Dina D. Pomeranz

Assistant Professor of Business Administration

Unit: Entrepreneurial Management

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(617) 495-1422

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Dina Pomeranz is an assistant professor in the Entrepreneurial Management Unit, where she teaches the Entrepreneurial Manager course in the MBA required curriculum. 

She is a faculty research fellow at the National Bureau of Economic Research (NBER), an affiliate professor at the Abdul Latif Jameel Poverty Action Lab (J-PAL), a member of the International Growth Centre (IGC) based at LSE/Oxford, and of the HBS Social Entreprise Initiative. Besides her academic interests, she serves on the board or advisory board of a number of social enterprise ventures committed to translating research into practice.

Professor Pomeranz’s research focuses on public policies towards firms and entrepreneurs in emerging markets. In particular, she has conducted large-scale randomized field experiments about tax evasion by firms and about determinants and impacts of formal savings for low-income microentrepreneurs. In current work, she is analyzing the impact of tax subsidies and public procurement regulations on investment and growth of SMEs in emerging markets. Prior to joining HBS, she served as a postdoctoral fellow at MIT’s Abdul Latif Jameel Poverty Action Lab, with a Ph.D. in economics from Harvard University and BA and MA degrees in international relations from the Graduate Institute of International Studies in Geneva.

Beyond her research, Dina Pomeranz has been active in a variety of organizations, including as a consultant to Ernst & Young, the World Bank, the Chilean and Ecuadorian Tax Authorities, and the Swiss State Secretariat for Economic Affairs. She serves on the board of Evidence Action and TAMTAM-Together Against Malaria and on the advisory board of Instiglio and IDinsight. 

Featured Work

  1. Under-Savers Anonymous

    We test the effectiveness of self-help peer groups as a commitment device for precautionary savings, through two randomized field experiments among 2,687 microentrepreneurs in Chile. The first experiment finds that self-help peer groups are a powerful tool to increase savings (number of deposits grows 3.5-fold and average savings balance almost doubles). Conversely, a substantially higher interest rate has no effect on most participants. A second experiment tests an alternative delivery mechanism and shows that effects of a similar size can be achieved by holding people accountable through feedback text messages, without any meetings or peer pressure.

  2. No Taxation without Information

    Tax evasion generates billions of dollars of losses in government revenue and creates large distortions, especially in developing countries. A growing, mostly theoretical literature argues that information flows are central to understanding effective taxation. This paper analyzes the role of information for tax enforcement in the case of the Value Added Tax (VAT) through two randomized field experiments with over 400,000 Chilean firms. Claims that the VAT facilitates tax enforcement by generating a paper trail on transactions between firms have led to widespread VAT adoption worldwide, but there is surprisingly little evidence. I find that the paper trail acts as a substitute to a firm's own audit risk. A message announcing increased tax enforcement has a much smaller effect on reporting of transactions that are already covered by a paper trail. A second experiment shows that the paper trail leads to spillovers that create important multiplier effects in tax enforcement. The impact of a random audit announcement is transmitted up the VAT chain, increasing compliance by firms' suppliers. These findings confirm that when evasion is taken into account, significant differences emerge between taxes that are equivalent in standard models but generate different information on taxable transactions.

  3. Start-Up Chile: April 2012

    Start-Up Chile is a unique program to encourage entrepreneurs to bring their new ventures to Chile. Policymakers must evaluate its effectiveness in achieving economic and social goals. http://startupchile.org/

  4. The Promise of Micro Finance and Women's Empowerment

    The microfinance revolution has transformed access to financial services for low-income populations worldwide. As a result, it has become one of the most talked about innovations in global development in recent decades. However, its expansion has not been without controversy. While many hailed it as a way to end world poverty and promote female empowerment, others condemned it as a disaster for the poor. Female empowerment has often been seen as of one the key promises of the industry. In part, this is based on the fact that more than 80% of its poorest clients, i.e., those who live on less than US $1.25/day, are women. This paper discusses what we have learned so far about the potential and limits of microfinance and how insights form research and practice can help reform the industry’s current products, policies and future development.

Publications

Working Papers

  1. Tax Me if You Can: Evidence on Firm Misreporting Behavior and Evasion Substitution

    Citation:

    Carrillo, Paul, Dina D. Pomeranz, and Monica Singhal. "Tax Me if You Can: Evidence on Firm Misreporting Behavior and Evasion Substitution." Working Paper, September 2013.
  2. Randomized Tax Enforcement Messages: A Policy Tool for Improving Audit Strategies

    Reducing tax evasion is a key challenge for governments around the world, particularly in developing countries. This paper presents a methodology to generate information to optimize audit strategies. Randomly selected taxpayers receive a deterrence message. Comparing their subsequent tax payments to a control group allows estimating what types of taxpayers are more likely to respond to an increase in perceived audit probability. This information can be used to target audits toward taxpayers that respond particularly strongly, and to construct risk indicators to predict taxpayers' responses. We show results from an application in Chile and describe lessons learned during the implementation.

    Keywords: Lawfulness; Taxation; Chile;

    Citation:

    Pomeranz, Dina, Cristobal Marshall, and Pamela Castellon. "Randomized Tax Enforcement Messages: A Policy Tool for Improving Audit Strategies." Tax Administration Review, no. 36 (January 2014): 1–21.
  3. Do Savings Constraints Lead to Indebtedness? Experimental Evidence from Access to Formal Savings Accounts in Chile

    Poverty is often characterized not only by low and unstable income, but also by heavy debt burdens. We find that the inability to save contributes to this indebtedness. Access to free savings accounts substantially decreases participants' propensity to use short-term credit. In addition, participants who experience an economic shock have less need to reduce consumption, and subjective well-being improves significantly. Precautionary savings and credit therefore act as substitutes in providing self-insurance, and participants prefer saving more when given the choice. Take-up patterns suggest that requests by others for participants to share their resources are a key obstacle to saving.

    Keywords: Saving; Poverty; Borrowing and Debt; Chile;

    Citation:

    Kast, Felipe, and Dina Pomeranz. "Do Savings Constraints Lead to Indebtedness? Experimental Evidence from Access to Formal Savings Accounts in Chile." Harvard Business School Working Paper, No. 14-001, July 2013.
  4. No Taxation without Information: Deterrence and Self-Enforcement in the Value Added Tax

    Claims that the VAT facilitates tax enforcement by generating paper trails on transactions between firms contributed to widespread VAT adoption worldwide, but there is surprisingly little evidence. This paper analyzes the role of third party information for VAT enforcement through two randomized experiments among over 400,000 Chilean firms. Announcing additional monitoring has less impact on transactions that are subject to a paper trail, indicating the paper trail's preventive deterrence effect. This leads to strong enforcement spillovers up the VAT chain. These findings confirm that when taking evasion into account, significant differences emerge between otherwise equivalent forms of taxation.

    Keywords: Information; Taxation; Chile;

    Citation:

    Pomeranz, Dina. "No Taxation without Information: Deterrence and Self-Enforcement in the Value Added Tax." Harvard Business School Working Paper, No. 13-057, December 2012. (Revised April 2013.)
  5. Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device

    We test the effectiveness of self-help peer groups as a commitment device for precautionary savings, through two randomized field experiments among 2,687 micro-entrepreneurs in Chile. The first experiment finds that self-help peer groups are a powerful tool to increase savings (number of deposits grows 3.5-fold and average savings balance almost doubles). Conversely, a substantially higher interest rate has no effect on most participants. A second experiment tests an alternative delivery mechanism and shows that effects of a similar size can be achieved by holding people accountable through feedback text messages, without any meetings or peer pressure.

    Keywords: Saving; Decision Making; Interest Rates; Planning; Performance Effectiveness; Economics; Entrepreneurship; Growth and Development; Social Enterprise; Global Range; Chile;

    Citation:

    Kast, Felipe, Stephan Meier, and Dina Pomeranz. "Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device." Harvard Business School Working Paper, No. 12-060, January 2012. (Revised October 2012.)

Cases and Teaching Materials

  1. IDinsight: Informing Decisions for Global Development

    Citation:

    Pomeranz, Dina, and William R. Kerr. "IDinsight: Informing Decisions for Global Development." Harvard Business School Case 814-103, March 2014.
  2. Start-Up Chile: April 2012

    Start-Up Chile is a unique program to encourage entrepreneurs to bring their new ventures to Chile. Policymakers must evaluate its effectiveness in achieving economic and social goals.

    Keywords: Entrepreneurship; Venture Capital; Policy; Chile;

    Citation:

    Applegate, Lynda M., William R. Kerr, Josh Lerner, Dina D. Pomeranz, Gustavo A. Herrero, and Cintra Scott. "Start-Up Chile: April 2012." Harvard Business School Case 812-158, May 2012.

Other Publications and Materials

  1. The Promise of Microfinance and Women's Empowerment: What Does the Evidence Say?

    The microfinance revolution has transformed access to financial services for low-income populations worldwide. As a result, it has become one of the most talked-about innoviations in global development in recent decades. However, its expansion has not been without controversy. While many hailed it as a way to end wold poverty and promote female empowerment, others condemned it as a disaster for the poor. Female empowerment has often been seen as one of the key promises of the industry. In part, this is based on the fact that more than 80% of its poorest clients, i.e., those who live on less than $1.25/day, are women. This paper discusses what we have learned so far about the potential and limits of microfinance and how insights from research and practice can help inform the industry’s current products, policies and future developments.

    Keywords: Microfinance; Entrepreneruship in emerging markets; entrepreneurship; gender; Women's Empowerment; entrepreneurs; Saving; savings; credit; credit supply; Insurance; Development economics; development finance; Behavioral economics; Microfinance; Developing Countries and Economies; Social Entrepreneurship; Gender Characteristics; Banking Industry; Financial Services Industry; Insurance Industry; Public Administration Industry; Africa; India; Asia; Latin America; Chile; Kenya;

    Citation:

    Pomeranz, Dina D. "The Promise of Microfinance and Women's Empowerment: What Does the Evidence Say?" EY Thought Leadership Series, February 2014.
  2. Métodos de evaluaciones de impacto: Una introducción breve a evaluaciones aleatorias en comparación a otras metodologías

  3. Shedding Light on the Gender Gap through Randomized Field Studies

    Citation:

    Chen, Connie, Felipe Kast, and Dina D. Pomeranz. "Shedding Light on the Gender Gap through Randomized Field Studies." Insights: Closing the Global Gender Gap (2009).
  4. Wirtschaftswissenschaft im Dienste der Armen: Ökonomen propagieren neue Evaluationsmethoden in der Entwicklungshilfe

    Research Summary

  1. Current research

    Professor Pomeranz has conducted large-scale, randomized field experiments in Chile and Ecuador to answer questions about tax evasion and savings by small firms and microentrepreneurs. In current research, she studies the impacts of tax subsidies and of the public procurement system on investment and growth of small and medium size firms in emerging markets.
  2. Tax evasion

    Tax evasion generates billions of dollars of losses in government revenue and creates large distortions, especially in developing countries. A growing, mostly theoretical literature argues that information flows are central to understanding effective taxation. Professor Pomeranz has analyzed the role of information for tax enforcement in the case of the Value Added Tax (VAT) in Chile. She finds that the paper trail generated by the VAT leads to important spillovers in tax enforcement along the production chain. These findings confirm the claim that the VAT has self-enforcing properties, a claim that has contributed to widespread VAT adoption worldwide. They also point to the important role that firms play as aggregators of information, thereby facilitating tax enforcement.
  3. Savings among microentrepreneurs

    Poverty is often characterized not only by low average income, but also by highly variable income and expenditures, and by a lack of access to insurance services that can help smooth consumption. While commitment devices such as defaults and direct deposits from wages have been found to be highly effective in increasing savings, they are not available to the millions of people worldwide who work in the informal sector or as independent entrepreneurs, and who therefore do not have a formal wage bill.

    Professor Pomeranz has investigated low-income Chilean microentrepreneurs and found that self-help peer groups can be a highly effective alternative commitment device to encourage savings. Participation in a peer group program increased the number of deposits in formal savings accounts 3.5-fold and almost doubled the average savings balance. A subsequent experiment shows that more than 80 percent of the peer-group effect can be achieved through follow-up by simple text messages. These findings are particularly relevant in light of another study, in which Professor Pomeranz documents that low-income entrepreneurs can effectively use savings accounts for self-insurance and protection against economic shocks.

      Yahoo! Finance
      01/13/2014

      Mandi Woodruff

      Wall Street Journal
      12/26/2013
      Financial Access Initiative (blog)
      11/06/2013
      Vox
      09/30/2013

      Wojciech Kopczuk, Justin Marion, Erich Muehlegger, Joel Slemrod,

      Economics Malaysia
      09/06/2013
      El Economista
      05/28/2013

      Raúl Martínez Solares

      World Bank
      02/04/2013

      Isis Gaddis

      Participant
      01/01/2013

      David Ireland

      Harvard's Dr. Dina Pomeranz on how peer pressure and text messages can help boost savings

      My Bank Tracker Money (blog)
      11/16/2012

      Debbie Dragon

      Business Insider
      10/15/2012

      Jill Krasny

      Que Pasa (online)
      07/17/2012
      Financial Access Initiative (blog)
      05/01/2012
      Swiss Study Foundation
      01/01/2012
      Rand Behavioral Finance Forum Bulletin
      01/01/2011
      Financial Access Initiative (blog)
      01/25/2010

      Caitlin Weaver