Are cash transfers overrated?

Kevin Starr and  Laura Hattendorf of Mulago explain why they think the evidence for cash transfers to the poor is overrated.

Basically, it comes down to how the income gains produced by cash compare to other interventions. They are underwhelmed by cash.

I have five comments:

  1. Victory! If it’s becoming standard to judge interventions by their cost effectiveness, then I can’t be more thrilled. Same goes for GiveDirectly. You can think of cash transfers like the index fund of development (making GiveDirectly the Vanguard). If the NGOs (money managers) of the world can outperform the index funds, then the world becomes a better place.
  2. They are right. There will be, I am confident, a great many interventions that do better than cash on any number of metrics. Ones that solve market failures or supply problems are big candidates, just like Starr and Hattendorf say. As I’ve said before, there’s a bubble of excitement around cash, researchers and NGOs could make their names skewering cash, and I think it’s a good trend.
  3. Scalable? Whether these other interventions prove as scalable or replicable as cash is another question. Too many NGOs search for solutions to help 1,000 people a year not 1,000,000. But I’m confident some alternatives to cash will prove promising. Some already are, from vaccines to election monitoring, if only because they solve the problems cash cannot. I’m more skeptical we’ll see better alternatives for pure poverty-alleviation, but we’ll see.
  4. But not so fast. The evidence they cite in favor of cash points to peer reviewed randomized trials. The evidence on better performing programs point to… NGO home pages. Not everything will get a randomized trial, but you’ll forgive me if, before I run to my pocketbook (or make cost effectiveness comparisons) I don’t pit PR materials against rigorous research. But perhaps those numbers have backup. Readers: anyone know the back stories here?
  5. And let’s do cost effectiveness right. Judging programs on three-year income effects is a reasonable first approximation of impact (sort of) but there are ways to do better. Take this J-PAL guide for instance (an organization Mulago funds). Present value of of a broader array of impacts at reasonable discount rates seem a sensible way to go. With considerations for scalability on top.

Anyways, even if Mulago’s evidence and method leave something to be desired, the spirit is right, and the conclusion will (I am confident) be eventually correct. In the meantime, personally I’ll Give Directly.

400 years of Chinese economic history in 79 pages

I am very excited to read this new Journal of Economic Literature article by Brandt, Ma and Rawski:

China’s long-term economic dynamics pose a formidable challenge to economic historians. The Qing Empire (1644 –1911), the world’s largest national economy before 1800, experienced a tripling of population during the seventeenth and eighteenth centuries with no signs of diminishing per capita income. While the timing remains in dispute, a vast gap emerged between newly rich industrial nations and China’s lagging economy in the wake of the Industrial Revolution. Only with an unprecedented growth spurt beginning in the late 1970s did this great divergence separating China from the global leaders substantially diminish, allowing China to regain its former standing among the world’s largest economies.

This essay develops an integrated framework for understanding that entire history, including both the divergence and the recent convergent trend. We explain how deeply embedded political and economic institutions that contributed to a long process of extensive growth before 1800 subsequently prevented China from capturing the benefits associated with the Industrial Revolution.

During the twentieth century, the gradual erosion of these historic constraints and of new obstacles erected by socialist planning eventually opened the door to China’s current boom. Our analysis links China’s recent development to important elements of its past, while using recent success to provide fresh perspectives on the critical obstacles undermining earlier modernization efforts, and their eventual removal

Ungated version.

Also see their new book, China’s Great Economic Transformation.

How to create jobs in poor countries? The video

In case you ever wondered “Hey Chris, why aren’t you headed for fame and fortune as an actor or motivational speaker?”, I give you my presentation on youth employment in developing countries:

It comes from the Inclusive Growth conference at Columbia Business School. My tent revival starts about 8:45 but the whole set of speakers is excellent.

The latest in faith-based development: Randomized control trials?

Lant Pritchett’s fondest 10th birthday wishes to the Poverty Action Lab:

The delightfully quirky aspect of the success of the randomista movement is that it was, and remains, entirely faith-based.

…The claim that attracted resources and support from development organizations and attention from the press was the claim that “rigorous” evidence from these RCTs could, should, and would produce better development projects and policies and, hence, ultimately better outcomes for human beings.

…The randomistas were not proposing new methods or techniques but rather broader adoption into the field of development methods that already had a long history. There was a big fad toward the use of experiments in a variety of social policy domains in the USA in the 1970s.

…Strangely, whether or not decades of social policy RCTs actually did have impact on policies and outcomes in the USA just kind of never came up in arguing that they would in developing countries.

In blogger camp they say “never feed the trolls”, but since Lant is my favorite development troll, I cannot resist. Even if I should be reading someone’s dissertation at the moment.

Continue reading

Respectamability

It’s official: today I move from the ranks of disreputable, careless, independent bloggers to the elite cadre of disreputable, careless bloggers who write for major news outlets. I am now of the Washington Post‘s Monkey Cage.

The popularity of my personal blog has been built primarily on the international development equivalent of cat pictures. I expect that tradition to continue here, since the Post only wants topical, newsy, thoughtful analysis. So do not worry–this blog will remain a lonely outpost of Star Wars trivia and cool, largely inaccurate graphs taken out of context.

I predict a period of time where I compose careful and detailed analysis for The Monkey Cage, most of which is too boring to read, before I lapse into my usual routine of idle speculation informed by reading two paper introductions (well… one paper abstract and a title).

Actually, I sincerely have no idea what I will write for The Monkey Cage, and I am basically seized by panic. Fortunately, panic is the writer’s and academic’s best friend–the source of all original thought and prose.

Finally, for those of you wondering, “How will he blog both here and at The Monkey Cage?” Won’t this affect the volume of silly trivia and obscure papers I receive?” The answer is “Yes, but it probably won’t be as bad for the blog as baby number two.” So there is that. Plus I start 18 months of leave in May, and I expect both this and The Cage to be excellent, excellent procrastination devices.

See The Cage here or @MonkeyCageBlog.

Do election monitors reduce or just displace fraud?

The short answer: a little of both.

I’m attending the NYU CESS conference, and the highlight of the day so far (and a contender for the new alpha paper on election monitoring and election day fraud) is this:

We address these questions by studying observers’ effects on two markers of fraud—overvoting (more votes cast than registered voters) and unnaturally high levels of turnout — during Ghana’s 2012 presidential elections. Our randomized saturation experimental design allows us to estimate observers’ causal effects and to identify how political parties strategically respond to observers.

We show that observers significantly reduce overvoting and suspicious turnout at polling stations to which they are deployed.

We also find that political parties successfully relocate fraud from observed to unobserved stations in their historical strongholds, where they enjoy social penetration and political competition is low, whereas they are not able to do so in politically competitive constituencies.

I learned more about elections listening to Susan Hyde’s 10-minute discussion of the paper than I’ve learned in several years of reading. Sadly not easily summarized or online.

Nonetheless, full paper here.

The one book you should read this year

Six years ago I stumbled on a book from a small Nigerian Press. I can’t remember where I found it. I think I grabbed the best-looking thing I could find in the bookshop at Entebbe airport before a long flight. My expectations were low. I certainly didn’t expect to find the best book I’d read in years.

It was a memoir. A young Nigerian doctor returns home after fifteen years in New York, and sees his native land through both native and foreign eyes. This is a terrific device for bridging the gap between an American reader and the life of Lagos. It’s also a feeling every émigré has shared–of suddenly realizing you’re a foreigner in your own land.

None of this sounds like the basis of a bestseller. And it wasn’t. But it was probably one of the most beautifully written books I could remember reading. And, as travel memoirs in Africa go, the most moving and least stereotypical. I remember thinking to myself: this guy should be famous.

It turns out, he now is. A few years later, Teju Cole would publish a debut novel, Open City, and The New Yorker (among others) would christen him one of the greatest writers of his generation. It’s now 2014, and a major press has decided to republish his Nigerian memoir, Every Day is for the Thief.

Needless to say, I can’t recommend a book more. Buy it here.

Quote of the day

Stephen Colbert speaking at an Internet security conference:

I think Bitcoin is fine,” he said. “After all, I don’t understand gold. Gold never loses its value because it’s shiny? When the apocalypse comes I’m not going to be investing in Bitcoin or gold. I’ll invest in sheep, potable water, and tradable women.

Full story

Negotiating your academic job offer

This is a minority need for advice, but it’s one I luckily get to give to friends and students a few times a year, in part because economics and politics are big markets. Two colleagues–a student and a coauthor–are deciding between a few different academic opportunities right now, and below is is what I told them (today, as it happens).

It’s basically the distillation of advice given to me when I first graduated from my PhD, and again when I deliberated over my move to New York. So all the good ideas come from others. Continue reading

The Freakonomics-ization of economics all over again

Here is Ray Fisman commenting on the plea for more academics to be have a voice in the real world:

One thing that’s been a bit lost in this debate is the fact that some stuff that applied academics do shouldn’t be things that are easily explained to your family at Thanksgiving. Take Nathaniel Hendren’s job market paper–a very subtle explanation of why those with pre-existing conditions can’t get insurance.

Further, and relatedly, there’s the very real issue of distortions in what academia ends up valuing–the stuff you can explain to your family, and that your family (and 2 min attention span web viewers) find most interesting. This is the Freakonomics-ization of economics all over again, and in this view of the world economics has taken a step backward relative to other disciplines.

I agree, though I would say that an awful lot of researchers who pursue arcane research topics might also have broader things to say, and might enjoy it and do well. Andrew Gelman comes to mind. but we wouldn’t want the public intellectualism to crowd out deeper research.

How is social media shaping academia

Nick Kristof got a big response this weekend (positive and negative) to his plea for more academics to act like public intellectuals.

Related, the student policy review at Georgetown interviewed me a couple of weeks ago, which you might say helps bolster Kristof’s point. This is my answer to, “What would you say this new era of technology has brought to development economics and academia?”

I think research papers are finding a much wider audience. Let’s say you like to follow stories on women’s empowerment or international development, previously you would’ve had to wait for The Economist to cover an article, or you would’ve had to go out and search for it yourself.

Before, journalists had to intermediate between researchers and the public. What’s happened now is that some academics are essentially acting as curators. That is basically what blogging and Twitter is: curating. I tell stories that I think are interesting. I relate things that stimulate me, and if you like the same things that I do, then you can see the stories I find interesting. Some of that is research.

This era is bringing stuff to the public that otherwise would have been harder for people to find. It is like someone who curates for a museum: there is so much art out there, just jumbled, which makes it harder for the public to appreciate. But someone arranges things in a way that is legible and that is useful.

What worries me about Twitter—to which I was slightly late to—is that people now follow a lot of blogs through Twitter, and I would have lost a lot of followers had I not joined. It made me realize that at some point of the technological revolution I’ll be too late to join a new platform and will lose some of the audience.

Someone told me “Oh I’ve seen this on Vine,” and I had never heard of Vine. I’m already missing things. I don’t know what Snapchat is, but I do know that I refuse to take pictures of my food at the restaurant.

Full interview.

My larger comment on Kristof is this: Academia could do better but does have a public voice–a modest but growing one. What worries me is the dearth of people in government and diplomacy who write openly and honestly and often. The knowledgeable inside voices we don’t hear, except muffled through a public relations screen, is the great tragedy of social media.

How to improve order and property rights under weak rule of law?

Can a brief mass education program resolve long, violent and intractable land disputes? As it turns out, yes.

My study of a dispute resolution intervention (with Alex Hartman and Rob Blair) is coming out in APSR this month. Turns out I’m allowed to post an ungated copy on my “personal website”, so here you go.

Dispute resolution institutions help reach agreements and preserve the peace whenever property rights are imperfect. In weak states, strengthening formal institutions can take decades, and so state and aid interventions also try to shape informal practices and norms governing disputes. Their goal is to improve bargaining and commitment, thus limiting disputes and violence.

Mass education campaigns that promote alternative dispute resolution (ADR) are common examples. We study short-term impacts of one such campaign in Liberia, where property disputes are endemic. From 246 towns, 86 randomly received training in ADR practices and norms, training 15% of adults.

One year later, treated towns have higher resolution of land disputes and lower violence. Impacts spill over to untrained residents. We also see unintended consequences: more extrajudicial punishment and (weakly) more non-violent disagreements. Results imply mass education can change high-stakes behaviors, and improving informal bargaining and enforcement behavior can promote order in weak states.

Social engineers of the world unite? I’m a little aghast that this might be the conclusion.

Employing and empowering marginalized women

That is the title of a paper I’m presenting tomorrow at Georgetown’s gui2de seminar. Here is the abstract:

We randomly evaluate a post-war program in northern Uganda designed to help poor unemployed women start nonfarm businesses and thus increase their incomes and autonomy. In 60 of 120 villages, the 15 most marginalized villagers (including some men) received five days of business training, $150, and ongoing supervision and advice. We also evaluate the marginal impacts of the supervision component and training to start mutual support groups.

People invested at least a third of the grant, typically in trading. After 18 months business ownership doubled and work hours increased by two-thirds relative to the control group. Women’s earnings increased 98% and men’s by 75%.

Group formation increased in-comes by encouraging cooperative farming and informal finance. Supervision and advice increased business start-up and survival but not profits.

In contrast to an observational literature linking women’s incomes to empowerment, we see little impact on women’s autonomy or bargaining power in the home, although community participation and leadership increase.

Authored with Eric Green, Julian Jamison and Jeanie Annan.

The paper will be posted in a month or two (after I polish it to an absurd sheen) but here you can find a 4-page policy note and gazillion-page policy report.