Yawn.... more RCT debates

Two very smart folks, Mark Rozenzweig and Martin Ravallion have reviews of Poor Economics in the latest Journal of Economic Literature (thanks to Abhi and Andrea for the papers). Obviously self-recommending when smart economists review smart economists. But there does seem to be a bit of a rehashing.

Martin's biggest score is the "where the hell is China?" line. Some of the other criticisms are a bit weaker.

Another likely bias in the learning process is that J-PAL’s researchers have evidently worked far more with nongovernmental organizations (NGOs) than governments.

Which is a bit of a cheap shot, and a bit innacurrate. Researchers have worked with whoever will let them experiment, which yes initially was NGOs but is increasingly governments - see Peru's Quipu commission, Chile's Compass commission, the teaching assistant initiative in Ghana, working with the planning Ministry in South Africa, experimenting with police service reform in Rajasthan, even Britain's Behavioural Insights Unit.

Then

how confident can we really be that poor people all over the world will radically change their health-seeking behaviors with a modest subsidy, based on an experiment in one town in Rajasthan, which establishes that lower prices for vaccination result in higher demand?

Ummmm... well thats why J-PALs policy recommendation for health pricing is based on 6 different studies....

Mark scores his biggest hit in the final footnote on the last page of his article;

Also absent is a discussion of the standard but major problem in the implementation of any programs or transfers targeted to the poor and that do not really spur development—moral hazard.

"Moral hazard" works at both the individual and national government level. If you get aid, you are probably less likely to work hard. The critical question is the magnitude of this effect. I think that on balance the positive value of effective aid outweighs the moral hazard, but that is more of a feeling than an evidence-based proposition. This is also one of the key points made by aid critics Bauer/Easterly/Moyo. Not necessarily that aid doesn't work, as Banerjee/Duflo would like to present their argument, but that even if aid does work, the negative moral hazard effect might outweigh the positive. I haven't seen this argument really addressed at all.

The other serious and neglected criticism for me is on general equilibrium, raised by Daron Acemoglu in the Journal of Economic Perspectives. What if you measure a positive impact of a program on earnings, but those are coming at the expense of others? A training program that increases earnings might just be equipping some individuals to out-compete others in the market, rather than necessarily increasing aggregate productivity, in which case scaling the program ain't gonna work.

So maybe I've missed them - but has anyone seen a convincing rebuttal to the moral hazard and general equilibrium critiques of micro aid project impact evaluation?

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Update: A couple of things I missed in my haste - Abhi points out that Rosenzweig makes good points on the sometimes tiny effect sizes lauded in Poor Economics (e.g. where "15% increase" translates to something like 2 weeks schooling or 50 cents), and that RCTs can focus our attention away from the big (important?) questions, but I felt this criticism is pretty well rehearsed.

Update 2: Also Ravallion loses points for his cliched title: "Fighting Poverty One Experiment at a Time". "x one y at a time" is a boring, tired, tired, catchphrase.

Update 3: Ravallion gains points for coining "regressionistas." 

Maasai Land

Last week I was mostly in Kajiado County. Maasai-land. The County is apparently the third richest in Kenya (by the KIHBS, but this number is disputed), though this wealth is driven by "outsiders" building new developments along the recently completed tarmac road to Nairobi. It can now take as little as an hour from Kajiado Central. The Maasai struggle to compete in the new economy, with limited education and skills.

I spoke to an educated professional (middle class?) Maasai who expressed his dismay at the erosion of the traditional Maasai way of life, as the government's land privatisation policy had led to the parcelling off of land, obstructing traditional migratory herding practices based on traditional beliefs that land is communally owned.

I sat there wondering how I could register some disagreement without sounding like a dick, and how this place epitomised the tension between modernisation and traditional ways of living, transported back to a development studies classroom of tedious debates on "what really is development?" I couldn't help but think that perhaps it was a little hypocritical for this well-educated man to sit in comfortable surroundings and talk about how tough it is for his people to have to give up their cattle herding.

Ultimately, for the Kenyan government to be able to afford to provide better health and education services for its people, it is going to need the revenues that come from the kind of economic development that comes with urbanisation and modernisation.

But this process is disruptive, and the best solution for the "losers" is not to put the brakes on development, but to provide compensation, safety nets, services, and the skills that they will need to engage in the growing economy.

Assistant Consultant Job at Oxford Policy Management

There a few days left to apply for the Assistant Consultant vacancy at Oxford Policy Management in the "cross-cutting" team that I am part of. I can honestly say that it's a really fantastic place to work with lots of smart interesting people (including tons of ODI Fellows) doing all sorts of smart interesting work. From the job ad:

Oxford Policy Management (OPM) is a leading development consultancy with offices in Oxford, Islamabad, Delhi, Pretoria, Dhaka and Jakarta. We provide rigorous analysis, policy advice, management and training services to governments, international aid agencies and other public sector and non-government organisations. OPM aims to contribute in innovative ways to enhance economic and social progress in developing and transition economies, with a focus on the needs of the poorest people. We have worked in over 90 low and middle income countries over the last 30 years. 

OPM is seeking to recruit an Assistant Consultant to work in its cross-cutting portfolio. The cross-cutting team is OPM's entry point for talented and passionate individuals with limited experience or no particular specialisation to work in development consultancy, and progress by either specialising in one of the other technical areas or remaining generalist. Skills are learnt through project work with senior consultants (including overseas fieldwork and ministry work as possible), a year-round training programme, and mentorship from an experienced senior consultant. We expect high performance, and reward it with promotions, salary increments and responsibility. The cross-cutting portfolio currently contains four assistant consultants and four consultants who work on and sometimes lead consulting and research projects across the rest of OPM’s specialist portfolios.

This role is full-time based in our Oxford office and the anticipated salary range is between £20,000 and £23,000.

Closing date is 01 April 2012

For more see here. There are also a few other positions open, including an Assistant Consultant based in Jakarta and a Senior Health Economist.

How to build resilience to climate change in Kenya

Cash transfers.

A growing body of evidence shows that safety nets are an important complement to efforts to improve the livelihoods of the poor, particularly in areas that remain vulnerable to shocks such as drought. Reliable access to safety net support allows households to take on more investment risk and thus produce higher returns.

 Gabriel Demombynes and Jane Kiringai (World Bank, Kenya)

Mud huts and hummers

V: Hows juba?? Changed beyond recognition?! 

Me: Meh. Lotsa new roads and buildings but fundamentally the same! 

V: Fundamentally still a collection of mud huts and hummers?

Which pretty much sums it up. Perhaps the most impressive part for me was being able to buy a visa on arrival. But it was very nice to visit. The whole carry-on-as-if-there-was-no-oil-shutdown-thing felt a bit like the cartoon Wile E. Coyote going over the edge of a cliff but not quite realising it or starting to fall yet. Perhaps a reason for optimism that there is something going on that we all don't know about, and there will in fact be a deal? Inshallah. Also, hopefully we'll be allowed to share the note from my trip at some point.

The RCT Bubble

Is it really a bubble? Whilst there has been rapid growth of impact evaluations of aid projects across agencies, and plenty of internet chatter, the vast majority of aid spending still does not get properly evaluated.  

For example, while there has been a substantial growth in impact evaluations of the World Bank development projects, only 8.8% of World Bank investment loans in 2009/10 had an impact evaluation. In 1999/00 the proportion was 2.4%.  ----- Martin Ravallion, World Bank Research Director

Attack of the (Kiva) Clones!

An advert on Guardian.co.uk this morning reads: "Give a small loan, make a huge difference You can help budding entrepreneurs in developing countries work their own way out of poverty with a small loan. Find out how you can transform lives via lendwithcare.org. In association with Care International UK"

Clicking through to the Care site, we are told that "lendwithcare.org is a revolutionary way for you to help people throughout the developing world transform their future."

Seriously guys.

A - there is nothing revolutionary about directly copying Kiva's business model (they started doing this in 2005).

B - WHO ARE THESE PEOPLE who work in the microfinance industry and apparently have not read or understood "More than Good Intentions" or "Poor Economics" or "Due Diligence"?

Let me summarize for you, from David Roodman, who has just spent the last two years writing the book on the impact of microfinance;

There is not a case for heavy subsidy of these activities; I think less money should go into microcredit.