Population Wars: Adam Martin replies to Global Population Speak Out

by Adam Martin I appreciate the thoughtful GPSO reply to my blog post. But I respectfully decline the offer to sign their pledge. Here is why:

Projections of population into the future that fail to account for the power of changing incentives are intellectually sterile explanations and policies that deny the rational response of individuals to incentives will prove impotent or worse.

Why are market-oriented economists so confident that population will be self-regulating? Well, under a regime of property rights, as we use up any scarce global resources, they will become relatively more scarce. This will put upward pressure on their prices. The first response is for individuals to cut back their consumption, but that's not the most important adjustment (that's only short term, after all).

The more important response is the one Julian Simon pointed out: the increase in resource prices creates an incentive to find more efficient means to use them or to come up with substitutes. Innovation of what we use and how we use it is the best path we know of to sustainability in development. Institutions such as property rights, the family, and, yes, even money are preconditions for aligning incentives with conservation and unleashing systematic resource-saving innovations.

Here both our deepest moral commitments, as well as sound economics, overlap with the professed beliefs of GPSO: certainly women should not have reproductive decisions forced upon them. So the message is not that nothing can go wrong. Absent secure individual rights, individual responsibility, and free markets, quite a bit can: first and foremost for the victims of injustice. However, simply admitting that these problems are real is a long way from endorsing statements like this (from the email I was sent):

the current size and growth of human population [is] a sustainability issue no less crucial than over-consumption in developed nations and all the resultant emissions, habitat loss and toxic pollutants. [emphasis in original]

I want to raise two problems with these sorts of statements. First, admitting that population growth can have adverse consequences is a long way from admitting that anyone has the knowledge to determine the "right" population size, even roughly. Statements like the one above, not to mention the affiliations of some of GPSO's signees--convince me that they believe otherwise. And I'm not arguing that sustainable population size is a difficult calculation to make, I'm arguing that it's meaningless. Sustainability means a balance between what present and future individuals want to do and can do. When human capacities and desires are by their nature heterogenous and changing over time--as in the long run that sustainabilitistas worry about--then what counts as sustainable is simply not knowable unless one knows current and future capacities and desires.

Second, I want to raise the question as to whether a "public discussion addressing the size and growth of human population" is compatible with those individual rights. If governments decide what the right population size is, and the actions of free and responsible individuals give rise to a different population size, either the population target or individual rights must be sacrificed. I believe--I hope--that the GPSO signees would abandon their plan. History has shown too many willing to do the opposite. It is for this reason that, while I obviously do not believe women should be coerced, I cannot sign onto "population justice" as defined by GPSO.

If it is excessive procreation we are worried about, we would do well to remember the words of Henry Simon: "Academic economics is primarily useful, both to the student and to the political leader, as a prophylactic against popular fallacies."

Is our nation-building a wee too ambitious? The prosecution rests

Previous post criticized Malthusian economics, but reading comprehension also may be a problem…

After our guest blogger and DRI post-doctoral fellow Adam Martin spoke out today against Malthusian population scares that lack economic credibility, he got the following invitation (abbreviated version):

Dear Adam

I am contacting you today to request your participation in the Population Institute’s Global Population Speak Out, February 2010.

I read your very thoughtful blog post.

And, I believe you are an important voice.

So, if you’re interested in supporting long term global sustainability, please click here:

I PLEDGE TO SPEAK OUT – FEBRUARY 2010

Sincerely,

The Global Population Speak Out Endorsers & Population Institute

“Global Population Speak Out” calls on “scientists and scholars” to call attention to “the size and growth of the human population {that} are fundamental drivers of the ecological crisis we face…If we hope to avert worldwide catastrophe, {we must} “conduct a massive shift of attention and resources toward humane, progressive measures designed to stabilize and ultimately reduce world population to a sustainable level.”

There is preliminary evidence that the letter writer may have missed the part of Adam's post, namely all of it, where Adam was arguing against the claims made by the  “Global Population Speak Out.”

Malthus vs. Malthusian Population Scares

This post is by Adam Martin, a post-doctoral fellow at DRI. The laws of economics are more powerful than the laws of physics. I once saw Deirdre McCloskey illustrate this by placing a $100 bill on the table. The laws of physics, she reminded the class, dictate that an object at rest tends to stay at rest. Economics tells us that errant $100 bills laying out in the open do not remain unattended for long. She assured the students that, were she to leave the room for several hours, economics would better predict Mr. Franklin's fate.

But how do the laws of economics fare against a tougher opponent: the laws of sexual attraction? Against them, economists--especially those march under the Malthusian banner--have been willing to cede more ground. Everyone knows, after all, that Malthus judged the "passions between the sexes" as both universal and powerful. Everyone knows that this passion leads to "geometrical" increases in population that inexorably outpace "arithmetical" increases in food. Everyone knows this is why economics is called the "dismal science." But what everyone "knows" is dead wrong.

This is not another argument about how ol' Tom-Bob got it all wrong. No, the problem with Malthus--a problem for both his self-proclaimed friends and foes--is that he we wasn't a Malthusian. Ross Emmett offers a detailed and trenchant analysis. Malthus was not arguing in a vacuum. He was responding to William Godwin's proposal to overthrow basic social institutions like private property and the family.  In a free love-fest where no one is responsible for the offspring resultant from their passions, Malthus argued, population growth would run amok. If individuals don't bear the cost of procreation, they will procreate too much. If they do bear costs of offspring, "preventative checks" such as birth control and delayed marriage will make population self-regulating. In his own words:  "Impelled to the increase of his species by an equally powerful instinct, reason interrupts his career, and asks him whether he may not bring beings into the world, for whom he cannot provide the means of subsistence." (An Essay on the Principle of Population, Chapter II). Reproductive choices respond to incentives. The laws of economics are more powerful than the laws of attraction.

Note that Malthus does not say that the incentives for procreation are automatically aligned with the common interest. If individuals do not bear the full costs of their offspring, such as any effects of Junior on the environment, they may make irresponsible decisions. But parents are no more socially responsible if they fail to account for the benefits their children will generate for others (such as new ideas on technology). What matters is that, when discussing population, we do not forget the basic lessons of economics. A top-down perspective on population that treats individuals like mindless lemmings will panic: "Unless we reduce the human population humanely through family planning, nature will do it for us through violence, epidemics or starvation."

Malthus gets right what both his followers and his more technocratic critics get wrong: the institutions within which individuals make reproductive decisions matter. The way to increase GDP per capita is not to cut the denominator. And while today’s scare tactics (Mali is “really in for a Malthusian disaster,”) and recommendations to stop having babies are not as monstrous as those of yesteryear, we should be wary of those who would intrude on one of the most personal and sacred choices individuals confront – whether to have a child. Nor is population sustainability a mere horse race between libido and technology. Consistent with the approach of classical economists, Malthus treats human nature as constant. Different institutions drive differences in fertility outcomes. In this we should all be Malthusians.

Why there’s no “GrowthGate:” Frustration vs. Chicanery in Explaining Growth

Despite Climategate, even a superficial reading seems to indicate that there is enough evidence for effects of man-made activity on the climate. Surprisingly, there is a lot less evidence for effects of man-made activity on something that actually is completely man-made: the rate of economic growth in each country.

I had this frustrating thought as I was reading an important new paper, “Determinants of Economic Growth: Will Data Tell?” [1]

The paper gives a conclusive and resounding answer to the question in the title: no. 

It has taken economists a lot of hard work to attain this level of sublime ignorance. There were three steps in the the great History of Evolving Cluelessness:

1. Economists spent the past two decades trying every possible growth determinant in sight. They found evidence for 145 different variables (according to an article published in 2005). That was a bit too many in a sample of only about one hundred countries. What was happening is there would be evidence for Determinants A, B, C, and D when tried one at a time to explain growth. But the evidence for A disappeared when you also controlled for some combination of B, C, and D, and/or vice versa. (Interestingly enough, foreign aid never even merited inclusion in the list of 145 variables.)
2. The Columbia economist Xavier Sala-i-Martin and co-authors ran millions of regressions on all possible combinations of 7 variables out of the many possible determinants of growth. Skipping a lot of technical detail, they essentially averaged out the millions of regressions to see which determinants had evidence for them in most regressions. There was hope: some were robust!  For example, the idea that malaria prevalence hinders growth found consistent support.
3. This new paper by Ciccone and Jarocinski found that every time the growth data are revised, or if the sample is changed to another equally plausible one, the results vanish on the “robust” variables and new “robust” variables appear. Goodbye, malaria, hello, democracy. Except the new “robust” determinants are no longer believable if minor differences between equally plausible samples changes what is robust. So nothing is robust.

 There are two possible ways to describe what had happened over the past two decades:

1. The growth research was at least partially fraudulent, in that we researchers were searching among many different econometric exercises till we got the “determinants of growth” we wanted all along.
2. There was a good faith effort by us researchers to test different theories of growth, which led to some results. We didn’t realize until later that these results were not robust.

Description (1) would be a “GrowthGate,” but since so many people would be guilty (of "data mining"), and since we really can’t tell for any individual study or researcher whether it was (1) or (2), “GrowthGate” never became a story.

The only guilty ones might be those who continue to run growth econometrics today without acknowledging that our Three-Act Tragi-Comedy is so OVER. Like for example, I wonder a little why pay attention to some hot new study that claims to have finally found that big POSITIVE effect of aid on growth, or POSITIVE anything on growth.

Of course, the policy world abhors the great Vacuum of Ignorance, which opens the door to empty pontificators like a certain bestselling writer of books about Flat Worlds, in which You Cannot Have Growth Unless You Do Precisely What I Tell You.

Thank goodness, many economists did good economics before the Dark Age of  Growth Econometrics, and many economists have still managed to do it during and after. Economics is so much more,  even if the cross-country econometric data refuse to tell us The Exact Determinants of Growth.

-----

[1] By Antonio Ciccone and Marek Jarocinski, ICREA-Universitat Pompeu Fabra; and European Central Bank.

[2] Durlauf, Steven N., Paul A. Johnson, and Jonathan R. W. Temple, 2005, “Growth Econometrics,” in Philippe Aghion and Steven N. Durlauf, eds., Handbook of Economic Growth, North-Holland.

[3] Sala-i-Martin, Xavier, Gernot Doppelhofer, and Ronald I. Miller, 2004, “Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach,” The American Economic Review, 94(4):813–835.

Sarah Dadush addresses RED’s response to her paper

Sarah Dadush sent us this response to our Cui Bono? Post. It's gratifying that Red is willing to shed light on some of the transparency issues raised by my paper. This openness could help Red set a standard for other initiatives that resemble it. The Red model now creates many informational gaps, which extend far beyond the question of whether Bono and Shriver are making money from it.

It's not about whether to "do the (Red) thing" but about how to do it. We want to know more about whose interests our purchasing decisions are serving and in what proportion. We want to know what commercial arrangements cause the appearance of the Red logo on everything from T-shirts to strollers to laptops, and what the label represents socially.

Watchdogs, academics, journalists and blogs like this one make it their business to filter information on the public's behalf. Ensuring that regulators have access to this information is also important, because they supervise charitable activities. Hopefully this will help them to 'upgrade their choice' of regulatory tools, to use another Red slogan.

The fact that The Persuaders is required to donate its profits is reassuring though it also raises some questions: Why does the Global Fund indicate that The Persuaders is not a donor? And why not make this (positive) feature more obvious? Maybe it's because The Persuaders don't actually profit from the Red brand, so no money moves. Or maybe it's because The Persuaders would prefer to avoid regulation as a "commercial co-venturer", which would require additional disclosure.

With regard to regulating The Persuaders as a professional fundraiser, the definition of Professional Fundraiser in NY includes: "Any person who directly or indirectly by contract ... for compensation or other consideration (a) plans, manages, conducts, carries on, or assists in connection with a charitable solicitation ... ; (b) solicits on behalf of a charitable organization or any other person; or (c) who advertises that the purchase or use of goods, services, entertainment or any other thing of value will benefit a charitable organization but is not a commercial co-venturer.” The Persuaders solicits and assists in the solicitation of funds from the public through Bono and Shriver-led public outreach on T.V. shows like Oprah, and at concerts, as well as through traditional fundraising events like the Sotheby's art auction. They also engage consumers directly: when consumers buy a Red Gap T-shirt, they're buying it because it's Red, not just because it's Gap (that's the point of Red, after all). And The Persuaders are the ones coordinating the Red donation machine, which has generated over $100 million in contributions from the corporate partners. They clearly carry out these activities on behalf of the Global Fund (their only charity partner), and advertise that buying Red will benefit that charity.

These activities affect the public's trust just as traditional fundraising models do, and should be regulated accordingly. And even though The Persuaders receive no financial compensation from the Global Fund, my paper argues that the licensing fees paid to The Persuaders amount to fundraiser fees, and that the Global Fund has essentially outsourced the payment of fundraiser fees to the corporate partners.

Extending charities' regulation to encompass the Red model is important. Otherwise, the door is open to charities to avoid regulation simply by having a third party pay their fundraisers!

1-800-How’s My Spending?

Local people are the experts on whether they are being well-served by a development project or organization.

This observation, simple on the face of it but downright revolutionary in its implications, is at the heart of the story presented by Dennis Whittle of GlobalGiving at last week’s NYU conference  on the privatization of aid.

Local people may be the experts, but for outsiders deciding where their donations can do the most good, getting access to local knowledge and acting on it appropriately requires real-time feedback loops that most aid projects lack.

Over a little more than a year, GlobalGiving combined staff visits, formal evaluation, third-party observer reports called visitor postcards, and internet feedback from local community members to create a nuanced, evolving picture of a community-based youth organization in Western Kenya that had received $8,019 from 193 individual donors through the GlobalGiving website.

Initially, youth in Kisumu were happy with the organization. Among other things, the founder used the money to fund travel and equipment for the local youth soccer team. But the first tip-off that something was going wrong came when a former soccer player complained through GlobalGiving’s online feedback form that “currently the co-ordinator is evil minded and corrupt.” The view that the founder had begun stealing donations and was stifling dissent among his members was expanded upon by other community members, visitors to the project, and a professional evaluator.

In the end, a splinter group broke off and started a new sports organization, and the community shifted their support to the new group. Reflecting the local consensus, GlobalGiving removed the discredited organization from its website. Marc Maxson and Joshua Goldstein, the authors of the case study, write:

We consider this story a seminal case because it illustrates that true community building is neither tidy nor predictable, but is nevertheless possible when feedback facilitates a dialogue….Rapidly spreading new technologies, particularly mobile phones, and SMS-to-web interfaces (e.g. twitter), now allow villagers to report continuously on project progress, and ultimately to guide implementers.

Just having the technology to create the feedback loop isn’t enough to make it happen, though. GlobalGiving first had to explicitly tell beneficiaries that they wanted to hear from them, and then spread the word effectively (through bumper stickers in this case).

In this story, the community consensus seemed clear. Of course, you could easily imagine another scenario in which the real-time feedback loop elicited wildly contrasting opinions, or provoked concerns about who was telling the truth, whether you were seeing a truly representative sample of opinions, or who might be promoting some hidden agenda. We wouldn’t want to dismiss these considerations, but we’ll happily take problems in aggregating or verifying feedback over the alternative, which has for far too long been very little feedback at all.

Cui Bono? The murky finances of Project (RED)™

Cui Bono is the ancient legal question of "Who Benefits" from an arrangement. A great paper by Sarah Dadush on Project RED at an NYU Conference last Friday, “The Privatization of Development Assistance,” says

though Red was established with the express purpose of generating charitable funds to “help eliminate AIDS in Africa,” the entity behind the campaign is not itself a charity. Instead, the entity that owns the Red label, and that enters into the licensing agreements with the {Corporate Partners} is a limited liability company, incorporated in Delaware, under the name The Persuaders.

The Red website says that the finances are like this:

But Dadush shows they are actually like this:

You can find The Persuaders LLC on the Red web site, but only in fine print for which you have to look hard.

The opacity of the Red finances is striking. As Dadush says, on the Red website, “the words 'accountability' and 'transparency' do appear fairly frequently, but the terms are attached to the Global Fund,” not to The Persuaders LLC or the Corporate Partners. The Persuaders LLC “discloses nothing about its earnings or the licensing fee structure that allows it to operate.”

We were able to find out through further digging that any profits made by the Persuaders will be transferred to the Global Fund, but this still tells us nothing about the salaries it pays out, and in general how high are its overhead costs.

The Persuaders LLC also “requires the contributions {to the Global Fund} made by the [Corporate] Partners to be disclosed in an aggregate, to-date figure,”which does NOT break out individual corporate contributions by year, a violation of the usual Global Fund “practice of itemizing contributions by donor and by year.”

Dadush wonders whether “consumers may make decisions based on mistaken and inflated assumptions of the beneficial impact of their purchases,” a risk possibly “aggravated by the powerful slogans and advertisements that communicate the potential of buying Red to “change the world.”

(This blog already got into trouble trying to figure out how the Starbucks RED card translated into donations for the Global Fund, drawing an angry response from Starbucks but no useful information.)

RED has a mixed message that may create confusion among consumers. On the one hand, slogans like “Buy Red. Save Lives” might be taken to mean that consumers are making a direct charitable contribution. But then RED says that the campaign is NOT a charity but a sustainable business model: “The company pays extra – the purchaser does not.” This lack of clarity contributes to the Byzantine structure shown above, in which the consumer never knows who is paying how much to whom.

Dadush concludes with a bottom line that sounded very persuasive to us:

[W]here the public’s philanthropic spirit is being leveraged, opacity in charitable activities risks jeopardizing nonprofits’ most important asset: trust.

Our constructive suggestion: voluntarily open all the Red books, including donations by year by corporate partner, and the books of The Persuaders LLC.

We asked the Red campaign for a response on these issues. It was reassuring that we got a prompt response. CEO Susan Smith Ellis wrote:

To the question about whether or not our founders receive profits from (RED) -  (RED)™ is owned by the Persuaders, LLC, a company founded by Bono and Bobby Shriver.  Any profits earned by The Persuaders, LLC are required by the organization’s charter documents to be paid directly to the Global Fund to fight AIDS, Tuberculosis and Malaria. Bono has never received compensation from The Persuaders, LLC.  When Bobby Shriver served as CEO and Chairman, he was compensated for fulfilling those duties.  He no longer serves in those capacities and does not receive any compensation from The Persuaders, LLC.

As for charitable solicitation registration as a "professional fund raiser," The Persuaders, LLC is not contracted by the Global Fund to solicit contributions and does not receive any compensation from the Fund and, therefore, does not fall under the N.Y. charitable solicitation registration requirements.

Mr. Shriver also admirably made himself available for a telephone interview, which amplified further these points. Ms. Smith Ellis's response addresses any concern whether Bono or Mr. Shriver might be personally profiting from Red, and gives Red's perspective on why The Persuaders is not technically required by law to disclose its finances. But it does not address our larger concerns regarding the opacity of the Red finances and the potential confusion this lack of transparency likely creates among Red consumers. So we say again: open the Red books!

Copenhagen Special: Climategate and the tragic consequences of breaching scientific trust

Clive Crook is such a calm, sensible, non-ideological voice, that if you ever get him really upset, you're in deep trouble.  And he could hardly contain himself at his blog at the Atlantic on Climategate, in which some climate scientists engaged in censorship and cover-ups:

The closed-mindedness of these supposed men of science, their willingness to go to any lengths to defend a preconceived message, is surprising even to me. The stink of intellectual corruption is overpowering.

Clive is also hard on the head of the Intergovernmental Panel on Climate Change (IPCC) who saw no problems of bias, even when contributing scientists said about studies they didn’t like: they “will keep them out {of the IPCC report} somehow - even if we have to redefine what the peer-review literature is!"

One problem that Clive points out is that some climate scientists don’t know that much about statistics and show little interest in consulting statisticians even while they are basing their finding on statistical analysis. The Wegman report on the “Hockey Stick” controversy has this amazing summary:

It is important to note the isolation of the paleoclimate community; even though they rely heavily on statistical methods they do not seem to be interacting with the statistical community.

Once the real statisticians looked, one "Hockey Stick" result fell apart: the conclusion that

the decade of the 1990s was the hottest decade of the millennium and that 1998 was the hottest year of the millennium cannot be supported by {the} analysis.

Clive considers some of the reactions to his blog in a subsequent post, and is unyielding:

Once scientists set out to mislead the public, they can no longer expect to be trusted. End of story.

So is Clive a climate “denialist”? Or am I a “denialist” by featuring this story on the opening day of Copenhagen?

That such questions are even on the table is itself a symptom of the problem. A less balanced but still insightful piece by George Will in Sunday’s Washington Post complains bitterly about this. Part of the problem is the real “denialists,” who DO ignore science -- but scientific dishonesty is not exactly a confidence-building response.

The analogy that got me interested in Climategate is of course with social science in development, where the problem is vastly worse. Advocacy on global poverty distorts everything from the data to the econometrics, as this blog frequently complains, so that credibility of development social scientists is sinking to dangerously low levels. It’s so bad that there is never a “Povertygate” scandal, because “Povertygate” is the norm rather than the exception.

What’s most tragic about both climate and poverty advocates engaging in censorship and distortion is that, while it might help advocacy in the short run at the expense of science, it destroys both advocacy and science in the long run. It’s infeasible for every individual to independently do their own research to verify problems and proposed solutions, so they have to trust the professional, full-time researchers. As Clive understood, if those researchers destroy that trust, then even honest advocacy becomes increasingly impossible, which means solutions become increasingly impossible.

Since any meaningful agreement on emissions at Copenhagen is about as likely as igloos in the Sahara, maybe the delegates could pass a resolution in defense of responsible criticism?

At least there's one good nation-builder for Afghanistan

As readers of this blog know, I am deeply opposed to the military escalation and deluded attempt at nation-building in Afghanistan. Yet some individuals can do good even in the middle of an overall bad policy, and if there is any one such individual from the outside I would bet on, it would probably be Clare Lockhart.

The current issue of Esquire has a good cheat sheet on Clare. Amidst the usual Esquire fare of scantily-clad, objectified-for-maximizing-male-readership 22-year-old "women we love," here's a serious intellectual who clocked in at #20 on the Foreign Policy Top Global Thinkers.

Clare also passed with flying colors the highly unscientific gut-feelings-check during a fascinating lunch discussion a couple months ago.

Clare insists on such common sense as: keep large foreign bureaucracies out of Kabul, and give aid and the power it coveys directly to local villagers. It's too late for her good insights on not cutting corners to reduce election fraud, which disastrously happened after her advice was disregarded. Maybe that will teach them a lesson to listen to Clare more this time around: we can desperately hope.

A balanced reaction to "The Civil War in Development Economics"

Aid Watch received the following very thoughtful comment. The author wishes to remain anonymous: The debate in the academic world sounds fascinating!  And it mirrors in some ways the ongoing debates I have within the international development practitioner community, where I work.  Due to my background and current job, I'm the resident RCT "expert" of sorts in my organization and get to have lots of fascinating discussions with program and M&E staff. I see the following pros and cons for randomized evaluation (or RCT's - randomized control trials - as they are often called in the NGO world):

PROS:

- As always, the key idea that you can't attribute causality of impact without a randomly-assigned control group.  Selection bias and other problems affect any other method to varying degrees.

CONS (or rather, arguments for having additional approaches in your evaluator's toolbox):

- RCT's are harder to do for long-run impacts. You either have to leave the control group without the program for 10-20 years, which is an ethical and logistical challenge.  Or you have to rely on some assumptions to add effects together from repeated follow-up surveys. For example if you delayed the start of a program in the "control group" for three years and then did a follow-up survey every three years, then you could add the difference between 3 and 0 years plus the difference between 6 and 3 years plus the difference between 9 and 6 years, etc, but you'd have to assume some stuff like linearity in the effect over time or specific types of interactions with global on-off events?  (I'm still thinking about this whole idea.)

- With a complex or system-wide program, you often can't have a control group, such as if you are working on a national scale. For example, working to change gender injustices in a country's laws. - Context is important and you can't always get that with good background research or a good pilot before an RCT, though you should try.  My organization talks a lot about "mixed methods" - mixed quantitative and qualitative research being a good way to combine the strengths of each.  In fact the RCT that I'm overseeing includes a team of anthropologists. - Qualitative research can also be more responsive if you get unanticipated results that are hard to explain.

So, being a good two-handed economist, I do see both sides now, though I'm still pro-RCT.  It helps that I was at that bastion of qualitative methodology, the American Evaluation Association conference (another AEA!) and heard some good indoctrination on the anti-RCT side.

It's particularly interesting to be at my INGO since much of the organization's work is focused on areas that are tough to evaluate with RCT's including lobbying the U.S. govt; humanitarian relief work (though we have a few staff who want baselines for refugee camps); and many small-scale, long-term, idiosyncratic projects in communities facing severe challenges.

The closest I've come to agreement with people who are anti-RCT is to have all of us agree that it's a great tool in the right circumstances but that it's one of many good tools.  What we always disagree on is whether RCT's are overused (them) or underused (me).  And many people hate the words "gold standard".  It's a red flag.  I use it anyway, as in "RCT's are the gold standard for short-run impact evaluations that you want to be free from selection bias."

I think that the "right circumstances" for RCT's would include important development approaches such as clean water or microcredit that haven't been evaluated yet with RCT's; or big programs that are finally stable in their implementation after an initial period of experimentation and adaptation. Pilots are OK, too, though that is a harder sell; program staff want to be able to get in there and experiment away with what works and what doesn't without worrying about rigorous evaluation.

It'll be interesting to see where these discussions are in 5 or 10 years.

“The statistical evidence from this study therefore suggests that as far as happiness is concerned, it is better to give than to receive aid.”

The World Database of Happiness, masterminded by Professor Ruut Veenhoven at Erasmus University in Rotterdam, provides the visitor with a vast searchable inventory of empirical findings on happiness, helpfully organized and cross-referenced.

However, the authors of a very concise paper published last April in the Atlantic Economic Journal (subscription required) have called attention to a shockingly neglected gap in the aforementioned scholarly literature: None of the existing studies has yet untangled the relationship between a state of insanely blissful delight and foreign aid.

B. Mak Arvin and Byron Lew of Trent University in Ontario, Canada, turn their attention first to donor countries, using happiness data from the World Database of Happiness and all other figures from the World Bank. Controlling for income, inflation and employment, they find happier countries give more aid: “the happiness coefficient is positive and statistically significant at the 5% level” and “a one-unit increase in happiness leads to an increase in the donor’s aid to GDP ratio…by 0.132 of a percent.” At the same time, “aid is a significantly positive determinant of a donor’s happiness.” There seems to be a virtuous circle between a 1.31217 standard deviation increase in the joy of giving and the parameterized, rigorously assessed impact on the act of giving.

Looking at recipient countries, the authors come to two conclusions: one predictable and one less so. First, controlling for income of recipient, donors are remarkably insensitive to the plight of the unhappy: “happiness has no statistically significant impact on the receipt of aid.” Second, “aid has no statistically significant influence on happiness, although income does.” Alas aid is not only ineffective in 15 other ways already covered by the literature, it also does not meet the goals of the country-owned, fully participatory Joylessness Reduction Strategy Paper.

Or doesn’t it? We were a little unclear on whether this paper was any more successful than other cross-country regressions that afflict the aid literature at resolving convincingly what causes what, whether the correlation is robust or was the result of data mining, and whether both happiness and aid are driven by some third factor, like cross-country differences in raw sex appeal.

It’s not easy being an aid researcher. In fact, we observe, anecdotally, that aid researchers are kind of unhappy….

--

(Thanks to reader Tomas for the tip.)

The Civil War in Development Economics

Few people outside academia realize how badly Randomized Evaluation has polarized academic development economists for and against. My little debate with Sachs seems like gentle whispers by comparison. Want to understand what’s got some so upset and others true believers? A conference volume has just come out from Brookings. At first glance, this is your typical sleepy conference volume, currently ranked on Amazon at #201,635.

But attendees at that conference realized that it was a major showdown between the two sides, and now the volume lays out in plain view the case for the prosecution and the case for the defense of Randomized Evaluation.

OK, self-promotion confession, I am one of the editors of the volume, and was one of the organizers of the conference (both with Jessica Cohen). But the stars of the volume are the speakers and commentators: Nava Ashraf (Harvard Business School), Abhijit Banerjee (MIT), Nancy Birdsall (Center for Global Development), Anne Case (Princeton University), Alaka Halla (Innovations for Poverty Action), Ricardo Hausman (Harvard University), Simon Johnson (MIT), Peter Klenow (Stanford University), Michael Kremer (Harvard), Ross Levine (Brown University), Sendhil Mullainathan (Harvard), Ben Olken (MIT), Lant Pritchett (Harvard), Martin Ravallion (World Bank), Dani Rodrik (Harvard), Paul Romer (Stanford University), and David Weil (Brown). Angus Deaton also gave a major luncheon talk at the conference, which was already committed for publication elsewhere. A previous blog discussed his paper.

Here’s an imagined dialogue between the two sides on Randomized Evaluation (RE) based on this book:

FOR: Amazing RE power lets us identify causal effect of project treatment on the treated.

AGAINST: Congrats on finding the effect on a few hundred people under particular circumstances, too bad it doesn’t apply anywhere else.

FOR: No problem, we can replicate RE to make sure effect applies elsewhere.

AGAINST: Like that’s going to happen. Since when is there any academic incentive to replicate already published results? And how do you ever know when you have enough replications of the right kind? You can’t EVER make a generic “X works” statement for any development intervention X. Why don’t you try some theory about why things work?

FOR: We are now moving in the direction of using RE to test theory about why people behave the way they do.

AGAINST: I think we might be converging on that one. But your advertising has not yet got the message, like the JPAL ad on “best buys on the Millennium Development Goals.”

FOR: Well, at least it’s better than your crappy macro regressions that never resolve what causes what, and where even the correlations are suspect because of data mining.

AGAINST: OK, you drew some blood with that one. But you are not so holy on data mining either, because you can pick and choose after the research is finished whatever sub-samples give you results, and there is also publication bias that shows positive results but not zero results.

FOR: OK we admit we shouldn’t do that, and we should enter all REs into a registry including those with no results.

AGAINST: Good luck with that. By the way, even if do you show something “works,” is that enough to get it adopted by politicians and implemented by bureaucrats?

FOR: But voters will want to support politicians who do things that work based on rigorous evidence.

AGAINST: Now you seem naïve about voters as well as politicians. Please be clear: do RE-guided economists know something the local people do not know, or do they have different values on what is good for them? What about tacit knowledge that cannot be tested by RE? Why has RE hardly ever been used for policymaking in developed countries?

FOR: You can take as many potshots as you want, at the end we are producing solid evidence that convinces many people involved in aid.

AGAINST: Well, at least we agree on the on the much larger question of what is not respectable evidence, namely, most of what is currently relied on in development policy discussions. Compared to the evidence-free majority, what unites us is larger than what divides us.

The secret to success is failure

When Jacqueline Novogratz, founder of the Acumen Fund, was in her early twenties, she turned down a promotion on Wall Street and went to the Cote d’Ivoire to open a new branch of the African Development Bank focused on microfinance for women. But the West African women she was supposed to work with shunned her. They talked about her derisively in her presence, letting her know exactly what they thought of an untested, unmarried, American woman with poor French skills being sent to lead them. They intimidated her, locked her out of the office, and (Novogratz suspects) actually gave her food poisoning to scare her away. It worked. On her next assignment, in Nairobi, she spent hundreds of hours analyzing the loan portfolio of a young microfinance organization. Presenting her results, she recommended a drastic restructuring. A week later, she found her handwritten report had been “lost,” and all her work destroyed.

Any other 24-year-old might have gone home. For Novogratz, these heartbreaking episodes led to some profound revelations:

“I wanted to help,” she writes, “but that didn’t matter to anyone but me.” “Donors could convince themselves to give to nonperforming organizations based on a few good stories. The world needed something better than that.”

But the failures didn’t end there. She spent two months reviewing a UNICEF-funded loan program for income-generating projects in Kenya. She found hundreds of broken maize mills, empty schools and unsold baskets: countless “well-intentioned projects gone wrong,” a system riddled with kickbacks, and no accountability. In the end, government officials found her report “too pessimistic.” A World Bank official in Gambia rejected her proposal to lend to small businesswomen instead of giving them grants, using then-conventional wisdom that the very poor couldn’t pay back loans.

As Tom Watson, the founder of IBM, famously said, “if you want to succeed, double your failure rate.”

Because eventually Novogratz found big successes, like the bakery in Kigali where she helped a group of unwed mothers wean their operation off charity and become a real business. And Duterimbere, a micro-lending organization strong enough to survive the genocide in Rwanda.

Not to mention the success of the eight-year-old Acumen Fund, which Novogratz calls a “nonprofit venture capital fund for the poor.” Just as Acumen absorbs the depth and breadth of her experiences and the advice of her mentors, the strength of this deeply personal book lies in its rejection of simplified narratives, easy truths and personal dogma.

Novogratz has emerged as a leading voice of a “middle way” in development thinking: “Philanthropy alone lacks the feedback mechanisms of markets, which are the best listening devices we have; and yet markets alone too easily leave the most vulnerable behind.” She writes:

I’ve learned that many of the answers to poverty lie in the space between the market and charity and that what is needed most of all is moral leadership willing to build solutions from the perspectives of poor people themselves rather than imposing grand theories and plans upon them.

So read this book! It documents in wonderful detail this resounding and inspirational conclusion.

Day of mourning for military Development

News sources say that President Obama will choose “escalate” with additional troops for Afghanistan in his speech at West Point tonight. I and many like-minded individuals find this disastrous. “Like-minded” means that critics of top-down state plans for economic development are also not fans of top-down state plans for military development. If the Left likes the first, and the Right likes the second, that just shows you how incoherent Left and Right are.

Will Wilkinson has a great column mocking the anti-PC Conservatives for mindless Conservative PC on militarism:

The public praise of martial virtue encourages a martial culture in which war is seen not as a gruesome tragedy but as a stage for the performance of righteous valor. … applause only reinforces a deeply ingrained American habit of easy patriotism so mindless and self-satisfied that we cannot see the brazen moral relativism of it. This is our war, so it is just.

And when you military claim the sanction of some development economists for armed intervention, I think other development economists have a right to fight back. If you military are going to do development, then we will do military. If you think you can impose conditions on Karzai for military aid, why don’t you read some of our articles on the failure of conditions for economic aid.

The somewhat clumsy words of George Kennan during the Vietnam War have seemed eerily appropriate to many reviewers recently:

If we can find nothing better to do than embark upon a further open-ended increase in the level of our commitment simply because the alternatives seem humiliating and frustrating, one will have to ask whether we have not become enslaved to the dynamics of a single unmanageable situation - to the point where we have lost much of the power of initiative and control over our own policy, not just locally but on a world scale.

And lastly the masterful essay by Garry Wills in a recent New York Review of Books:

We sink deeper into blood, with no foreseeable end in sight…Some leader has to break the spell before costs mount further while our wars are passed from President to President…Barack Obama said he would rather be a one-term president than give up on his goals. Here is a goal no other president we can imagine would have a possibility of reaching. Presidents who just kick the can down the road are easy to come by. Lost lives and limbs are not.

Shamans and Development Experts

Robert Wright writes in his fascinating book, The Evolution of God:

There is in the world today a great and mysterious force that shapes the fortunes of millions of people…There are people who claim to have special insights into this force…Most of them have often been wrong about the future, and many of them have been wrong most of the time. In fact, it’s not clear their advice is worth anything at all…Nonetheless, {they} have a profitable line of work... Why? Because whenever people sense the presence of a puzzling and momentous force, they want to believe there is a way to comprehend it. If you can convince them that you’re the key to comprehension, you can reach great stature.

 Wright is not  talking about religion, but about stockbrokers and the stock market. Wright correctly points out that much research demonstrates that stockbrokers do NO better than you and me at beating the stock market. Yet we pay stockbrokers.

Wright then discusses shamans in hunter-gatherer societies, which meet a similar demand – somebody who claims to be able to influence the vast uncertainties of hunting failures, weather, and disease, which makes hunter-gatherers feel better. To Wright, stockbrokers meet the same religious need as shamans.

 With both shamans and stockbrokers, it helps a lot that we humans are really bad at distinguishing pure randomness from real accomplishment (as this blog is fond of pointing out).

 There is always one shaman/stockbroker who is performing above average due to sheer luck. We refuse to accept that it’s pure luck and we are drawn to this shaman/stockbroker. Then he (it’s usually a he) reverts to average. Again, we refuse to believe this is random, we say that he has now lost his touch and we switch to following the new above-average champion. So our general faith in the power of shamans/stockbrokers remains intact.

Some of you have guessed where I am going with this. Development experts are a lot like stockbrokers. To get specific, development experts offer the hope that their expertise will raise a country’s growth rate, despite the lack of ANY clear empirical evidence that they know how to raise a country’s growth rate.

 Few can accept the current consensus of the empirical growth and development literature -- that we know something about what works in the long run for development (institutions, human capital, etc.) but virtually nothing about how to raise growth in the short to medium run. As Abhijit Banerjee puts it:

it is not clear that the best way to get growth is to do growth policy of any form. Perhaps making growth happen is ultimately beyond our control. Maybe all that happens is that something goes right for once (privatized agriculture raises incomes in rural China) and then that sparks growth somewhere else in the economy, and so on. Perhaps we will never learn where it will start or what will make it continue. (In new book edited by Jessica Cohen and I, “What works in development: thinking big and thinking small”)

 Yet the demand for development experts is as intense as ever. For example, the World Bank spent $4 million on an expert-laden Growth Commission to raise growth, issuing a report in 2008, with this finding:

It is hard to know how the economy will respond to a policy, and the right answer in the present moment may not apply in the future.

Despite the possibly limited utility of this breakthrough,  the World Bank Growth Commission is now being emulated elsewhere.  The UK Department for International Development just spent £37 million on assembling academic experts into a new International Growth Centre (IGC) that will promote “sustainable growth in developing countries by providing demand-led policy advice based on frontier research.”

Relentless demand for growth experts despite lack of evidence for growth expertise may have a faith-based component, just like the demand for shamans and stockbrokers.

 Maybe I shouldn’t spend so much time mocking the “growth experts” who claim to know something they don’t (especially the day after being named one of the Top 100 Global Thinkers for being a “growth expert”).  Maybe I should just accept that people are going to keep listening to shamans on growth and development, and maybe shamans could even play a useful role. How to make sure that those shamans at the very least, do no harm, and maybe even recommend sensible things?

 First, select the shamans on academic merit. Second, such quality academics should stick to their guns that nobody should waste time on experts directing growth from the top based on expert knowledge that does not exist. Such a top-down expert approach would actually do harm in unintentionally strengthening authoritarian and excessively statist approaches. The development shamans could still perform inspirational religious rituals as long as they don't actually affect anything.  Third, there are still plenty of useful things that academics can say about more specialized areas, such as health, financial regulation, macroeconomic management, education, clean water, and agriculture.

Indeed, the DFID International Growth Centre assembled a jaw-dropping list of stellar academic economists, fulfilling requirement (1). On (2) and (3), what seems to be going on at IGC is “bait and switch.” A few at the top spuriously promise the ability to raise growth, while the quality academics just get on with applying their specialized knowledge to specialized problems. At least there are good economists saying good things at the bottom.

Let’s hope that the power is shifting from the development shamans, who should be reassuring but powerless, to useful economists with useful knowledge.

The Age of the Development Expert

Foreign Policy magazine just released its top 100 Global Thinkers for 2009. Twelve out of the top 100 were what is loosely called “development experts:”  Ashraf Ghani and Clare Lockhart (20), Paul Collier (36), Jeffrey Sachs (39), William Easterly (39), Esther Duflo (41), Muhammad Yunus (46), Amartya Sen (58), George Ayittey (76), Paul Farmer (83), Jacqueline Novogratz (85), Andrew Mwenda (98).

 With the obligatory caveats about the more well-deserving who were omitted and questionable rankings, it is nice to see the diversity of the list: female and male, Central Asian, South Asian, African, European, and American, pro-aid and anti-aid, self-confident experts and those who don’t believe in experts (e.g. me), and even good experts and bad experts (kidding)?!

The secret to aid is people

Editors' Note: This will be the last Aid Watch post until Monday after the holiday weekend. Happy Thanksgiving! Which attribute of an aid project makes it more likely to succeed:

1. It will have rigorous evaluation based on some output indicators to make sure it’s working, OR
2. It is staffed by people who really, really want it to succeed?

This question came out of a tour of maternity and family planning clinics of Marie Stopes International in Addis Ababa. The dedicated staff of Marie Stopes courageously confronts a sensitive issue responsible for about a third of the deaths behind Ethiopia’s high maternal mortality rate – deaths of mothers during unsafe abortions. Marie Stopes workers offer safe abortions consistent with Ethiopian law. They also provide the whole package for reproductive choices AND safe childbirth for women: contraception alternatives, testing and counseling for HIV, prevention of mother to child transmission of HIV, prenatal care, and a clinic for difficult, life-threatening deliveries referred from Ethiopia’s official hospitals. (Although I’m NOT a fan of family planning fanatics who decide on behalf of the poor that they should have less children; I AM a fan of family planning people who respect their clients enough to just give them more choices.)

One afternoon’s visit is not enough to verify a great aid project, and my brief stop at the Marie Stopes project is pathetically inadequate. But since informal site check-ups are much cheaper and more universal than more rigorous methods like randomized controlled trials (RCTs), which will only EVER be available for a small sample of aid projects, it’s worth pointing out a few advantages of the humble site visit.

First, a site visit tells you something about clean, well-maintained, high quality facilities, whether medicines and equipment are available, not to mention whether the health workers are present and whether there are patients waiting because they value the services. A government hospital in a regional town failed many of these same tests during another brief visit during this trip.

Second, gut instincts tell you at least a little something about the attitudes of the PEOPLE involved, workers and patients.[1] At Marie Stopes, I was very impressed with the eloquence and dedication of our host, Sister Shewaye Alemu, an Ethiopian who is the Addis Ababa Area Manager.  The Danish country director of Marie Stopes (the only non-Ethiopian employee), Grethe Petersen, told me her mission was to be the LAST non-Ethiopian country director of Marie Stopes.

RCTs, on the other hand, don’t have a good way of getting at the intangible human element in aid projects –is there good team spirit and morale? Are there good relationships between management and workers, and amongst coworkers, and between workers and patients? There are no scientific recipes on how to DO human relations, just tacit knowledge on managing people, and personal attributes like trust, humility, patience, and respect. Getting to know the people involved can give you a sense of how well this intangible stuff is going.

RCTs could possibly identify the right actions, but if PEOPLE’S motivation to get good results is low, these actions will not be implemented in the right way, or not at all. This will usually be obvious in a site visit.

I am not saying that getting to know the aid workers and more rigorous methods like randomized controlled trials are mutually exclusive – both have value. But even one brief visit to Marie Stopes in Addis was enough to increase HOPE in the potential for determined PEOPLE to make a difference in aid, and was strangely more persuasive than randomized trials.

Think of the analogy to the private sector: venture capitalists don’t do randomized trials but they DO talk to the entrepreneur and inspect the operation in situ. We need venture capitalists and entrepreneurs as well as randomized experimenters in aid.

---

[1] A related observation: the best evaluations of actual project implementation I have ever read BY FAR are written by anthropologists, such as James Ferguson’s all-time classic on a World Bank project on Lesotho.

African leaders advise Bono on reform of U2

An expert commission of African leaders today announced their plan for comprehensive reform of music band U2. Saying that U2’s rock had lost touch with its African roots, the commission called for urgent measures to halt U2’s slide towards impending crisis.

“Our youth today are imperiled by low quality music,” said Commission chairman Nelson Mandela. “We will be lending African musicians to U2 to try to refurbish their sound to satisfy the urgent and growing needs for diversionary entertainment at a time of crisis in the global music and financial sectors.”

Concerns about U2 have been growing in Africa for a while. One Western aid blogger testified to the Commission that his teenage kids found U2’s music “cheesy.” The Mandela Commission proposed that U2 follow a series of steps to recover its Edge:

1) Hire African consultants to analyze U2’s “poverty of music trap”

2) Prepare a Band-owned and Commission-approved Comprehensive U2 Reform Strategy Design (CURSD)

3) Undertake a rehabilitation tour of African capitals to field-test and ground-truth proposed reforms

4) Subject all songs to randomized experiments in which the effect on wellbeing of control and treatment groups is rigorously assessed.

Mandela expressed optimism that the Commission’s report and proposed reforms had come in time to stave off terminal crisis in U2, and restore its effectiveness in the 80s arena rock field.

USTR Replies to Our Campaign to Save Madagascar Jobs

After sending an email to Constance Hamilton, Deputy Assistant U.S. Trade Representative for Africa, we received the following email in response: Thank you, Mr. Easterly, for your email. We of course, want to have as many sub-Saharan African countries as possible be eligible for AGOA benefits. We are working with all the countries, including Madagascar -- to encourage their governments to abide by the AGOA eligibility criteria, particularly rule of law. There has been some recent progress amongst the Malagasy actors involved which gives us some hope. But at the end of the day, an unstable political environment, no regard for rule of law, etc. will undermine Madagascar's future, ongoing investment, and the lives of its people more than any one preference program or initiative. We hope that it is their understanding of that point that will keep them moving forward with restoring democracy and rule of law in Madagascar.

Regards, Connie Hamilton