Collective Action and Community Development: Evidence from Women’s Self-Help Groups in Rural India

In response to the problems of high coordination costs among the poor, efforts are underway in many countries to organize the poor through “self-help groups” (SHGs)–membership-based organizations that aim to promote social cohesion through a mixture of education, access to finance, and linkages to wider development programs. We randomly selected 32 of 80 villages in one of the poorest districts in rural India in which to establish SHGs for women. After two years of exposure to the intervention, women in treatment villages were more likely to participate in group savings programs, exerted greater control over household decisions, and displayed greater civic engagement than women in control villages. To investigate the sources of cooperation further, we conducted a simple multi-round public-goods game in 14 villages. We find that players who have been exposed to SHGs converge towards a cooperative equilibrium faster than those who have not. We also find that SHG women discount the risk of non-cooperation by others more than women in control villages. We conclude that SHGs and other membership-based organizations for the poor, where they promote collective action do so not by enforcing a commonality of tastes, but by reducing uncertainty surrounding cooperation. a The authors gratefully acknowledge the cooperation of the Self-Employed Women’s Association (SEWA) and financial support of the Wolfensohn Center for Development at the Brookings Institution and Georgetown University’s Engaging India initiative. Surveys were conducted by Social and Rural Research Institute of IMRB, New Delhi. A previous version of this paper was delivered at the annual meeting of the American Political Science Association. Errors and omissions are the authors’ own. b Edmund A. Walsh School of Foreign Service and Department of Government, Georgetown University, Washington, D.C. and the Brookings Institution, Washington, D.C. Email: [email protected]. c Edmund A. Walsh School of Foreign Service, Georgetown University, Washington, D.C. Email: [email protected].