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) and at the Bureau for Research and Economic Analysis of Development (BREAD), and a member of the International Growth Centre (IGC) 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

Publications

Journal Articles

  1. Randomized Tax Enforcement Messages: A Policy Tool for Improving Audit Strategies

    Dina Pomeranz, Cristobal Marshall and Pamela Castellon

    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. View Details

Working Papers

  1. Monitoring Public Procurement: Evidence from a Regression Discontinuity Design in Chile

    Maria Paula Gerardino, Stephan Litschig and Dina D. Pomeranz

    The government is the biggest buyer in the economy of most countries. At the same time, the public procurement process if often thought to be fraught with corruption and malpractice. However, there is little evidence regarding the impact of audits aimed at reducing such malpractice. This paper investigates the effect of being audited on public entities' subsequent procurement practices in Chile. For identification, we exploit a scoring rule of the national auditing agency, which allows for regression discontinuity analysis. Our preliminary results show that the audits seem to lead to a temporary shift towards less transparent modalities of procurement. The share of the amount of total purchases through direct negotiations increases by around 20 percentage points, at the expense of the use of public auctions. The effect is most pronounced during months when the audit is taking place and disappears completely by the subsequent fiscal year. Since audits in Chile rarely happen in consecutive years, and since the audit typically only covers the most recent completed fiscal year, this time pattern of effects is consistent with public agents responding to a temporary drop in audit risk during the year of the audit.

    Keywords: procurement; chile; corruption; public finance; Public procurement; Public Sector; Public Administration Industry; Chile;

    Citation:

    Gerardino, Maria Paula, Stephan Litschig, and Dina D. Pomeranz. "Monitoring Public Procurement: Evidence from a Regression Discontinuity Design in Chile." Working Paper, September 2014. View Details
  2. Dodging the Taxman: Firm Misreporting and Limits to Tax Enforcement

    Paul Carrillo, Dina Pomeranz and Monica Singhal

    Reducing tax evasion is a key priority for many governments, particularly in developing countries. A growing literature has argued that the ability to verify taxpayer self-reports against reports from third parties is critical for modern tax enforcement and the growth of state capacity. However, there may be limits to the effectiveness of third-party information if taxpayers can make offsetting adjustments on less verifiable margins. We present a simple framework to demonstrate the conditions under which this will occur and provide strong empirical evidence for such behavior by exploiting a natural experiment in Ecuador. We find that when firms are notified by the tax authority about detected revenue discrepancies on previously filed corporate income tax returns, they increase reported revenues, matching the third-party estimate when provided. Firms also increase reported costs by 96 cents for every dollar of revenue adjustment, resulting in minor increases in total tax collection.

    Keywords: Governance Compliance; Taxation; Ecuador;

    Citation:

    Carrillo, Paul, Dina Pomeranz, and Monica Singhal. "Dodging the Taxman: Firm Misreporting and Limits to Tax Enforcement." Harvard Business School Working Paper, No. 15-026, October 2014. (Note: Previously circulated as "Tax Me if You Can: Firm Misreporting Behavior and Evasion Substitution.") View Details
  3. Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile

    Felipe Kast and Dina Pomeranz

    Poverty is often characterized not only by low and unstable income, but also by heavy debt burdens. We find that reducing barriers to saving through access to free savings accounts decreases participants' short-term debt by about 20%. 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 borrowing less when a free formal savings account is available. Take-up patterns suggest that requests by others for participants to share their resources may be a key obstacle to saving.

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

    Citation:

    Kast, Felipe, and Dina Pomeranz. "Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile." NBER Working Paper Series, No. 20239, June 2014. (Revised June 2014. Featured by La Tercera. Harvard Business School Working Paper, No. 14-001, July 2013) View Details
  4. No Taxation without Information: Deterrence and Self-Enforcement in the Value Added Tax

    Dina Pomeranz

    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. Under second review at the American Economic Review. Featured by CNN, Vox.eu, World Bank News, and others.) View Details
  5. Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device

    Felipe Kast, Stephan Meier and Dina Pomeranz

    We test the effectiveness of self-help peer groups as a commitment device for precautionary savings, through two randomized field experiments among 2,687 Chilean micro-entrepreneurs. The first experiment finds that self-help peer groups are a powerful tool to increase savings (the number of deposits grows 3.7-fold and the average savings balance almost doubles). In contrast, a more classical measure, a substantially increased interest rate, has no effect for most participants. A second experiment tests an alternative delivery mechanism and shows that effects of similar size can be achieved by holding people accountable through feedback text messages, without 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 June 2014. Featured by Time, Business Insider, Freakonomics, Wall Street Journal, Yahoo! Finance, and others.) View Details

Cases and Teaching Materials

  1. Start-Up Chile: April 2012

    Lynda M. Applegate, William R. Kerr, Josh Lerner, Dina D. Pomeranz, Gustavo A. Herrero and Cintra Scott

    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. View Details

Other Publications and Materials

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

    Dina D. Pomeranz

    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; Gender Characteristics; Microfinance; Social Entrepreneurship; Developing Countries and Economies; Banking Industry; Public Administration Industry; Financial Services Industry; Insurance Industry; Latin America; Kenya; Chile; India; Asia; Africa;

    Citation:

    Pomeranz, Dina D. "The Promise of Microfinance and Women's Empowerment: What Does the Evidence Say?" EY Thought Leadership Series, February 2014. View Details

    Research Summary

  1. Current research

    by Dina D. Pomeranz

    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

    by Dina D. Pomeranz

    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

    by Dina D. Pomeranz

    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.

      28 Oct 2014
      BBC Business Daily
      13 Jan 2014
      Yahoo! Finance
      26 Dec 2013
      Wall Street Journal
      06 Nov 2013
      Financial Access Initiative
      06 Sep 2013
      Economics Malaysia
      24 Oct 2012
      HBS Working Knowledge
      04 Feb 2013
      World Bank Blogs
      01 Jan 2013
      Participant
      16 Nov 2012
      My Bank Tracker Money
      01 May 2012
      Financial Access Initiative
      01 Jan 2012
      Schweizerische Studienstiftung
      01 Jan 2011
      Rand Behavioral Finance Forum Bulletin
      25 Jan 2010
      Financial Access Initiative