The Townsend Thai Project

The Townsend Thai Project

Running since 1997 and continuing today, the Townsend Thai Project has tracked millions of observations about the economic activities of households and institutions in rural and urban Thailand. The project represents one of the most extensive datasets in the developing world. Chronicles from the Field by Robert M. Townsend, Sombat Sakunthasathien, and Rob Jordan offers an account of the design and implementation of this unique panel data survey. It tells the story not only of the origins and operations of the project but also of the challenges and rewards that come from a search to understand the process of a country’s economic development. In an interview, Robert Townsend provides an update on this innovative project.

What is the Townsend Thai Project?

The Townsend Thai Project is one of the longest-running research projects of its kind in the developing world. For roughly twenty years, we have had a team of researchers in Thailand visiting the same villages and households every month (and at other times).

We ask comprehensive questions about household and village economic activity, such as whether they have given gifts of money (as you might at a wedding), how much rice they have stored, and how much they earn in their work. These give us a thorough financial portrait of what is happening in the households and villages. And, because we go back monthly, we can constantly refine the process. The sheer amount of data we have collected is quite large, and it allows us to study the economy from many angles and with great depth in our inquiries.

It’s a large undertaking but I also think that just focusing on the measurement and the data can be misleading. At its heart, the Townsend Thai Project is rooted in economic theory and examines important economic ideas that go well beyond the household data. The project is about villages as entire economies, and it is about entire economies as well.

What was the motivation behind the founding of this project? Why did you choose Thailand?

Early in my career, I studied medieval English villages and their landholdings, which were quite fragmented. I began thinking about the ingenuity I saw in the ways that landowners managed their lands. They would manage parcels, in part, to protect themselves from some of the risks they faced, like flooding or the need to vary their crops. I then turned to explore some of these ideas using existing consumption and income data from a panel study in India, and I was similarly struck.

It was remarkable to me that these informal networks found ways to effectively manage their assets and risk just as economic theory predicted they might, but economists had not really studied these informal networks in India so closely before. That desperately poor households in undeveloped villages could come close to achieving something so remarkable went against the presumption of policymakers and NGOs, as well as those who were a bit skeptical about the seriousness over economic theory. This created a bit of a firestorm, which, ironically, helped to fuel interest in the work.

I wanted to find ways to track how households and villages managed their financial challenges so that I could use the data from the on-the-ground interactions to test against some of the theory. I was also interested in finding out whether we could more richly understand what was going on in the more formal macroeconomy by studying these local economies. But, at that point, the existing data was very limited. It became clear that I could no longer rely on data gathered by others to address my questions.

I set out to study villages in four provinces of northeast Thailand and observed the vast system of informal financing among households and networks of the people there, but it varied so much across villages. It was clear that something more complex and significant was going on in the way the households here, too, managed their finances. This convinced me that Thailand would be well suited for my work.

From there, the process was iterative to determine how to gather the data: facts and assertions from the many conversations I had with the villagers had to be sorted through the lens of theory, and then insights from theory had to be incorporated into new conversations. Ultimately, final questionnaires were designed and administered to a small sample of households across each of ten villages overall, in three distinct areas. The survey work grew from there into urban areas and more provinces.

What were some surprising observations in your research on the rural and urban economies of Thailand and the country’s economic development? What did the interviews with the villagers reveal?

I think one of our most surprising experiences led to what was also one of our more significant findings to date, our work investigating the Thai Million Baht Fund. A peculiar advantage of running a long-term survey in the field over so many years is that natural experiments can occur. For instance, it would have been valuable but impossible for us to test how a random injection of capital into the villages we were studying might affect the local economies. Yet, about five years into the project, something like this happened.

In 2001, then Prime Minister Thaksin’s government introduced a village-level saving and loan association, funding each with a million baht (roughly $24,000). At the time the program was introduced, the total amount represented roughly 1.5 percent of GDP, making it arguably one of the largest microfinance programs ever. We had the good fortune of being there to take advantage of it.

Using the data we gathered after the program was introduced, Joe Kaboski and I investigated the impact of this experiment. We found that the Million Baht program created an increase in total short-term credit, increased consumption (by more than credit), increased agricultural investment and income growth, but also decreased overall asset growth. We also found a positive impact on wages, and several other findings. The study presented some of the first evidence of the impacts of large-scale microfinance programs and indicated how the impact of expanding access to credit can be complex.

Aside from the economic discoveries, can you tell us about some instances of the culture shock experienced by the survey enumerators?

Many of our enumerators came from the densely populated areas of Thailand and were unaccustomed to what life was like in the rural parts of the country. This meant they had little understanding for the ebb and flow of crop seasons and activities. Yet, their having a good working relationship with the households we visited was vital to the success of the project. So, we trained the researchers in details of the agricultural calendar, what the typical jobs were on a farm, and we reminded them how important it was to use honorifics, such as “grandfather,” to show respect and build trust. Still, it was a bit of a challenge for some to adjust to rural life. In some instances, they would have to bathe in shrimp ponds and live on modest meals that they weren’t accustomed to. The locals would consider it impolite if the enumerators refused an evening drink, so we suggested the researchers decline due to an illness and otherwise assure their hosts that they would enjoy sharing in the drink. Bridging this gap was a challenge early on in the survey, but over time, the team became quite skillful at navigating and bridging these challenges.

Can you give us an update on the project since the publication of Chronicles from the Field in 2013?

I think what is becoming really exciting now that we are rapidly approaching our twentieth year is seeing all the implications of what it means to have a survey of this length and breadth in the field.

For instance, as we gather longer and longer panel data, we are able to address life cycle research topics. We can see children born, school attendance, and soon a sufficient number that are now with jobs and wages. We can see middle-aged households initially in their most productive years now quasi-retired, and others with disabling health shocks reduced to zero income at earlier ages. The research possibilities only grow the longer we stay in the field and gather the data.

The longevity of the surveys also turned out to have had another major advantage: repeat interviews build trust. Interviews are now conducted in a conversational style so they are not tedious to the households. Enumerators have largely memorized the questionnaires anyway, and of course take extensive notes during the interview, so that the data fields can be filled in afterward.

We expect the Townsend Thai Project will continue to have impact even as the data gathering eventually comes to an end. The Thai government is now aware of the research, which flows from it and considers it in their financial reforms. The research database is available to the public and will continue to attract students and many other researchers in the U.S. and other countries.

Based on your experience in Thailand, what are some insights on understanding poverty and the steps needed to alleviate it?

I think there is this view that poor people do not really contribute much to the overall economy and that the much larger sources of economic activity occur in the manufacturing sectors or through industrialization. But, this turns out to be a false assumption; in many economies, when added up, the contributions of poor populations are a substantial part of the Gross Domestic Product. We certainly saw this in Thailand.

So, it is essential we include the poor in our accounting. One way to do that is through the type of work we have done with the data from the Townsend Thai project, and that is to build a financial accounting of each household. We put actual measurement practices in place and gain meaningful insights to the talent that poor households display in managing and growing their resources. We have seen how they innovate and even drive total factor productivity, a metric commonly used by economists to measure productivity.

Of course, the environment is not perfect for poor populations. There are many obstacles to trade, especially for investment, and there are many obstacles created by the regulatory political economic financial infrastructure. But, poor populations should be given every opportunity to integrate financially into the rest of the economy and to manage their money accordingly. This would result in improvements in human capital, wealth and net worth, and overall well-being.