more people to buy. The county government really liked the finding. I also helped advertising and explaining this product to farmers. I hired a research team to do trainings and promotion.
My experience is that it might be easier to get a collaboration if there is an existing program that the government wants to implement. You could convince them to help with the evaluation and then you add an experimental design. So, show how your research can help them. You can first work with those partners on things like analyzing their data or generating reports. These things help to build a relationship. Then, gradually, you can propose some joint research projects.
ETRM: How different it is to collaborate with private companies compared to government institutions?
There is a lot of variation in the willingness to collaborate across different governments and firms, so it depends. Of course, their objectives are different. Governments are policy makers, they would make sure that anything you are proposing, does not harm the fairness of the policy. They will have more considerations, like, how would this influence the policy implementation? Will there be any negative feedback from potential beneficiaries? It is usually more challenging than working with a single company.
A company wants to maximize their profit. Think about the big problems they face. For example, nowadays firms in developing countries struggle to retain workers. If you can convince them that what you are proposing can help solving dimensions that they really care, they might be willing to collaborate. Firms might not be very open to RCTs at the beginning. So, you have offer things like training to their employees. For example, in one of my projects I did multiple rounds of trainings to mid-level managers. I also introduced popular management practices that have been used in diverse countries. I also worked on their administrative data to generate reports based on questions they asked. It was a long process but the payoff is also high. After all the investment, there was trust between the two parties. You also get to know more about the firm itself. In any kind of field work you do it is important to spend time in the field and talk with people. If you will study management or firm issues you must interview workers and managers to understand which are their problems.
In either case, but we have to be clear about what is the partner’s objective, what do they care. Then we can prepare different strategies to move forward the collaboration.
ETRM: Which advice do you have for graduate students that are building their network and want to approach a government or a firm?
Jing: First, get involved in professors’ projects. You want to learn how to do field work, how to communicate with partners, organize your research team, train enumerators to do surveys. Get some experience being a research assistant or even field manager for some of your professors’ projects. I have seen examples where students took this experience and during the process they got familiar with the local government or entities they were collaborating with. This could help to form your own research projects, and usually most professors would be willing to support research of their students. Other possibility can be building experience from working with your advisor or committee members and then you use your own connection to explore opportunities elsewhere. But you already learned how to plan for a field work. What kind of uncertainty and risks are there? How to train your own research team and how do you lead them? The first-hand experience is very important.
It is also good to get some internship opportunities in institutions like the World Bank or IFPRI. There are a lot of projects those institutions are doing. Nowadays we expect more from job candidates. We want either published papers or R&R’s. It’s good for the students to experience other opportunities and maybe to establish potential collaborations with researchers in those institutions who might have a lot of connection in different countries.
There’s also another advice for graduate students. It is better to stay focused in a couple of research areas rather than diversify too much. It is hard to picture yourself if you are doing a lot of different, but not that related topics. As a graduate student when you’re on the market, you want to say “my main research interest is such”. But if you have three papers, one in IO, one on trade, and the other one in other topic, it is really hard to define which field you are at. Also, you want to be an expert in a certain area so you can be defined as a leading researcher in a certain field. People can have a lot of different interests. Think about how can you put all those in the same umbrella.
ETRM: Our last question is about your paper where workers give feedback to manager. You said that after you presented these results to the company, they implemented the suggested changes. Do you think this lower level to higher level feedback is common in companies across the world?
Jing: We were surprised when we visited manufacturing firms in China. All follow this top-down evaluation. I’d already heard about 360-degree valuation. It’s not only top-down or bottom-up, but also there’s peer evaluations. Why did we decide to do that intervention? This is related with my recommendation of talking with the workers to find out their problems. The government has been trying different things to reduce turnover because it is costly. People come and then quit, so they need to hire new workers and train them again. The company provided different types of financial incentives to keep them. That did not work very much. Workers told me that this type of job does not meet their expectation about their career. Most of them are college students. They graduated after the expansion of education policy in China. They feel like they deserve a better job, and they feel they are not very important in the company. This is why we think improving their participation in the decision making of the company can be important. That’s how we introduced this evaluation. For the firm it was not difficult to implement. And after seeing the big effects and how widespread it is in other contexts, the company was open to that.
ETRM: Thank you so much for your time and insights. We really appreciate you joining us today!
