World Development symposium on RCTs

World Development has a great collection of short pieces on RCTs.

Here is Martin Ravallion’s submission: 

….practitioners should be aware of the limitations of prioritizing unbiasedness, with RCTs as the a priori tool-of-choice. This is not to question the contributions of the Nobel prize winners. Rather it is a plea for assuring that the “tool-of-choice” should always be the best method for addressing our most pressing knowledge gaps in fighting poverty.

… RCTs are often easier to do with a non-governmental organization (NGO). Academic “randomistas,” looking for local partners, appreciate the attractions of working with a compliant NGO rather than a politically sensitive and demanding government. Thus, the RCT is confined to what NGO’s can do, which is only a subset of what matters to development. Also, the desire to randomize may only allow an unbiased impact estimate for a non-randomly-selected sub-population—the catchment area of the NGO. And the selection process for that sub-sample may be far from clear. Often we do not even know what “universe” is represented by the RCT sample. Again, with heterogeneous impacts, the biased non-RCT may be closer to the truth for the whole population than the RCT, which is (at best) only unbiased for the NGO’s catchment area.

And here is David Mckenzie’s take: 

A key critique of the use of randomized experiments in development economics is that they largely have been used for micro-level interventions that have far less impact on poverty than sustained growth and structural transformation. I make a distinction between two types of policy interventions and the most appropriate research strategy for each. The first are transformative policies like stabilizing monetary policy or moving people from poor to rich countries, which are difficult to do, but where the gains are massive. Here case studies, theoretical introspection, and before-after comparisons will yield “good enough” results. In contrast, there are many policy issues where the choice is far from obvious, and where, even after having experienced the policy, countries or individuals may not know if it has worked. I argue that this second type of policy decision is abundant, and randomized experiments help us to learn from large samples what cannot be simply learnt by doing.

Reasonable people would agree that the question should drive the choice of method, subject to the constraint that we should all strive to stay committed to the important lessons of the credibility revolution.

Beyond the questions about inference, we should also endeavor to address the power imbalances that are part of how we conduct research in low-income states. We want to always increase the likelihood that we will be asking the most important questions in the contexts where we work; and that our findings will be legible to policymakers. Investing in knowing our contexts and the societies we study (and taking people in those societies seriously) is a crucial part of reducing the probability that our research comes off as well-identified instances of navel-gazing.

Finally, what is good for reviewers is seldom useful for policymakers. We could all benefit from a bit more honesty about this fact. Incentives matter.

Read all the excellent submissions to the symposium here.

People Are Brains, Not Stomachs

Alex Tabarrok over at MR has a fantastic summary of some of the works of this year’s three Nobel Prize winners in Economics. This paragraph on one of Michael Kremer’s papers stood out to me:

My second Kremer paper is Population Growth and Technological Change: One Million B.C. to 1990. An economist examining one million years of the economy! I like to say that there are two views of humanity, people are stomachs or people are brains. In the people are stomachs view, more people means more eaters, more takers, less for everyone else. In the people are brains view, more people means more brains, more ideas, more for everyone else. The people are brains view is my view and Paul Romer’s view (ideas are nonrivalrous). Kremer tests the two views. He shows that over the long run economic growth increased with population growth. People are brains.

Here is the abstract from Kremer’s QJE paper:

The nonrivalry of technology, as modeled in the endogenous growth literature, implies that high population spurs technological change. This paper constructs and empirically tests a model of long-run world population growth combining this implication with the Malthusian assumption that technology limits population. The model predicts that over most of history, the growth rate of population will be proportional to its level. Empirical tests support this prediction and show that historically, among societies with no possibility for technological contact, those with larger initial populations have had faster technological change and population growth.

Read Tabarrok’s entire post here. Highly recommended.

Since Sunday I’ve been asking around if the Prize got any mention on local radio in Busia, Kenya — the cradle of RCTs, if you will, and where Kremer conducted field experiments. No word yet. Will report if I hear anything.

On external interventions to improve village-level governance and development: The DRC Edition

This is from an excellent JDE paper by Humphreys, de la Sierra and der Windt:

We study a randomized Community Driven Reconstruction (CDR) intervention that provided two years ofexposure to democratic practices in 1250 villages in eastern Congo. To assess its impact, we examine behavior in a village-level unconditional cash transfer project that distributed $1000 to 457 treatment and control villages. The unconditonal cash transfer provides opportunities to assess whether public funds get captured, what governance practices are employed by villagers and village elites and whether prior exposure to the CDR intervention alters these behaviors. We find no evidence for such effects. The results cast doubt on current attempts to export democratic practices to local communities.

Here’s a description of the program:

Our study takes advantage of a large UK funded CDR program, called “Tuungane,” implemented by the International Rescue Committee andCARE International in 1250 villages throughout eastern Congo. The program had as a central goal to “improve the understanding and practice of democratic governance ….”

… Over a four year period, the program spent $46 million of development aid, reaching approximately 1250 villages and a beneficiary population of approximately 1,780,000 people. A large share of this funding was used for facilitation and indirect costs, with only $16m, 35% of the total program costs, going directly towards infrastructure. These shares reflect the fact that the main focus of the intervention was institutional change, not the use of existing institutions to deploy development funds.

This very cool paper raises important questions about the role of elites in African development (read it to get a better understanding of the futility of these kinds of “democracy promotion”, too).

It might seem logical to assume that short-circuiting elite power, whether at the local or national level, may lead to accelerated development. However, because a lot of “development” is often elite-driven, an explicit agenda of effective elite disempowerment might actually yield suboptimal outcomes. All else equal, elites are often better organized, better-placed to take risks (on account of having more economic slack), better able to protect their property rights, and routinely deploy the state to further advance their economic interests. $46m in the hands of a powerful and secure elite class might yield jobs in firms that provide economic stability for whole districts. It is also true that less powerful or stable elites are likely to squander it on consumption, quick profit schemes, or stash it abroad.

These observations are not unique to African states.

Overall, when I look at most African states, what I see are a lot of very weak elites lacking social power, constantly unable to bend their societies to their will, and resigned to low-equilibrium forms of  political and economic organization (for example, by being mere middlemen in lucrative global commodity markets). In the case of the DRC, this is true whether one looks at Kabila/Tshisekedi or the leaders of armed groups in the east of the country. The same goes for so-called “traditional” leaders. Throughout the country and in the wider region, such elites lack infrastructural power in profound ways. Importantly for economic development, many often lack the ability to protect their own property rights. Our stylized idea of the nature of societal power relations on the Continent needs some updating. Consider this paragraph:

Eastern Congo is a well-suited environment to examine the adoption of democratic practice in local governance. The state has largely with-drawn from the rural areas of the east and enjoys low legitimacy. Local governance is often described as “captured” by traditional chiefs and vulnerable to corrupt practices by state officials. These features are not unique to the Congo. Multiple accounts suggest that in many Sub-Saharan states, colonial rule used pre-colonial institutions to create “decentralized despots” in ways that are detrimental to development.

topographies.jpgAre local elites in the modal African country this powerful? Is this the sense one gets traveling in rural Ghana or Zambia? Do these (mostly) guys look like they are in charge? As the paragraph notes, “traditional leaders” often lack the means to coerce their constituents (the state is largely absent). Despite Mamdani’s persuasive (Rwanda) story, these are not powerful and unchecked “despots” in the standard sense.

At times Africanist scholarship on state/elite society relations can seem schizophrenic: Africa is the land of “imperial” big men elites who can scarcely project their power on account of state weakness (see here, here, and here). Since the early 1990s, a lot of effort has been put into taming the allegedly imperial political elites in the region. Missing in our analyses and in donor programs have been attempts to understand the structural weakness of these same elites and the attendant consequences. The presence of an erratic and parasitic elite class might be the proximate cause of underdevelopment in the region. However, I would argue that a deeper cause is persistent elite weakness in the region. Catherine Boone’s book (see image) is the best I’ve ever read on African elites’ strategies of power projection in a context of state weakness (Boone is easily the most underrated Comparativist of her generation).

The tenures of Africa’s Amins, Mobutus, and Bongos took the form they did in no small part because these were structurally weak leaders (long leadership tenure is not synonymous with state capacity). Throughout their times in office they did all they could to destroy any and all alternative centers of power (including institutions such as legislatures). Their failures reinforced their respective counties’ two publics problems whose legacy is chronic elite weakness that is obvious for all to see. To this day, very few African countries have stable economic elite classes with easily identifiable immovable assets in-country. Most operate like little more than Olsonian roving bandits.

I am yet to see a clear theory that links greater vertical accountability to state/elite capacity. The historical record suggests that democracy works best in contexts with pre-existing state/elite capacity. In my own work, I’ve shown how strong autocratic legislatures beget strong democratic legislatures.

This is not a defense of autocracy. It is a reminder that the processes of state and political development, while related, often run on separate tracks and should therefore be decoupled in programs such as the one above and in our studies.

The disaster that is Kenya’s new “competency-based”curriculum

This is from Business Daily:

….. a Grade Two student at a private primary school in Kiambu County, gets upset every evening that his father, Joseph Mutiga, returns home without a printer.

His homework involves printing assignments almost on a daily basis, and his dad has promised him that he will buy a colour printer to make it easier for him to deliver on the assignments.

print outs must be done in full colour.

The Mutiga household’s story is replicated in most Kenyan households that have school going children in Grade Three and below, who are undertaking the new Competency-Based Curriculum (CBC).

The curriculum, which is set to replace the 8-4-4 system that was criticised for being too theoretical and exam-focused, has won admirers and critics in equal measure.

A small home colour printer costs about Sh10,000, which Mr Mutiga says is a new item on his budget. He is also contemplating installing a home internet connection that will add about Sh2,500 to his monthly budget.

Critics, including the Kenya National Union of Teachers (Knut), have however warned that the new curriculum will entrench inequalities where only children of the rich and middle class families will afford to provide their children with the relatively expensive learning materials.

Public schools, and especially those in rural areas and urban slums, are most affected as their student populations cannot afford the materials required for the new curriculum. In Kirinyaga County, Jerry Mworia says his son previously brought home class assignments that only required him to use a pencil and a book. After the new curriculum took effect, he is now regularly required to buy items that are not stocked in his neighbourhood shops such as modelling clay.

“I had to make a two-hour round trip to Kerugoya, the nearest place I could find plasticine (a brand of modelling clay). I bought a kilogramme for Sh150.

Kenya’s CBC is a caricature of isomorphic mimicry. Teachers are not ready. Parents are not ready. The government is not ready. It all sounds like a sophomore project gone awry.

Yet millions of Kenyan pupils will be subjected to this disaster of a policy. It is not hard to see how the new system will worsen class-based differences in education outcomes. The curriculum is totally divorced from the lived experience of the vast majority of Kenyans.

Now it would be one thing if the Kenyan government had the capacity to pull it all off. However, the government merely implemented what “consultants” and “advisors”, many of whom obviously had very little local knowledge, suggested. It has done precious little to prepare the country for the policy.

Most reputable education professionals in Kenya oppose the shift.

The textbooks are a disaster. Teachers have not been trained.

Add this to the list of failed “development” projects that are completely divorced from the objective realities of their intended beneficiaries.

Roll-out of the curriculum has taken off poorly, especially in public schools that do not yet have books and other learning materials. Teachers in some public schools were yet to get instruction kits as of late last week. “From the CBC training, we are required to take videos, pictures and in some lessons use the television as a teaching tool, but we do not have any of the supporting equipment and books at my school,” said Mrs Jackline Mueni, a Grade Three teacher in a public school.

Recall that it is the same Uhuru Kenyatta administration that came up with the hair-brained idea to give a laptop to every Standard One pupil. The plan was later shelved, after reality set in.

The clock is ticking on the CBC.

 

Top five books I read in 2018

This is the not-for-work list. It’s also mostly based on my subjective sense of how much I learned from the books.

Iran: A Modern History by Abbas Amanat — This is a long book that covers several centuries of Iranian history (beginning in 1501). It is definitely worth your time. At the end I learned a lot more about the brief Pahlavi dynasty than I knew and got a peak into the dynamics of the Iranian nation-state before, during, and after the revolution. The bits on the Qajars were my favorite (while I was reading the book my wife and I watched a number of Iranian movies and documentaries. I highly recommend this strategy).

The End of Alchemy: Money, Banking, and the Future of the Global Economy by Mervyn King (former governor of the Bank of England). A great chaser to this is Paul Volcker’s excellent bio.

The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War by Robert J. Gordon — this is a great development book.

Money Changes Everything: How Finance Made Civilization Possible by  William N. Goetzmann 

The Wizard and the Prophet: Two Remarkable Scientists and Their Dueling Visions to Shape Tomorrow’s World by Charles C. Mann — This book surprised me. I thought it would be yet another uncritical celebration of scientific progress. But Mann is nuanced and makes a strong case for belief in science’s potential to keep the human project going despite the many current structural challenges — not least of which is climate change. Those into development will particularly enjoy the bits on the Green Revolution. 

I am still struggling to read fiction. In 2019 I will try harder.

 

The Economics of Weddings in Nigeria

This piece highlights some interesting facts about the wedding industry in Nigeria.

How much do weddings cost?

When an upper-class Nigerian couple throws a wedding, at least 1,000 guests are invited. This equates to about ₦20 – ₦100 million [$55k-$275k], indicating that our celebration culture is nothing short of extravagant.

For perspective:

In India, with 3-5 days set aside to mark the union of two people, a single wedding can earn the economy about as much as $300,000.

Here’s more:

There is evidence that Nigerians’ desire to “flex” has provided a boost to the economy. For example, during the country’s last recession, the entertainment industry continued to expand even as other sectors shrunk. This similar pattern is observed with big-budget weddings. The cost of living has risen, but it hasn’t deterred the big wedding spenders.

And this has had a rippling effect on the rest of the economy.

Today, weddings are major employers of catering services, makeup artists, photographers and so on, directly supporting key growth drivers for any economy- small businesses. For example, a mobile toilets startup estimates that marriage celebrations account for 40% of its revenue. Trickle down economists might have a point. Our booming wedding culture is now supporting so many businesses today that would have struggled to survive in the past.

… Even though Nigerians are still famous for being net importers of many products, the wedding industry appears to be directing more spending within the country’s borders. Designers like Deola Sagoe and Mai Atafo have become favourites among brides for their bridal train outfits, instead of foreign designers like Vera Wang.

Lately I have been thinking a lot about socially-embedded economic sectors on the Continent, and their potential for mass job creation — think housing, agriculture, textiles, logistics, carpentry, funerals, weddings. These sectors provide low hanging fruits for policymakers for value addition and productivity gains. And their social embeddedness ensures that the surpluses are shared across the entire SES spectrum.

Unfortunately, most African governments spend all their energies on attracting FDI that ends up in enclave economies that create very few jobs. And to make matters worse, these sectors also get a ton of subsidies:

For example, multinational companies [in Nigeria] are entitled to tax incentives worth an estimated $2.9 billion a yearthree times more than our entire health budget. By comparison, small and medium-sized businesses and workers in the informal sector face multiple taxes. Regressive tax policies like this work to keep wealth concentrated amongst a few.

FDI is great for capital intensive sectors. But governments should also be thinking creatively about how to promote local (micro) SMEs that touch a wider base of households.

Perhaps its time for the World Bank to consider issuing “An Ease of Doing Business for Local Firms” index.

Claims About “Good” Institutions

This is from Yuen Yuen Ang’s excellent book on How China Escaped the Poverty Trap:

When foreign experts enter developing contexts and insist that there is one standard of good institutions — namely, that found in wealthy societies — this by itself imposes a lethal impediment against localized adaptation. Imagine “good governance” in medieval European communes being measured according to how closely they approximated institutions in the future. Then imagine foreign consultants dispensing praise and conditional aid to these European communes based on how well they score in good governance alongside contemporary countries; such an index would be titled “Worldwide and Timeless Governance Indicators” (WTGI). Further imagine medieval commune leaders and merchants being herded into classrooms to be taught about the technicalities of replicating institutions from the future in their current communities. Could this be an environment that empowers medieval actors to improvise fitting solutions for the needs of their time?

Highly recommended.