Unanticipated Input Shocks

In Simple Words

When an educational grant arrives unexpectedly after households have already completed their major annual purchases (e.g., at the start of the school year), families cannot easily return or resell their bought items. This locks in the private spending, causing the full public grant to act as an additive increase in learning resources rather than replacing existing spending.

Research question

Standard evaluations assume public funding interventions operate in static environments, but the timing and predictability of grant arrivals dictate whether agents can adjust expenditure behavior before the intervention occurs. When resources arrive unexpectedly, households lack the opportunity to reallocate private funds prior to spending.

Participants

200 primary schools in rural Andhra Pradesh, India (~27,704 student test observations in Year 1).

Study Design

Randomized controlled trial with surprise grant disbursal (~$3 per pupil) announced two months into the school year.

Results

Unanticipated Year 1 grants increased combined student test scores by 0.085 SD (0.09 SD in math, p < 0.05; 0.08 SD in language, p < 0.05) with zero significant reduction in household private spending (-0.041 log expenditure change, p > 0.10).

Takeaway

Deploy emergency or non-recurrent school improvement grants as unexpected one-time allocations to prevent private expenditure reductions during early implementation phases.

Read alongside the research

Plain-English glossary

Original explanations, informed by the references below. Examples are illustrations, not data from the studies above. The research text stays unchanged.

Randomized controlled trial

A study that uses chance, like drawing lots, to decide who receives each option being compared. Researchers compare the groups’ outcomes to estimate the effect of those options.

ExampleA lottery assigns volunteers to a training programme or a comparison group. Researchers then compare their outcomes.

GET-IT glossary · Randomized study ↗Read more about randomized controlled trial →

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