DOES PARTICIPATION IMPROVE PERFORMANCE - ESTABLISHING CAUSALITY WITH SUBJECTIVE DATA

Data from 121 diverse rural water projects provide strong statistical findings that increasing beneficiary participation directly causes bet ter project outcomes. Three possible econometric objections to these f indings are addressed and answered. The subjective nature of the data does not preclude valid, cardinal measures of participation appropriat e for statistical analysis. ''Halo effects'-changes in the measurement of one variable because of the observed state of another variable-do not seem to induce a strong upward bias in the measurement of particip ation or project performance. Reverse causation is unlikely: estimatio n using instrumental variables, data on project timing, and documentat ion of case studies support the cause-effect relation between particip ation and better project performance.