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1. What is human development? How does the idea of the human development index help to capture aspects of development that are not only to do with income? 2. What happens over time in each graph? What is the trend in each variable in Mexico? Using only these graphs, can we make any causative statements about the relationship between PROGRESA/Oportunidades and the changes in Mexico's HDI and GNI? That is, from the figures, can you say PROGRESA/Oportunidades caused changes in GNI or HDI? 3. Given what you explained in b. ii., why is IFPRI able to claim that PROGRESA caused these changes? Explain how the Mexican government (with IFPRI) could do a microeconomic impact evaluation (or randomized controlled trial) that helps to isolate causation. 4. Given the results reported by IFPRI (and other results explained in the textbook and in Poor Economics), what do you think the consequences of PROGRESA/Oportunidades will be for Mexico's human development index? Why? Do you think you can make any causative statements now between PROGRESA/Oportunidades and HDI? 5. With a model of household utility using indifference curves provide a graph to show the effect of a household getting a PROGRESA (or Oportunidades) grant from the government on its consumption of agricultural or food goods (x) and other goods (y). Explain what changes in your graph when a household receives the grant (show a 'before' and 'after' on the same set of axes in your graph).
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