Aid Watch blog ends; New work on development begins

Today, after two years and four months, we end the experiment that was the Aid Watch blog. We think the experiment was a success. We’ve had a great time blogging here. Thank you all for reading and writing back, and to our wonderful guest bloggers, for helping to make Aid Watch a source for way-outside-the-Beltway commentary on aid. Your response continues to exceed our expectations.

Some of you may be surprised. This was not a sudden decision; we have been talking it over with a few others for some time now.

The simple reason for ending the blog is that we want to free up our own time for writing longer and more substantive pieces, both academic and non-academic, on development.

The blog is a hungry mouth that always wants to be fed, and the longer projects we’d like to take on don’t fit in with those constraints.

Economists are professionally trained to be wary of diminishing returns to any one activity, and to be entrepreneurial about starting new activities. Although we’ll still write about aid, we plan to move away from aid criticism as our main focus, and put more emphasis on the high-stakes development debates going on now. We still believe that more aid will reach the poor the more people are watching aid, but, as we’ve always known, there’s a lot more to development than aid.

Fortunately for us all, there are many other good blogs on aid and development that have sprung up since we started Aid Watch, from smart establishment blogs like Development Impact at the World Bank, to lonely aid workers blogging from Malawi (check the sidebar for our recommendations).

The blog will stay at its current web address, and all the archives will remain available and searchable. Check for updates on our work at the DRI web site.

Signing off for now,

Bill and Laura


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From Hell to Prosperity

A graphic showing striking disparities income among religions in America, from the NYT Magazine:

Bill switched from childhood Methodist to adult Episcopalian in an attempt to boost income. Did that likely work?

Barro and McCleary 2006 argue the relationship goes from income to religiosity (as measured by church attendance, personal prayer, and belief in hell and the afterlife). At least for the Protestant denominations, the ones on the left mostly feature more religiosity in these senses than the ones on the right.

Barro and McCleary analysed the relationship going the other way also, and found that Belief in Hell raised your economic growth potential.

Another study found that college students who believed in a vengeful, angry God were less likely to cheat on a test than those who believed in a kindly, forgiving God. And of course we know from other literature that trustworthy behavior is associated with more opportunities to trade, and thus more prosperity.

A different twist than the Protestant Ethic: Scared Rich?

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Poverty: Is there an app for that?

by Tate Watkins. Tate is a research associate at George Mason University’s Mercatus Center. Last week the World Bank issued a announced an upcoming event called Random Hacks of Kindness. Tech developers will gather at locations around the world to try to “create open solutions that can save lives and alleviate suffering.” Random Hacks of Kindness began in 2009 as a partnership between the World Bank, Google, Microsoft, Yahoo!, and NASA. Its goal is to “produce practical open source solutions to development problems” by bringing together development experts and software developers.

Initiatives like Random Hacks of Kindness, one example of the wider push to use information and communication technologies (ICTs) to solve development problems, have produced useful tools; for instance the SMS service that helped people communicate with family and friends after earthquakes in Haiti and Chile. But billing efforts like these as capable of producing “solutions to development problems” is misguided at best. This level of hype brought to mind recent overpromising headlines, like: “IT can meet Africa’s Millennium Development Goals” and ”Nations Call for ICTs to Tackle Disease.”

After reading about Random Hacks of Kindness, I asked UC Berkeley ICT for development expert Kentaro Toyama what he thought about them. Toyama responded:

Anyone imagining that a day or two of hacking will produce solutions to development problems, even in some small part, is either a technologist drunk on her own self-image who believes that she’ll solve a mindboggling social challenge with technology, or a World Bank officer drunk on his own self-image who believes that he’ll solve a mindboggling social challenge by motivating some technologists. In any case, it seems clear they are the kind of folks who don’t learn from history.

We should be wary of being distracted by technologies that can solve some direct problems but will never be able to solve underlying development problems. If an app gives a mother access to maternal health information, but she doesn’t have access to basic healthcare, how much good will it do her?

Toyama, who blogs humorously as the ICT4D Jester, was more optimistic about the initiative’s ability to build capacity of programmers in developing countries:

[T]o the extent that these events generate excitement around the ability to develop software in developing countries, they are fantastic…Among the things that make a country “developed” is its intrinsic capacity to create, adapt, and master technology.

Similarly, much of what makes a country “developed” is an emergent system that permits and promotes problem solving.

To paraphrase and adapt a point made previously on this blog: Direct solutions to problems (say, aid programs that use ICTs to locate disaster survivors) may be worthwhile as benefiting a lot of people. But a long list of many such solutions is not development. Development is the gradual emergence of a problem-solving system.

No one really believes that there’s an app for development, but we sometimes seem to talk like there is. We should keep sober our expectations about what ICTs can and cannot accomplish, because getting drunk on techno-hype is sure to cloud our understanding of underlying development issues -- like why certain places lack the problem-solving systems that afford mothers access to basic healthcare.

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Who should be the next IMF chief?

Even if the serious charges against IMF head Dominique Strauss-Kahn are proven false, the IMF will likely be in need of a new leader.

According to unwritten agreement, the IMF has always been headed by a European, just as the president of the World Bank has always been American.

Some (mainly Europeans, funnily enough) argue that the IMF needs a European leader now more than ever, because the biggest issues the IMF currently faces are in the eurozone  rather than in the developing world. Possibilities named include French Finance Minister Christine Lagarde, Italian Central Bank head Mario Draghi.

Others, like Felix Salmon, argue it’s time for a change.  After all, when he was chosen in 2007  DSK himself said that his appointment would be the last time a European automatically got the nod.  "Voice and representation of most countries in a changing world have to be better taken into account by the board, but also by the staff," he said, "as well as by management.”

Owen Barder calls for the selection to be open, transparent, and merit-based (in contrast to the back-room deals that usually cinch the nomination.) This would open the field to contenders like Turkish former UNDP head Kemal Dervis and South African politician Trevor Manuel.

Meanwhile, the Freakonomics blog attempts to rescue the reputation of economists the world over by reminding us that morality and occupational choice are not highly correlated.

Postscript from Bill 8:30am Tuesday: Did the IMF get it wrong in 2008? Disturbing story in NYT this morning about the previous DSK sex scandal of an affair with a subordinate:

The Board concluded that ... Mr. Strauss-Kahn ...had not abused his power.

In a letter to the board {at the time}, {the woman in the affair} disagreed, saying Mr. Strauss-Kahn had used his power as managing director to become intimate with her.

“I was damned if I did and damned if I didn’t,” she wrote in a letter to the investigators. In the letter, she went on to say that Mr. Strauss-Kahn was “a man with a problem that may make him ill-equipped to lead an institution where women work under his command.”

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Development Social Science in medical journals: diagnosis is caveat emptor

Aid Watch has complained before about shaky social science analysis or shaky numbers published in medical journals, which were then featured in major news stories. We questioned creative data on stillbirths, a study on health aid, and another on maternal mortality.

Just this week, yet another medical journal article got headlines for giving us the number of women raped in the DR Congo (standard headline: a rape a minute). The study applied country-wide a 2007 estimate of the rate of sexual violence in a small sample (of unknown and undiscussed bias). It did this using female  population by province and age-cohort  -- in a country whose last census was in 1984. (Also see Jina Moore on this study.)

We are starting to wonder, why does dubious social science keep showing up in medical journals?

The medical journals may not have as much capacity to catch flaws in social science as in medicine. They may desire to advocate for more action on tragic social problems. The news media understably assume the medical journals ARE vetting the research.

We could go on and on with examples. The British Medical Journal published a study of mortality of age cohorts in five year bands for both men and women from birth to age 95 for 126 countries—an improbably detailed dataset. (The article was searching through all the age groups to see if any group's mortality was related to income inequality.).  Malaria Journal published a study of nationwide decreases in malaria deaths in Rwanda and Ethiopia, except that the study itself admitted that its methods were not reliable to measure nationwide decreases  (a small caveat left out later when Bill and Melinda Gates cited the study as progress of their malaria efforts).

The Lancet published a study that tested an “Intervention with Microfinance for AIDS and Gender Equity (IMAGE)” in order  “to assess a structural intervention that combined a microfinance programme with a gender and HIV training curriculum.” The conclusion: “This study provides encouraging evidence that a combined microfinance and training intervention can have health and social benefits.” This was a low bar for "encouraging:" only 3 out of the 31 statistical tests run in the paper demonstrate any effects -- when 1 out of every 20 independent tests of this kind show an effect by pure chance. (The Lancet was also the culprit in a couple of the links in the first paragraph.) Economics journals are hardly foolproof, but it's hard to imagine research like this getting published in them.

Medical journals would presumably not tolerate shaky medical science in the name of advocacy; why in social science? We also care about rape, and stillbirths, and dying in childbirth. That's why we also care about the quality of social science applied to these tragic problems.

Postscript: we are grateful to Anne Case and Angus Deaton for suggestions and comments on this article, while not attributing to them any of the views expressed here.

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Economics professors' favorite economics professors

From a newly published article here. Before anyone on this list gets too much of a swollen head, note that everyone after the top 4 got between 5 and 10 votes out of 299 professors surveyed (there was another group at 4 votes, including a certain J. S*chs). There also seems to be a sheer name recognition effect over-representing economists that show up in the news media, kind of the same way that Donald Trump was leading in the Republican nomination polls recently.

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Are Lax US Gun Laws Spilling Violence into Mexico?

The question:

Do more guns cause more violence?

The experiment:

We exploit a natural experiment induced by the 2004 expiration of the U.S. federal assault weapons ban to examine how the subsequent exogenous increase in gun supply affected violence in Mexico. The expiration relaxed the permissiveness of gun sales in border states such as Texas and Arizona, but not California, which retained a pre-existing state-level ban.

The results:

Using data from mortality statistics and criminal prosecutions over 2002-2006, we show that homicides, gun-related homicides and gun-related crimes increased differentially in Mexican municipios located closer to Texas and Arizona ports of entry, relative to those nearer California ports.

Our estimates suggest that the U.S. policy change caused at least 158 additional deaths each year in the post-2004 period. Gun seizures also increase differentially, and solely for the gun category that includes assault weapons. The results are robust to controls for drug trafficking, policing, unauthorized immigration, and economic conditions in U.S. border ports, as well as drug interdiction efforts, trends by income and education, and military and legal enforcement efforts in Mexican municipios.

The conclusion:

Our findings suggest that U.S. gun laws have exerted an unanticipated spillover on gun supply in Mexico, and this increase in gun supply has contributed to rising violence south of the border.

From a paper presented by Oeindrila Dube at NYU’s Development Seminar, with Arindrajit Dube and Omar Garcia-Ponce.


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Best and Worst of Official Aid 2011- new release

By Claudia Williamson, Post-Doctoral Fellow, Development Research Institute Rhetoric on “aid effectiveness” keeps escalating, is there anything to show for it?

The past (almost) two years, Bill and I have been collecting data, combing through that data, and refining the numbers to ‘grade’ aid agencies and assess overall trends in aid practices. We waited until our paper passed peer review to release our findings. Rhetoric versus Reality: The Best and Worst of Aid Agency Practices has now been accepted for publication in a special issue of World Development. {{1}}

Our work updated Easterly and Pfutze’s 2008 study, Where Does the Money Go: Best and Worst Practices in Foreign Aid, on five dimensions of agency ‘best practices’: aid transparency, minimal overhead costs, aid specialization, delivery to more effective channels, and selectivity of recipient countries based on poverty and good government.  Based on these measures, we calculate an overall agency score using original data and 2008 OECD data. These scores only reflect the above practices; they are NOT a measure of whether the agency’s aid is effective at achieving good results.

There is slight improvement in transparency and more donors are moving away from ineffective channels. But transparency is still at unacceptably low levels. For example, two agencies (MOFA Japan and France’s DgCiD) fail to report any aid data at all.

The most conspicuous failures in both trends and levels are in specialization and selectivity. Luxembourg is as unspecialized as the US with a 70th of the aid flow. Many such unspecialized small donors likely have most of their aid eaten up by fixed costs before the funds reach any beneficiaries. At the same time, allocation to corrupt countries is increasing, not decreasing. Aid to corrupt autocrats is not explained by emphasis on the least developed countries; donors such as the US, Sweden, and Norway do poorly on both income selectivity and autocracy/corruption selectivity.

The best bilateral agency is UK’s Department for International Development (DFID).

DFID is one of ten agencies that fully reports aid flows to OECD, and it lists number of staff, administrative costs, salaries and benefits and its ODA budget on its website. DFID also has relatively low administrative costs and salaries and benefits relative to aid disbursements (2.6% and 1.6% respectively). DFID relies on more effective channels of aid disbursements, not tying any of its aid and dispersing relatively little food aid (1.3%) (pages 53-54).

Japan, New Zealand, and Germany also do well, rounding out the top five best agencies.  The United States ranks below average mainly because of poor performance on selectivity and choosing to allocate aid through ineffective channels. As we write in the paper, “the foreign policy needs of the US superpower and the lobbies for particular aid channels seem to dominate the politics of American aid” (page 54).

Another theme that emerged is that the Scandinavian countries’ reputation of altruism based on aid volume does NOT translate to good practices; they have below average scores on specialization and transparency and are mediocre in the overall ranking.

Lastly, the UN agencies on average are worse than the other multilateral agencies and the bilateral agencies, and the differences are statistically significant. Above all, they are worse on overhead and transparency. On overhead, they have an average ratio of 46 percent of administrative costs to ODA. UNDP reports no data on its operating costs or ODA, now even worse than its minimal reporting in 2008.

The two goals of the paper were to test if: 1) donors’ rhetoric matches reality; and 2) they are making any improvements in doing so. Our answer is no on both accounts.

Postscript: Fortunately, we are now part of a larger community running independent checks on aid. For other recent aid quality exercises, see Birdsall and Kharas, 2010; Knack, Rogers and Eubank, 2010; and Ghosh and Kharas, 2011.

[[1]]The dataset for the paper can be downloaded here[[1]]

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World Bank mustn't say "democracy," but "deploy troops" is OK

UPDATE: Wed, May 11: World Bank media chief David Theis responds (see end of comments section below) I finally read the World Bank's 2011 World Development Report, Conflict, Security, and Development. It shed new light on an earlier discussion I had by email with World Bank Media Chief David Theis last month, which I reproduce here, and then I add a new letter I just sent to Mr. Theis.

To World Bank Media Chief David Theis, April 7, 2011

David, I noticed that President Zoellick's speech yesterday on the Arab Democratic Spring did not actually mention the word "democracy" … The omission is quite startling given the topic, so I was wondering: is there a legal prohibition (such as from the articles of agreement) that prohibits the President from overtly using the word "democracy"? Bill

From World Bank Media Chief David Theis, April 8, 2011

Hi, Bill. Since you worked at the World Bank for 16 years, you probably know that our Articles of Agreement say that the Bank, which is owned by 187 member countries, “….shall not interfere in the political affairs of any member; nor shall they be influenced in their decisions by the political character of the member or members concerned.”

Here's a link to the Articles, if you need a refresher:

Thanks very much,


New letter yesterday

To World Bank Media Chief David Theis, May 9, 2011

Dear David,

I have finally had a chance to read the 2011 World Development Report (WDR) on Conflict, Security, and Development. On p. 188, it says:

" External forces can ...begin to restore confidence ... They can also deploy troops to provide physical security guarantees against a relapse."

On p. 192, it talks again about the idea for external forces “to deploy peacekeeping operations to confront violence in a timely manner.”

Thanks for the refresher in your April 8 letter on the restriction that the World Bank “not interfere in the political affairs of any member.”

And thanks for explaining that any descriptive use of the word “democracy” on Arab revolts by President Zoellick would be such an interference in political affairs of a member state.

I was just wondering if you would consider a deployment of outside military troops to be less of an interference than using the descriptive word “democracy”?

Thanks for any clarification you can provide.

All the best. Bill

Mr. Theis kindly said he would check with the WDR team and get back to me.

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Saving Private Hayek

UPDATE: 3:30pm links to other reviews (all great) of the Fukuyama review at end of this post F.A. Hayek continues to be the most mis-characterized economist of all time.  As if Glenn Beck were not doing enough damage, now even someone I greatly respect -- Frank Fukuyama-- has gotten Hayek wrong yet again. In a review of a new edition of the Constitution of Liberty in the NYT book review, Fukuyama says at the end:

In the end, there is a deep contradiction in Hayek’s thought. His great insight is that individual human beings muddle along, making progress by planning, experimenting, trying, failing and trying again. They never have as much clarity about the future as they think they do. But Hayek somehow knows with great certainty that when governments, as opposed to individuals, engage in a similar process of innovation and discovery, they will fail. He insists that the dividing line between state and society must be drawn according to a strict abstract principle rather than through empirical adaptation. In so doing, he proves himself to be far more of a hubristic Cartesian than a true Hayekian.

To say Hayek's skepticism about government was based on "great certainty" is not just wrong, it is so much the opposite of  Hayek, it's like accusing Michele Bachmann of excessive belief in the Koran.

Hayek's view of knowledge was that it was partial and dispersed among many. The market gave individuals the incentives to apply this knowledge, and coordinated the uses of this local knowledge in a way that rewards each of us who knows best about any particular narrow area. (Frank notes this insight in an earlier paragraph, which makes the paragraph above even more puzzling.)  Government usually lacks both the incentives and the coordination mechanism. In government we don't know who knows best, so which knowledge wins the argument could often be wrong.

This does NOT imply the caricature that Hayek always opposed government action. As Fukuyama notes:

It may, however, surprise some of Hayek’s new followers to learn that “The Constitution of Liberty” argues that the government may need to provide health insurance and even make it ­compulsory.

A government based on individual liberty will have some feedback and reward mechanisms that would produce better government outcomes in such areas than under tyrannical outcomes, and will make possible some kinds of government innovation and discovery that Fukuyama likes. But the political feedback mechanisms even under liberty (like majority voting, protesting, freedom of speech, or lobbying) are much cruder and less likely to align individual and social payoffs than the market feedback mechanisms, so one should be cautious about the scope of activities in which government programs will be effective.  One should be particularly wary of large-scale government plans that require a type of centralized knowledge that Hayek argued forcefully does not exist (down with Robert Moses, up with Jane Jacobs!)

To sum up,  Hayek's skepticism about government was NOT based on his certainty, as Fukuyama would have it,  but on his awareness of his ignorance. (and everyone else's)

Us public intellectuals who are communicating ideas of Hayek to a broader public are NOT fond of ideas that highlight our own ignorance, so one prediction that can be made with a higher degree of certainty than usual is that Hayek will continue to be misunderstood.

UPDATE 3:30pm 5/9/11: Links to other reactions to Fukuyama: Pete Boettke, Don Boudreaux, David Boaz, Don Boudreaux again with more, and, intriguingly, Hayek himself. (HT to Knowledge Problem for bringing them all together.)

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Coming out as a feminist

UPDATE 9 am, Saturday, May 7: Another round with Matt (see comment below), another unnecessary reassurance for Offended White Males: yes I completely agree that nobody is automatically guilty or evil based on their gender and race.

Jessica Mack from the great blog Gender Across Borders, interviewed me on feminism in development yesterday, find it here. I had never voiced before what I said in the interview. Some were pleasantly surprised, a few forgot to include the word "pleasantly."

One commenter on Gender Across Borders kindly offered to play the role of Offended White Male. Matt complained about my references to "our paternalistic fantasies.” Matt said:

That has got to be one of the most offensive things I’ve read in quite a while about my intentions as a white male....It’s not ok to generalize women, but it’s ok to generalize white guys?

Matt, please relax.  Which do you think is closer to the truth: (1) there is way, way, way too much talk about white male paternalism in aid, or (2) it has been a verboten subject and it's time we talked about it? I say (2). In conclusion, thanks for saying you agreed with 95 percent! and out of respect for you and other readers, I hereby agree to retract nothing.

A shortened version of the interview follows here:

You talk about the concept of paternalism in global development. I’m curious what the concept of feminism means to you, and what relevance it has for understanding global development.

Most of the time, I talk about the paternalism of rich people toward poor people. I don’t think there’s much explicit racism in aid and development, but there is still a condescending or superior attitude toward poor people, that we can fix their problems. I think there is a gender dimension as well, though I haven’t really talked about it much in my work. I think I could talk about it a lot more.

It’s not an accident that the word paternalistic is the notion of father taking care of and supporting. A lot of discourse in aid is often about helping women and children. Aid agencies offer this appealing image of innocent women and children that are helpless and need our help. ... If you go through a bunch of aid brochures online, I bet that in the vast majority of them you ....will only see women and children...

It seems to me that some of the most insidious examples of bad aid have to do with women and children.

There’s a very powerful incentive to use that imagery for campaigns. They’re about the victims being women and children, but we’re covering over a lot of stuff. We rich white males – speaking as a rich, white male – are trying to alleviate our own guilty conscience not only toward the poor of the world, but also toward women in our own society. There’s still a lot of sexism and discrimination in our own society. We move the gaze away from that inequality and toward another remote part of the world to indulge our paternalistic fantasies.

Yet in crises like Darfur, women really are exponentially more vulnerable. How do you portray this reality so that women aren’t tokenized?

Of course women are vulnerable to violence and rape in a way that men are not. But we should not go all the way to the stereotypes ...Women in poor countries – and this is a big generalization – are incredibly resourceful. They’re achieving an awful lot. So, to peddle this stereotype of the helpless , pathetic woman that can’t do anything on her own – that’s really destructive and will definitely result in bad aid. Whereas if we find ways to let women tell aid givers what they need so that they can help themselves, that’s going to be much more successful.

.... What’s really at the heart of development is recognizing that everyone has equal rights.  I think the most fundamental thing that needs to happen in development is the recognition of equality in rights: poor, rich, male, female, every ethnic group and every religion.

What do think of some of the stories that Nicholas Kristof portrays? He’s gotten flack for “exploiting” stories of women and girls in order to evoke responses.

I respect Kristof. ... It’s impossible for anyone, including me, to be pure in this business. It’s just so difficult and complicated.

What do you mean by “pure?”

I mean to get things exactly right in terms of motivating people to get involved, not discourage giving, and yet at the same time respect the dignity of poor people.

Right, I think it has to be an ongoing process, but a self conscious one, a very self aware one.

Self awareness is very important. ...the idea of reciprocity. Any time you’re portraying a victimized woman in the Congo a certain way, turn the tables and try to think how you would feel if you were that woman and someone in a rich country far away was portraying your story. If you don’t pass that test – if you say, ‘no I would hate that,’ then you shouldn’t do it. Reciprocity is really at the heart of equality.

Is there a need for more women in global development, or perhaps more feminists?

What’s really needed is a lot more straight talk in our conversations ... that there’s still is a lot of oppression of women going on in poor and rich countries. We need to acknowledge that fact and not hide it behind buzzwords. Honesty makes it easier to find the things that will change power relationships. We have to also recognize the unintended power of development to strengthen women’s positions. Economists talk about development increasing the demand for brains relative to brawn. As economies get richer, the demand for brains goes up and that strengthens the position of women because they have the brains, and now a lot more bargaining power.

It’s funny to me that honesty turns one into a dissident in global development.

I know, it’s strange.

That’s where I see the role of feminism, and in global development too: continually questioning the institution, an appreciation for the process, and a whole lot of self-awareness. The more dissidents the better.

I agree!

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African Universities: Creating True Researchers or “Native Informers” to NGOs?

In a recent speech addressing the Makerere Institute of Social Research in Uganda, Mahmood Mamdani described the state of academic research and higher education in Africa as dominated by a “corrosive culture of consultancy.”

Today, intellectual life in universities has been reduced to bare-bones classroom activity. Extra-curricular seminars and workshops have migrated to hotels. Workshop attendance goes with transport allowances and per diem. All this is part of a larger process, the NGO-ization of the university. Academic papers have turned into corporate-style power point presentations. Academics read less and less. A chorus of buzz words have taken the place of lively debates…

What’s the difference between academic research and consultancy-driven research? Mamdani, who spent decades teaching at universities in South Africa, Tanzania and Uganda before moving to Columbia University, defines research for a consultant as seeking answers to problems posed and defined by a client. But university research, properly understood, requires formulating the problem itself.

His example of how this works in practice is an interesting one. In 2007, the Bill and Melinda Gates Foundation shifted global health spending priorities towards their research question: How to eradicate malaria? But if malaria can’t be eradicated, as a team of scientists from France and Gabon now believe, then researchers have spent four years and hundreds of millions of dollars answering the wrong question.

The cumulative effect of this model is to “devalue original research or intellectual production in Africa.”

The global market tends to relegate Africa to providing raw material (“data”) to outside academics who process it and then re-export their theories back to Africa. Research proposals are increasingly descriptive accounts of data collection and the methods used to collate data, collaboration is reduced to assistance, and there is a general impoverishment of theory and debate.

In my view, the proliferation of “short courses” on methodology that aim to teach students and academic staff quantitative methods necessary to gathering and processing empirical data are ushering a new generation of native informers.

Mamdani, who is now director of the Makerere Institute of Social Research in addition to his professorship at Columbia, seeks to counter the spread of consultancy culture “through an intellectual environment strong enough to sustain a meaningful intellectual culture.”

“To my knowledge,” he said, “there is no model for this on the African continent today. It is something we will have to create.”

HT Africa is a Country.


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The Great Manhattan Africa Luxury Coffee Tour

Welcome to Manhattan, tourists! Today's tour will accomplish three things: (1) you will find great coffee places, (2) you will find great coffees from Africa, and (3) you will end poverty in Africa. OK, both coffee people and aid people tend to exaggerate, so don't take (3) literally, unless you are from the Earth Institute.

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What better place to begin Manhattan coffee mania than at Stumptown Coffee Shop? This place takes African coffee so seriously, there are two varieties from Burundi and two from Rwanda, and if you give up your first born child,  you can take back a pound of beans to Ohio.

Next is Café Grumpy, where they have a $10,000 machine to brew the clean, sweet, complex $12 cup of coffee from Nekisse, Ethiopia.

Down 7th Avenue to Irving Farm (Go Rwanda!). {Full disclosure: I have a personal connection to Irving, but they're great anyway.} On to Third Rail, rated the best coffee in Manhattan by somebody, and also selling killer Yirgacheffe from the birthplace of coffee. And no, they don't have a bathroom -- this is Manhattan, you can pee when you get back to Iowa.

Moving east we get to La Colombe, accidentally discovered by coffee-illiterate Chris Blattman next to his office. They sell coffee labelled Afrique, which I am pretty sure is in Africa. Sometimes there's a bit of a wait. What part did you not understand about "no bathroom"?

And then just a little further east is Gimmee Coffee, which turns Rwandan coffee into espresso so delicious and thick that you stir it with the hunting knife you brought from Idaho.

Even farther east is the Roasting Plant in a gentrifying former immigrant slum on the Lower East Side.  It embodies the coffee-phile obsession with fresh roasted coffee, so your $24/lb Ethiopian Harrar turned brown right before we walked in.

Now that you've drunk enough coffee, reach with your shaking hands for your Gold Card to buy yet more coffee beans. Whole Foods, Dean and Deluca, and even Murray's Cheese Shop sell Fair Trade, which is almost as good as Unfair Trade for transferring income from rich NYC to Kayanza, Burundi.

If you want to keep things simple, tourists, our last stop is Porto Rico Coffee Importers, which sells many African coffees,  but no spiel on "helping the poor Africans".

Manhattan's pampered and discriminating coffee fanatics don't buy from African producers out of pity, they buy from African producers because they supply wonderful coffee.

Thanks for coming, tourists, have a nice trip back to Indiana. Don't forget mail order.

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Development before a killer

In an article that just might have been overshadowed by bigger news out of the “AfPak” region Sunday night, the New York Times reported on USAID’s project to build the Gardez-Khost Highway in Afghanistan. This 64-mile stretch of road meant to connect the two mountainous southeastern provinces of Paktia and Khost is shoddily constructed and incomplete after 3 years.

Not least among the problems was that construction began before the region was cleared of insurgents. “You are talking about pushing development before there’s security,” said a former American government official who was involved in the project.

“And you have military or politically driven timelines and locations which make no sense, or which force us into alliances with the very malign actors that are powerfully part of the broader battles we are fighting,” the official said. “No one steps back and looks at the whole picture.”

What is the cost of “pushing development” before security?

One answer: Although originally budgeted at $69 million, USAID has spent  $121 million on the project so far, and now says it expects to spend $176 million.

Another answer: Any remaining American credibility as a development actor in Afghanistan.

A better answer:

… Despite all the money spent on security…there have been 364 attacks on the Gardez-Khost Highway, including 108 roadside bombs, resulting in the deaths of 19 people, almost all of them local Afghan workers.

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Controlled experiments and uncontrollable humans

Bill reviewed two much-awaited books for the Wall Street Journal last weekend: Poor Economics by Abhijit Banerjee and Esther Duflo, and More Than Good Intentions by Dean Karlan and Jacob Appel. The Good:

The books' signal achievement is in addressing two disgraceful problems that beset humanitarian aid. The first is that the effectiveness of aid is often not evaluated at all; the second is that even when aid is evaluated, the methods are often dubious, such as before-and-after analysis that doesn't take into account variables that have nothing to do with the aid itself. Humanitarian aid is usually flying blind. These books take the blinders off—de-worming does work, many other efforts do not.

But things are not as simple as they first appear. The authors are brutally honest about how difficult poverty-alleviation is....


In addition to testing out ideas, such field work also has the benefit of letting researchers chat informally with poor people—conversation that can be thoroughly illuminating. What looks like irrationality may just be the failure of outsiders to fully appreciate the problem...


“More Than Good Intentions” and “Poor Economics” are marked by their deep appreciation of the precariousness that colors the lives of poor people as they tiptoe along the margin of survival. But I would give an edge to Mr. Banerjee and Ms. Duflo in this area—the sheer detail and warm sympathy on display reflects a true appreciation of the challenges their subjects face. Messrs. Karlan and Appel are at their best in addressing the subtleties of behavior and testing them in the psychology laboratory and in the field. They have produced a remarkably readable and credible analysis of the intertwining of irrationality and poverty.

The Not-so-Good:

Unfortunately, the books also indulge another sort of irrationality: the demand for big, general statements even if you’re discussing limited, context-specific matters. The authors criticize over-generalizing and over-promising in the aid business, but they too often do their own exaggerating when it comes to what their methods can deliver. Both books end with overselling, “five key lessons” (Banerjee and Duflo) or “seven ideas that work” (Karlan and Appel), overriding their own previous cautions about sensitivity to context and the limits to each intervention. Other economists criticize overselling as a common fault of those who do these small experiments.

Read the full review (ungated) here.

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Money buys happiness after all

Does happiness rise with income? Are people in poor countries less happy than people in rich countries? Much of what we thought we knew on this topic comes from a famous 1974 study by economic historian Richard Easterlin. Easterlin found that within countries, rich people tended to be happier than the poor. But contrary to expectation, rich countries as a whole were not happier than poor countries. And even stranger, in the US, when per capita income rose sharply from 1946 to 1970, bliss did not rise alongside it.

Easterlin resolved this seeming contradiction—known as the Easterlin paradox—by hypothesizing that “[t]he increase in output itself makes for an escalation in human aspirations, and this negates the expected positive impact on welfare.” That is, having more stuff actually tends to make people want more stuff, and doesn’t make them any happier.

The Easterlin paradox has been crumbling, but is not altogether demolished, with new expanded datasets and recent research. A great summary of research collected in a newly published volume International Differences in Well-Being, edited by Ed Diner, Daniel Kahneman, and John Helliwell, plumbs voluminous new data (World Values Survey and Gallup World Polls from a larger set of countries) to update our knowledge.

One important refinement in these new studies is the distinction between feeling happy from day to day (more a mood, perhaps) and long term “life-satisfaction.” The Easterlin paradox does NOT reliably hold with “life-satisfaction.”

Bill lays out exactly which parts of the Easterlin hypothesis appear to be holding up over time, and which are collapsing under the weight of the new data, in a new review published today in the Lancet.

If the Easterlin paradox no longer holds true—particularly the lack of difference between rich and poor countries on average happiness—what are the implications for development policy?

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More Tales of Two Tails

The following post is by Dennis Whittle, co-founder of GlobalGiving. Dennis blogs at Pulling for the Underdog.

An eloquent 3 year-old would have been better asking "What the dickens are you talking about?  Who is defining success?  Who says failure is bad, anyway?" - Joe

Earlier I blogged about aid cheerleaders and critics. Each camp argues about the mean outcome of aid rather than the distribution of impact among projects. Both camps agree that some projects have positive results and others negative. So why not try to figure out which projects work and focus our resources on them?

I got some great and insightful comments and a few nice aid distribution graphs from readers.  Here are some key themes:

  1. The mean *does* matter if the distribution is random. In other words, if we can't predict in advance what types of projects will succeed, we should only spend more resources if the mean outcome is positive.
  2. Many people believe that on average the biggest positive returns come from investment in health projects.
  3. We should also look at the distribution of impact even within successful projects, because even projects that are successful on average can have negative impacts on poorer or more vulnerable people.
  4. Given the difficulty in predicting ex-ante what will work, a lot of experimentation is necessary.  But do we believe that existing evaluation systems provide the feedback loops necessary to shift aid resources toward successful initiatives?
  5. "Joe," the commenter above, argues that in any case traditional evaluators (aid experts) are not in the best position to decide what works and what doesn't.

Petr Jansky sent a paper he is working on with colleagues at Oxford about cocoa farmers in Ghana.  The local trade association was upset that they could not get pervasive adoption of a new package of fertilizer and other inputs designed to increase yields.  According to their models, the benefits to farmers should be very high.  The study found that - on average - that was true, but that the package of inputs has negative returns to farmers with certain types of soil or other constraints.  Farmers with zero or negative returns were simply opting out.

At first glance, these findings seem obvious and trivial.  But they are profound, in at least two ways.  First, retention rates are an implicit and easily observable proxy for net returns to farmers.  We don't need expensive outside evaluations to tell us whether the overall project is working or not.  And second, permitting farmers to decide acknowledges differential impacts on different people even within a single project.

What other ways could we design aid projects to allow the beneficiaries themselves to evaluate the impact and opt in or out depending on the impact for them personally?  And how would it change the life of aid workers if their projects were evaluated not by outside experts and formal analyses but by beneficiaries themselves speaking through the proxy of adoption?

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Me-ism, and other Reasons for Economists to Think Big about Development

Why should economists continue to work on such ambitious Big Ideas in Development -- what drives Development?  Freedom? Property Rights? Human Capital? Whether you are just like ME? One good reason is that most people are going to have their own Big Ideas anyway.  If economists and other social scientists refuse to discuss Big Ideas, then people will just base them on some random anecdote or on laughably casual empirics. (I once heard a prominent non-development economist say he understood underdevelopment after his first 5 minutes in a poor country.)

One way that casual back-of-the-envelope empirics seems to work is I judge other peoples more favorably the more they are like me.   

One of the worst forms of Me-ism is racism. What could be more direct than just assume the rich people are racially superior to the poor people? Racism was the prevailing explanation in "Development Economics" for 5 centuries until racism became politically unacceptable (and was refuted scientifically). 

Racism (like other forms of Me-ism) is just lazy empirical work. You go for some superficial correlate of development that has no other evidence behind it --other than your instinct that everybody should be judged by how similar they are to you.

So thank goodness that many development economists are continuing to write about all the above topics. They may not achieve 100% airtight evidence, they may not definitively resolve what causes what, but I think they do better than the Me-ists and the racists who decide the answer in the first 5 minutes.

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Cash transfers: What are they good for?

There is convincing evidence from a number of countries that cash transfers can reduce inequality and the depth or severity of poverty. For example, in Brazil a combination of cash transfer programmes accounted for 28 percent of the total fall in the Gini index (a summary measure of inequality) between 1995 and 2004…. Well-designed and implemented cash transfers help to strengthen household productivity and capacity for income generation. Small but reliable flows of transfer income have helped poor households to accumulate productive assets; avoid distress sales; obtain access to credit on better terms; and in some cases to diversify into higher risk, higher return activities. These intermediate outcomes help draw poor people into the market economy on terms that allow them to benefit from and contribute to growth.…

There is robust evidence from numerous countries that cash transfers have leveraged sizeable gains in access to health and education services…However, transfers have had less success in improving final outcomes in health or education.  Cash transfers can help the poor overcome demand-side (cost) barriers to schooling or healthcare, but they cannot resolve supply-side problems with service delivery (e.g. teacher performance or the training of public health professionals). Cash transfers therefore need to be complemented by ongoing sectoral strategies to improve service quality.

From a new paper on the evidence for cash transfers from Britain’s aid agency.

I’ve heard people talk about cash transfers as the next silver bullet. They’re frequently mentioned in conversations about what’s “new and innovative” in aid. Studies like this one, that synthesize what we know so far and point out where knowledge is still uneven, can help calibrate those expectations.


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How the South was Lost

Vivek Nemana is an economics graduate student in New York University and a student worker at DRI. UPDATE: Art Carden makes an important emphasis regarding this post and contibutes an ungated link to his paper. See comments/bottom of post.

Last week marked 150 years since the beginning of the Civil War. Victory for the North meant more than the preservation of the Union. It meant that slavery could no longer continue as a viable factor of economic productivity. It meant the end of the terrible institution that deemed human beings were property, and heralded an important step in the long American struggle for universal human rights.

But it also reinforced the cleavage between an industrial, prosperous North, and a rural, underdeveloped South, a distinction that persists in some ways even today.’ The Union won in large part because of its industrial advantage, and its victory installed in the South what should have been better conditions for economic growth – liberal, more universal property rights and the abolition of slavery.

So what happened? A 2009 paper by Art Carden{{1}} argues that it was the very insertion of these new freedoms and property rights into a society designed for slavery that led to the divergent development of North and South.

Before the War, Southern social networks were based on hegemonic bonds relying on power imbalances and the threat of violence. The South was heavily invested in racial subjugation – slavery directly accounted for over a quarter of the GDP. The region spent an enormous amount of resources to justify slavery, hiring silver-tongued apologists like John C. Calhoun to spin slavery as humane. In this light, slavery was an economic institution that was designed for racially hegemonic society.

While the Civil War radically restructured Southern laws to promote racial equality and property rights, the hegemonic bonds were resistant to change. This generated a major friction, Carden writes, that manifested through the racist Jim Crow laws and, most gruesomely, lynchings that openly defied the new freedoms for blacks.

The backlash against black self-determination, the politically-enforced segregation, and the conviction that one race was inferior were societal phenomena that hurt economic growth. For example, segregation and racist violence meant that markets were smaller and the division of labor shallower than it could have been. Mutual fear and distrust made contracting and doing business across racial boundaries more expensive. As a result, Carden writes, “Southern entrepreneurs, innovators, and laborers relied more heavily on kinship networks and informal arrangements than on formal markets.”

And these factors were self-reinforcing, Carden argues, breeding a cycle of mistrust, ignorance and poverty.

Gary Becker once wrote that people lose out on the potential gains from trade if one group is able to indulge in “tastes for discrimination” against another. As the legacy of slavery wound its way into postbellum Southern society and politics, it hindered the way freedom and property rights should have boosted the economy, denying the South the full bounty of American development.

[[1]]Here's the ungated version.[[1]]


Photo credit: New York Times and Wikispaces


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