H/T Khadija Mohamud.
This is from Alex Tabarrok over at MR:
Our focus on prisons over police may be crazy but it is consistent with what I called Gary Becker’s Greatest Mistake, the idea that an optimal punishment system combines a low probability of being punished with a harsh punishment if caught. That theory runs counter to what I have called the good parenting theory of punishment in which optimal punishments are quick, clear, and consistent and because of that, need not be harsh.
We need to change what it means to be “tough on crime.” Instead of longer sentences let’s make “tough on crime” mean increasing the probability of capture for those who commit crimes.
In my public policy class this semester we read the sad story of Thabo Mbeki’s capture by “dissident” scientists who sold him unconventional policy approaches to South Africa’s AIDS epidemic. The lesson was that we should always be wary of allowing experts too much leeway in deciding actual policy. This means more debate (both among experts and by the public) and routine rigorous evaluation to strengthen the quality of feedback after policy rollouts.
Social Science is awesome. And may the credibility revolution live on. But the world certainly needs more humble social scientists.
I finally got to reading Brian Levy’s Working With the Grain. It is easily the most underestimated development book of 2014, and should be read alongside William Easterly’s Tyranny of Experts (which it both complements and pushes back against). Like Easterly, Levy worked at the Bank and has insightful case studies and anecdotes from South Korea, to Ethiopia, to Bangladesh, among other countries. The book’s main thrust is that approaches to interventionist development policy ought to internalize the fact that:
… Successful reforms need to be aligned with a country’s political and institutional realities. For any specific reform, an incentive compatible approach begins by asking, who might be the critical mass of actors who both have standing and a stake in the proposed arrangements – and so are in a position to support and protect them in the face of opposition? [p. 142-3]
From a policy perspective, Levy tackles the relationship between governance, regime types, and development head on. How do you deal with the Biyas, Kagames or Zenawis of this world if you deeply care about [both] the material aspects of human welfare – roads, hospitals, schools, electricity, etc., [and] political freedoms and inclusive institutions?
Levy’s answer is that development experts should work with the grain, focusing on incrementally solidifying past gains in specific agencies and issue areas, instead of engaging in epic battles against ill-defined and equally poorly understood “bad institutions” and evils like “corruption.” He aptly points out that you do not need the full set of the “good governance” bundle in order to continue chugging along on the path to economic prosperity.
In other words, we don’t have to put everything else on pause until we get the institutions right (or topple the bad guys). It is not an all or nothing game. His argument is persuasive (“good governance” has failed as a prescriptive remedy for underdevelopment), albeit at the cost of casting the immense toll of living under autocratic regimes as somewhat ineluctable on the road to economic prosperity. But at least he dares to challenge conventional approaches to governance reform that have at best failed, and at worst distracted governing elites from initiatives that could have worked to improve human welfare in developing countries.
As I read the book I wondered what Levy might think of the current state of development research. We are lucky to live in an age of increasing appreciation for evidence-based policy development, implementation, and evaluation. However, the resulting aura of “objectivity” in development research often leaves little room for politics, and its inefficiencies and contextual nuances. Sometimes the quest for generalizability makes us get too much into the weeds and forget that what is good for journal reviewers seldom passes the politicians’ (or other influential actors’) incentive compatibility test, rendering our findings useless from their perspective.
It is obvious, but worth reiterating, that the outcomes we can quantify, and therefore study, do not always overlap with the most pressing issues in development or policies that are politically feasible.
Perhaps this is a call for greater investment in public policy schools (not two-day capacity building workshops) in the developing world that will train experts to bridge the gap between academic development research and actual policy formulation and implementation (talking to policymakers makes your realize that this gap is wider than you think). Linking research findings to actual policy may sound easy, but you only need to see a “policy recommendations” section of a report written by those of us in the academy to know that it is not.
This afternoon I joined NYU’s William Easterly, Ingrid Kvangraven of the New School and Daniel Kaufmann of Revenue Watch to talk about Easterly’s new book, The Tyranny of Experts. You will notice that I am a huge fan of STATE CAPACITY.
(Apparently, graduate school prepares you not for TV appearances…)[youtube.com/watch?v=CmcL4R_PZRE]
Note: If you are in the US you have to VPN it since al jazeera doesn’t stream content in the US.
In preparation for the show I finally finished reading Easterly’s book. A review is coming soon (grad school permitting).
The people in poor countries have the same aspirations as those in rich countries — to have the same chances and opportunities, good health care, clean running water in their homes and high-quality schools for their children. The problem is that their aspirations are blocked today — as the aspirations of black people were in apartheid South Africa — by extractive institutions. The poor don’t pull themselves out of poverty, because the basic ability to do so is denied them. You could see this in the protests behind the Arab Spring: those in Cairo’s Tahrir Square spoke in one voice about the corruption of the government, its inability to deliver public services and the lack of equality of opportunity. Poverty in Egypt cannot be eradicated with a bit more aid. As the protestors recognised, the economic impediments they faced stemmed from the way political power was exercised and monopolised by a narrow elite.
…… Making institutions more inclusive is about changing the politics of a society to empower the poor — the empowerment of those disenfranchised, excluded and often repressed by those monopolising power. Aid can help. But it needs to be used in such a way as to help civil society mobilise collectively, find a voice and get involved with decision-making. It needs to help manufacture inclusion.
That is Daron Acemoglu and James Robinson writing in The Spectator on Why foreign aid fails – and how to really help Africa.
I am a firm believer in the fact that “institutions rule” and are “the fundamental cause” of long-run economic growth and political stability. That said, I think this latest addition to the “Aid Debate” also detracts from the real issues regarding the efficacy of aid. It also runs the risk of creating the impression that the promotion of good institutions is a substitute for all forms of aid, or worse, that aid has led to the persistence of bad institutions and endemic poverty in poor countries.
How would the Central African Republic look today if it hadn’t received any kind of foreign aid over the years? I, for one, don’t think that it would be a bastion of political stability and stellar economic performance.
Strong and stable institutions are absolutely essential for the achievement of political and economic stability and general improvement of human welfare. And we should definitely preach this gospel for all to hear. But they also take forever to emerge, and depend on all sorts of localized variables that an international institution builder would most certainly miss (also, see here). And in the meantime, we still have to deal with the challenge of making the lives of the poor better (and within their lifetimes, approx. 60 years). Under these conditions, single panaceas (aid-driven or not) will obviously not work, especially if they come in as vague a package as “good and inclusive institutions.”
Critics are right to say there is no definitive proof that aid drives economic growth. But you could say the same thing about almost any other factor in the economy. It is very hard to know exactly which investments will spark economic growth, especially in the near term. However, we do know that aid drives improvements in health, agriculture, and infrastructure that correlate strongly with growth in the long run. Health aid saves lives and allows children to develop mentally and physically, which will pay off within a generation. Studies show that these children become healthier adults who work more productively. If you’re arguing against that kind of aid, you’ve got to argue that saving lives doesn’t matter to economic growth, or that saving lives simply doesn’t matter [3 Myths].
That is Bill Gates writing in his 2014 annual letter. If you haven’t read it yet, go ahead and read it. He makes some good points.
I think most reasonable people would agree that Sachs kind of oversold his big push idea in The End of Poverty. Or may be this was just a result of his attempt to shock the donor world into reaching the 0.7 percent mark in contributions. In any event it is unfortunate that the debate on the relative efficacy of aid left the pages of journal articles in its current form. It would have been more helpful if the debate spilled into the public in a policy-relevant form, with questions like: under what conditions does aid make a difference? What can we do to increase the efficacy of aid? What kinds of aid should we continue and what kinds should we abolish all together?
Obviously aid alone will not turn the Central African Republic into Denmark. It is also obvious that less corrupt governments do a better job of reducing infant mortality with aid money than their more corrupt counterparts. This is what policy-makers need to know, if they don’t already.
UPDATE: A reader, C. Mwangi, just brought to my attention this quote from William Easterly’s 2009 review of Dambisa Moyo’s Dead Aid.
Moyo is onto something important but, as she says, seldom discussed openly. One of development’s dark secrets is its still-influential origins in the “poor people are children” view, a view with a deeply rooted and very long history. The “development” metaphor was itself is a biological one: poor people “develop” from childhood (poverty) into adulthood (prosperity). Some of the signs of this mindset are subtle but unmistakable. Just think of who was pictured in the last glossy “aid to Africa” brochure you saw? I am willing to bet it was African children. As David Rieff said in his classic book A Bed for the Night, “There are two groups of people who like to be photographed with children: dictators and aid officials.” And of course, you don’t let children manage their own affairs; the adults must do it for them.
The rest of the review, originally meant for publication in the LRB, is available here.
They say don’t judge a book by its cover, but if it wasn’t for Bill Easterly’s reputation for sound thinking on matters to do with Development, I would not have pre-ordered his upcoming book The Tyranny of Experts.
Seriously, as a new year resolution can we all promise never to fall into the temptation to include anonymous African children (invariably looking poor and shabby with flies on their faces or carrying guns, among other things) on the cover of books on poverty and development?
PLEASE? It is no longer good form (and never has been), especially coming from people who ought to know better. Were the boy’s parents or guardians consulted? Do they even know that their kid is on the cover of Easterly’s book?
The book title suggests that Easterly cares about the forgotten rights of the poor, yet the use of the cover image violates an important right of the poor: the right against unfair objectification. There is research out there suggesting that African states face an FDI inflow penalty simply because they are African. Images like these on the cover of books do not help the cause to reverse this reality.
To be fair (as a commenter pointed out to me on twitter) it is the publishers who decide these things to drive sales. But authors still have a right (and in my view, a duty) to ensure that this sort of stuff doesn’t happen.
I feel bad calling out Easterly on this because he is one of the more nuanced and very sane development economists/practitioners out there (and there are certainly far much worse instances of this phenomenon out there); but the habit of using a whole region and its peoples as shorthand for poverty, underdevelopment and dysfunction has to stop. And it starts with each and every one of us.
Dear readers, this is your quarterly reminder to remind your friends (because I know you wouldn’t fall for this) in the development industry to shake off the messiah complex they may have developed in the course of their work.
1. Satire, courtesy of I Studied Abroad in Africa:
You go to one of those fabulously elitist schools where everyone talks about privilege, classism, racism, sexism, etc. as if they don’t practice it in real life. But in order to really see the world, they decide to go somewhere where they can understand what their privilege looks like. So they choose AFRICA! Yay! A whole continent dedicated to helping [non-Africans] people understand what it means to be poor and undeveloped.
2. Bill Easterly on the Ideology of Development: This is an old piece (from 2007) but which should be required reading every week for development
expats experts and the wider Global Bleeding Hearts Industrial Complex.
The ideology of Development is not only about having experts design your free market for you; it is about having the experts design a comprehensive, technical plan to solve all the problems of the poor. These experts see poverty as a purely technological problem, to be solved by engineering and the natural sciences, ignoring messy social sciences such as economics, politics, and sociology [This is also a warning to all you mono-issue activists out there. Life is complicated. Accept that fact and move on].
3. And this is how the Canadian International Development Agency, CIDA, defines international development on its website (granted it is in the youth, 13-16, section, but still):
International development is the term used to describe the activities that developed countries, called donor countries, like Canada, carry out to help poor or developing countries lift themselves out of poverty and raise their standard of living to one that is closer to the standard of living we have in Canada. About 2.6 billion people (about two out of five) live on less than $2 per day.
To reduce poverty, donor countries, like Canada, provide developing countries with technical expertise, goods and money.
Back in 1972 Stanford psychologist Walter Mischel conducted experiments in which he claimed to show a correlation between patience and later success in life – in the experiment kids who could wait for 15 minutes before getting two marshmallows, instead of eating one immediately, were likely to be more successful and self-controlled later in life. Michel attributed patience and self-control to some of the kids’ innate capacities.
It turns out that that might not be the case after all. Researchers in Rochester revisited the experiment and show that kids’ choices over whether to wait or not are “moderated by beliefs about environmental reliability,” in other words, kids react rationally to the proposed deal based on prior experience.
According to Celeste Kidd (more on this here), a University of Rochester grad student and lead author on the study:
“Being able to delay gratification — in this case to wait 15 difficult minutes to earn a second marshmallow — not only reflects a child’s capacity for self-control, it also reflects their belief about the practicality of waiting,”
“Delaying gratification is only the rational choice if the child believes a second marshmallow is likely to be delivered after a reasonably short delay.”
This reminded me of the interesting works in economic history (gated, sorry) that try to tackle issues of culture and socialization and their role in economic development. The punchline from these works is that group-specific socio-cultural values have long-lasting effects on attitudes towards investment, saving, entrepreneurship and ultimately economic development (Think of the fabled frugality and self-discipline of Weber’s protestants). Putting some of the critiques of these works aside for a moment, they are a reminder of just how COMPLEX development is.
Because material conditions both shape and are a result of prevailing cultural norms and practices (both Marx and Weber were right!) it becomes difficult to change one thing while ignoring the other (And this is even before you open the pandora’s box, viz: POLITICS). To put it simply, you cannot increase the investment rate in a society simply by throwing money at people. They will spend it on a new shrine for their god or marry a third wife.
This is not to say that it is impossible to transform entire societies in a short while, just that it is not easy, and that we should be humble enough to accept this fact when thinking about how to promote economic development in the bottom billion societies of the world.
For those, like me, who still miss Aid Watch, here is Easterly over at FP:
I would not appoint U.S.-educated elites vetted by their autocratic home governments to represent the underrepresented peoples of the world. I would not negotiate the contents of World Bank reports with governments in either the West or the Rest, except possibly for correcting typos.
I would not lead the World Bank by perpetuating the technocratic illusion that development is something “we” do to “them.” I would not ignore the rights of “them.” If the New York Times should happen to report on the front page that a World Bank-financed project torched the homes and crops of Ugandan farmers, I would not stonewall the investigation for the next 165 days, 4 hours, 37 minutes, and 20 seconds up to now.
And for more on leadership selection at IFIs see CGD’s policy brief here.