Don't think of this as permanent
It has been over two years since Ranil and I started this blog. Initially a place to gather our thoughts on subjects we care about and find an excuse to post as many photos of Arnold Schwarzenegger as possible, it never crossed our mind that the site would one day have over 1,200 subscribers.
I’ve really, really enjoyed working on this blog. However, as you might have noticed from the lack of posting, other responsibilities are currently rearing their heads. Rather than deliver half-baked thoughts with less frequency, I’d prefer to take a break, disconnect from the development blogosphere for a while and, I don’t know, work on finishing my PhD and come up with some new ideas.
Fear not – we’re not going anywhere in the longer term, so please don’t delete us from your feed readers. Yet, don’t be surprised if things get very, very quiet in the medium to long-run (i.e. it might be a few months). I’ll keep an eye our for colleagues willing to do some guests posts, so the site doesn’t become too derelict.
If you haven’t been following us for that long, now is an excellent time to go back to our archive and check out some of the things we’ve written over the past two years. A lot of it is still relevant – plus there are more pictures of Arnold.
And thanks for reading – it’s been a lot of fun so far, and it will continue to be in the future.
PS: Follow me on Google+ if you are so inclined – I’ll try to keep the snark flowing. Also, keep an eye out (not up yet, but soon!) for a new blog from the Centre for the Study of African Economies, where I’m a research student.
PPS: I always find that in difficult times like this, when further words fail me, a little Whitesnake will always suffice:
http://www.youtube.com/watch?v=2fP9hW7655U
The 2010 Child Poverty Act defines a child as being in absolute poverty if “the household’s equivalised income is below 60% of the 2010—11 median income, adjusted for inflation”, while fixing the use of 2010/11 as a comparison year. Lee, the Roving Bandit, comes down pretty hard on this definition:
So by “absolute poverty” we are still actually talking about inequality. Now, I care very deeply about inequality, and in particular inequality in life chances (i.e. starting points rather than outcomes).
But I just can’t decide whether I should be irritated by imprecise and misleading language about poverty, or impressed by the re-branding of inequality (which is clearly something only loony socialists should care about) as child poverty (who wouldn’t care about child poverty? Surely only a heartless monster. Even Conservatives should care about child poverty).
So points for clever marketing. But do we really want people to think for a second that the absolute poverty of living on £23.50 a day in the UK is in any way comparable to the absolute poverty of the billion or so people worldwide who live on less than 80 pence a day?
Lee has two arguments here: the first is that the measure of `absolute poverty’ described in the 2010 Child Poverty Act is actually a measure of inequality, as it is based on a percentage of total income. His second argument is that the UK’s conception of absolute poverty is to sensitive – that the people living below 60% of 2010/11 median income.
The first problem with this argument is that the international measure of absolute poverty, i.e living on less than $1.25 (PPP) dollars a day, is not really an absolute measure. Consider this thought experiment: if we had first developed the international policy line 100 years ago or 100 years in the future, would it be the same as it was today? I doubt so – our perceptions of what poverty is change over time, and these perceptions are inherently relative to our own position. This means that even `absolute’ measures are, in some way, a measurement of inequality, just ones we’ve committed to for some unspecified period of time.
We fool ourselves into thinking these are absolute measures for a while because they are fixed over time. This is what we did with the $1 a day measure, which was subsequently revised up (!) to $1.25 a few years ago. This is exactly what the Child Poverty Act has done – it has picked a measure of poverty based on a time-invariant threshold. Sure, the basis for that threshold is very sensitive to inequality, but as I’ve already explained, there’s no such thing as an objective, absolute conception of poverty. We will all be poor in the eyes of our descendants.
Is the threshold set by the CPA too high? Are households earning under £23.50 a day really poor? It’s not for me to say, but I see nothing wrong with individual countries coming up with their own definitions of poverty. If we are encouraging developing countries to outline their own definitions and policy priorities, why shouldn’t the UK? International development experts don’t have copyright over the term, nor should they.
Yes, the relative poverty measure is very closely linked to inequality, but so are a lot of different types of absolute poverty measures. The lines seem a bit too blurred here to get upset over them.
Obscure Causality
Oct 2
"I knew something was obstructing the fish's breathing..."
I’m currently on the shelf, waiting for my new job to start, and I’ve been filling the time doing a lot of reading. Mainly fiction from developing countries (which sometimes tell us quite a lot about the process of development), but I’ve also been re-reading David Landes’ The Wealth and Poverty of Nations, in which he looks at why the West is so wealthy through historical analysis. To sum up a five hundred page book in a few sentences, his argument is: the West had better natural endowments, and learnt respect for property rights earlier and better than other countries, which when coupled with an innovative impulse in Judeo-Christian societies lacking in others, ensured that it pulled away from other regions early and decisively. He is absolutely adamant that ‘for the last thousand years, Europe (the West) has been the prime mover in development and modernity’.
Consensus among historians now is that Landes’ argument is, not to put too fine a point on it, wrong in a number of aspects. Most centrally, his claim that Europe has been the world leader for one thousand years has taken heavy knocks of late. Kenneth Pomeranz’ The Great Divergence was the big counterargument, suggesting that ‘European exceptionalism’ emerges much later, perhaps in the 18th Century or even a little after this. This squares very much with the view taken by those historians who have taken the widest and most comprehensive view of the emergence of the world we live in, Chris Bayly and Victor Lieberman (of whose book I’ve only read the introduction – the other couple of thousand pages will have to wait).
Despite covering a period 500 or so years ago, this argument actually has great relevance for the modern business of development and moving people out of poverty. Though the bulk of historians suggest European dominance in the world economy happens late, there is a strong argument that those things that would eventually allow Europe to pull ahead of the rest start to emerge a couple of centuries before economic development truly accelerates away.
These characteristics and advances that would propel growth include property rights and innovation as specified by Landes, but also encompassing military organization and capacity, the emergence of maritime expeditions (which would lead to extraction of resources and the mercantilist system), and the development of credit and banking services, as well as new forms of ownership and patterns of landholding This is a really important point: the motors of development took around 200 years or more to interact and whir into action for the first-movers in modern development processes. Later developers also show a long lead-in for development: Japan since the Meiji Restoration in 1868 after which changes widely held to be important preconditions for the emergence of Japan as economic power in the 20th Century were introduced.
Why is this important? It raises the possibility that the time scales we’re talking about in modern development might be completely out of proportion to the those that historical development processes have taken, because we’ve been so engaged with proximate causes of transformation rather than underlying ones. I’m not suggesting that all development processes will and should take 200 years. Far from it – you would expect first movers to take far longer catch-up nations for a number of reasons, and we know much more about economies and care much more about generalizing economic development than at any stage before in human history. That said, of we accept that underlying causes of development operate over very long time frames, there are important implications for development thinking.
I wish I could have made that title up – but I didn’t. That was Save the Congo, who basically just directly equated cell phone purchases to rape. QED.
And they did this how? Through shock and awe: `Unwatchable‘ is a film they just released in which a gang of British soldiers attacks an upper-class white family in the Cotswolds. Young women are raped. Men are shot. Gonads are severed and fed to survivors.
No, this isn’t a second-rate Michael Haneke knockoff, but it feels like it. It’s pretty awful, and apparently based on a true story. Still, that doesn’t necessarily mean that mobile phones are the main drivers of rape in the DRC or that kneejerk legislation like the Dodd-Frank bill makes sense. We need intelligent discussion to work our way through these problems – I don’t see any room for shock tactics like this.
People who approach debate like this are absolute nutters and should be kept as far away from the discourse as possible.
Famine prediction bleg
Sep 20
Over at The Guardian, Oxfam’s Max Lawson makes this assertion:
…. we have been banging our head against a brick wall from the beginning of the year, warning that an emergency was on its way. We have been talking for months about the complex combination of conflict, entrenched poverty, political marginalisation and the worst drought in 60 years – but commentators haven’t been interested, and governments don’t engage until the TV crews are on the ground and a disaster has been declared.
Really? I’ve had a (cursory) look, and can’t really find bold predictions from any NGOs about the coming crisis prior to this Reuters report, which itself was based on Famine Early Warning System report two weeks earlier. It seems to me that Oxfam threw most of its clout behind the GROW campaign this spring. This in itself isn’t a criticism – Oxfam believes that GROW is part of the solution to preventing future crisises – but would they have really chosen to spend several million dollars on a new campaign if they thought a famine was right around the corner?
So readers, this one is up to you: can any of you find an NGO which used the f-word (famine) prior to the release of the FEWS report? Not a general “we’re going to see more famine in the future” but something akin to “We’re going to see famine or something close to famine this year.”
I’m happy to be proven wrong on this one, but I think everyone was equally caught with their pants down.
Update: that was quick, Oxfam is vindicated (although still no f-word).
Don't provoke him. You wouldn't like him when he's angry.
A few weeks ago, Nick Eubank wrote a piece about Somaliland in the Guardian’s Poverty Matters blog. Somaliland is an interesting one – it’s a state that is not officially recognized and therefore in receipt of less aid than would be expected (though it is incorrect to assert, as he does, that it receives no foreign aid), but is performing well above reasonable expectations. They have a pretty well-functioning democracy, biometric passports – like Lee, I still can’t get over this – and pretty good economic performance.
Eubank suggests that it’s the very lack of aid and subsequent development of tax structures that has led to Somaliland’s good performance, a view to which I have some sympathy. I’ve written in the past about why developing taxation systems is crucially important for all developing countries and why it tends to be difficult. If a side-effect of Somaliland’s lack of access to aid is being forced to be more representative and more developmental, could there possibly be a benefit to restricting rather than increasing aid volumes?
It’s a provocative idea, because it flies in the face of almost everything we’re led to believe about development and levels of development funding, but as a thought experiment, it’s worth considering. It would be likely to yield specific benefits:
- Most obviously, it incentivizes the creation of a viable tax regime with the benefits of accountability, representation and responsiveness that issue from one
- It also creates far more pressure to achieve concrete and valuable results than any system of performance assessment – strictly limited aid volumes makes failure far more costly
- Ownership would take a big boost. The biggest boon to local ownership of the aid agenda would be the ability and necessity to refuse aid packages that are not wanted. If bad aid or aid out of line with the local development vision replaces good aid, the incentive to exercise ownership of the agenda and refuse the aid is that much higher
- A limited volume of aid would mean that the limited management capacity of local institutions is not stretched over hundreds of projects and programmes (as is the case now), but focused on a few tightly prioritized programmes, with consequent benefits for implementation.
Offsetting these benefits is the obvious drawback that much of what needs to be done could not be financed with a strict aid ceiling. The value of the thought experiment is not to assess whether we should cap aid, but to see what benefits it would bring so we can work out how to generate these benefits without limiting aid volumes. The hardest two to incentivize without some resource constraint are the improved ownership (which really requires that local institutions to refuse aid far more than they actually do) and the management effects. Suggestions welcome.
Staying in the region, Chris Blattman also linked to a paper suggesting that Somalia was better off without a state. While the writer of the original paper seems to be a libertarian (and somehow the headline ‘Libertarian Dislikes Government’ isn’t all that shocking), it does make an interesting basic point: the correct counterfactual when we consider poorly governed or chaotic states is not a ‘good’ Government, but a ‘different’ one. This is something to bear in mind when we consider countries with corrupt, dictatorial or ineffectual Governments. Very often it’s not the specific leadership or political party that is at the root of bad governance or decline, but the structural characteristics of their rule: their relationship with the opposition, their relationships with the public, their ability to govern effectively and the options open to them. In very different contexts I’ve argued this for Malawi and Zimbabwe. In Malawi, the same leadership was fine in one political context and dictatorial in another. In Zimbabwe, the temptation to lay all blame at the feet of a very convenient (and abhorrent) villain blinds many to the complex roots of his crimes and Zimbabwe’s decline. The saddest thing is that this point is often neglected even by immensely powerful decision makers – the invasions of Afghanistan and Iraq both show marks of this error.
Going back to the original article, is there a case to be made for statelessness when the Government is predatory? The argument is strongest in the static view, comparing a bad state and statelessness. The more dynamic the view taken, where we consider how tyrannical or corrupt regimes can become effective ones, the less this view makes sense, though it’s also true that plenty of tyrannical regimes didn’t evolve but were overthrown. Again, the thought experiment of whether some developing countries would be better off stateless is most valuable in focusing our attention on the long term needs and real dynamics of state building – not just in terms of building institutions but understanding how bad or predatory institutions can evolve into good ones. It’s happened in many countries, and links back to the questions of accountability, representation and taxation discussed above.
Survey time!
Sep 12
Fashionably late, as always, we’d like to call your attention to the Aid & Development blog survey that has been making the rounds. We’re really quite interested in who you are (I might as well know how many job opportunities I destroy every time I write something), so please, let us know by filling out the survey here.
There’s an interesting debate between Tim Ogden and Barbara Magnoni on the usefulness of targeting women with microcredit. Ogden makes a statement which I believe deserves an enormous amount of attention:
Here’s my operating hypothesis: as family incomes rise, families invest more in all their children, boys and girls. That investment often yields much higher levels of schooling for girls which in turn increases their opportunities.
If you accept that hypothesis, it makes sense to focus on raising family incomes in the fastest way possible. That in turn suggests that we should be paying attention to what groups generate the highest returns on capital. Given the status quo, that again implies that it makes a lot of sense to provide working capital to male entrepreneurs—and then work with them to encourage them to invest in all of their children.
For me, that’s as plausible a path to both increasing family welfare and addressing gender imbalances as focusing microcredit outreach on women who, until you change societal norms, will likely earn very low returns on capital and raise family incomes less.
Basically, Ogden is arguing that growth trumps redistribution, that it’s more worthwhile to push a family’s income onto a high growth path, letting individual members benefit as best they can through whatever distributional norms currently prevail, rather than change those norms to be more equitable today, but doing little to change the household’s income path.
In a new paper, Benjamin Olken, Junko Onishi and Susan Wong examine the effects of a cash-grant programme in Indonesia, randomly allocated (across sub-districts), but with some receiving a cash-incentive bonus, conditional on performance:
This paper reports an experiment in over 3,000 Indonesian villages designed to test the role of performance incentives in improving the efficacy of aid programs. Villages in a randomly-chosen one-third of subdistricts received a block grant to improve 12 maternal and child health and education indicators, with the size of the subsequent year’s block grant depending on performance relative to other villages in the subdistrict. Villages in remaining subdistricts were randomly assigned to either an otherwise identical block grant program with no financial link to performance, or to a pure control group. We find that the incentivized villages performed better on health than the non-incentivized villages, particularly in less developed provinces, but found no impact of incentives on education. We find no evidence of negative spillovers from the incentives on untargeted outcomes. Incentives led to what appear to be more efficient use of block grants, and led to an increase in labor from health providers, who are partially paid fee-for-service, but not teachers. On net, between 50-75% of the total impact of the block grant program on health indicators can be attributed to the performance incentives.
Cash-on-delivery aid critics and proponents should give this a good read. Of course, it won’t settle any arguments, but provides some interesting evidence. A couple of thoughts:
- The authors find that there are no Milgrom & Holstrom-type external spillovers (i.e. you start paying me to publish more so I start publishing in worse journals) and deduce that non-targeted indicators might have benefited from the extra effort. One caveat: they only look at non-targeted indicators within the domains of health and education, so we can’t say what happened to indicators outside of this domain that went unobserved or unreported.
- Prior to the intervention, the optimal allocation of funds was unknown, but it seems that the villages solved it: the extracted inefficient spending on school materials and re-allocated it to health. As far as black box solutions go, this is great – but note that the only thing that might have kept educational performance constant was the addition of the performance measures.
- The performance measures were relative to other sub-districts, so there was no set `target’ that villages had to meet, so not as much scope for threshold effects (slacking off because you confident you will meet the target or that the target can never really be met).
One question we should be asking ourselves when we try and tie this to cash-on-delivery aid: how might a village respond differently to incentives than a national government?
Hat tip to Chris Blattman
