Follow us
Publications Commentary Research People Events News Resources and Videos About IFS
Home Publications Labelled Loans and Human Capital Investments

Labelled Loans and Human Capital Investments

IFS Working Paper W20/20

Making lumpy human capital investments is difficult, particularly since returns may accrue with a significant time lag. Lack of commitment impedes savings and diverts funds from intended investments. We draw on a cluster randomised controlled trial in rural India to provide the first evidence that labelled microcredit is effective in increasing take-up of a lumpy human capital investment, a safe toilet. Testing predictions from a theoretical model provides novel evidence that loan labels influence household borrowing and investment decisions. Not all loans are used for sanitation investments, suggesting that loan labels offer a soft commitment incentive.

More on this topic

This report looks at annual education spending in the UK.
Press release
We have remarkably reduced the fraction of national income we devote to public spending on education in the past decade.
Press release
We publish a report in partnership with the Sutton Trust that ranks universities in terms of their contributions to social mobility.
We investigate the extent to which individual universities, subjects and courses promote intergenerational mobility.