You just don’t get me

Timothy Taylor has an excellent write up on the behavioural economics results coming out of the recently-released 2015 World Development Report. One of the most striking findings is that World Bank staff tend to overestimate the tendency for poor people to be fatalistic. From Taylor’s post:

What do development experts think that the poor believe, and how does it compare to what the poor actually believe? For example, development experts were asked if they thought individuals in low-income countries would agree with the statement: “What happens to me in the future mostly depends on me.”  The development experts thought that maybe 20% of tthe poorest third would agree with this statment, but about 80% actually did. In fact, the share of those agreeing with the statement in the bottom third of the income distribution was much the same as for the upper two-thirds–and higher than the answer the devleopment experts gave for themselves!

A number of other bloggers have picked up on this result, albeit without too much discussion about what this implies. I think the implicit assumption here are that development professionals are out of touch with the poor. I think there’s a number of ways we can interpret these results. Here’s the graph in question:

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So the first possibility is the implicit one, that Bank staff don’t know what the poor believe, and possibly even that they assume the poor are fatalistic, possibly to a fault. Development economics is only starting to turn its head towards the convergence of fatalism, aspirations and economic outcomes (see, for example, the recent paper by Kate Orkin and her co-authors on aspirations in Ethiopia). The story that development experts buy into this belief is an easy one to believe, but not necessarily the right one. Note that it doesn’t at all take into account what the truth is, only perceptions.

Imagine your life’s outcomes are determined by (A) your own actions and (B) everything else, including randomness. How much weight would you put on (A) vs (B)? There’s no easy answer to this, but it is perfectly possible that the world’s poor ARE poor because (B) is actually much larger than (A). When you live in a country with terrible institutions, no social safety net, frequent economic or environmental shocks, it becomes very clear that (B) dominates (A).

So the second possibility is that Bank staff aren’t assuming the poor are being fatalistic, but that they are being realistic. That they (correctly?) judge that they have little control over their own lives. If they did, then they probably wouldn’t be poor. In this case, if the responses from the above sample are genuine (we might worry that respondents would be unwilling to admit that they have little control), then it’s the poor who have it the wrong way around: they are too optimistic about how much control they have over their own lives.

The second possibility isn’t necessarily any more likely than the first, but we should be cautious about what stories eventually emerge out of the above figure – there are a number of potentially overlapping biases at play, to the extent that it is not just a straightforward story of development professionals not `getting’ the poor.

Land grabs in everything: couldn’t you have just have bought your daughter a pony edition

By most accounts, the recent swath of large scale land acquisitions are being driven by investors wishing to capitalize on rising food prices or expectations of greater demand for land. However, some just want to give their daughter a nice birthday present:

Within months, Heaton was journeying through the desolate southern stretches of Egypt and into an unclaimed 800-square-mile patch of arid desert. There, on June 16 — Emily’s seventh birthday — he planted a blue flag with four stars and a crown on a rocky hill. The area, a sandy expanse sitting along the Sudanese border, morphed from what locals call Bir Tawil into what Heaton and his family call the “Kingdom of North Sudan.” There, Heaton is the self-described king and Emily is his princess.

Uh, what?

Heaton says his claim over Bir Tawil is legitimate. He argues that planting the flag — which his children designed — is exactly how several other countries, including what became the United States, were historically claimed. The key difference, Heaton said, is that those historical cases of imperialism were acts of war while his was an act of love.

At 200,000 hectares, this partially qualifies the, uh, Kingdom of North Sudan to be counted as a land deal in the Land Matrix. This dude even wants to use the land for large scale agriculture:

The next step in Heaton’s plan is to establish positive relationships with Sudan and Egypt by way of converting his “kingdom” into an agricultural production center as his children, especially Emily, wanted.

Hat tip to Karol Bodreaux.

Development as freedom from back pain

The Batman solution to back pain: repeated punches to the back, lots of push ups, gruelling climb out of a pit of despair. Sounds a lot like life during my PhD.

As if turning 30 wasn’t enough of an incentive to start feeling anxious about getting older, I recently started having back trouble. The other day, getting out of bed, I threw my back out, and so ended up on the floor with my iPad, as usual contemplating how I could turn this unfortunate turn of events into a blog post.

Lower back pain is particularly frustrating, because as far as the medical establishment is concerned it is an ailment without a clear treatment. Even the most standard type of treatment prescribed by the NHS (rest, painkillers and physio) only shows very moderate success.

This frustration pales in comparison to that of having everyone tell you what they think you should be doing. Physiotherapy,  Yoga, massage, chiropractor, better posture, swimming, acupuncture, eating rare herbs and lying down (this suggestion came from a Tanzanian friend), or the standard GP response of just deal with it.

Many people, often those who have suffered from pain themselves, will swear by their given treatment. I’ve always found this perplexing: surely if there was a obvious method for curing lower back pain, that method would quickly have spread and someone would have become very rich. There are of course reasons why this might not be the case. Let’s consider a few:

1. None of the treatments work, and people just randomly recover from back pain.

This is particularly disconcerting, but given that most of these treatments haven’t been proven with rigorous methods, it’s perfectly possible that people are just recovering at random. If you are trying out treatment X when you happen to get better, it’s likely that you’re going to start seeing a casual relationship where there isn’t one.

2. People have back pain for random reasons and some treatments only work for some types of lower back pain.

This is possibly even more disconcerting. There are a myriad number of potential causes for back pain, and not every treatment will work. So even if you run an RCT examining the impact of a given treatment on pain, if the proportion of people suffering from the exact ailment that the treatment will fix is small enough you might end up failing to reject the null hypothesis anyway. So no particular treatment wins because we don’t have a good sense of what causes back pain, nor which treatment is most appropriate for a given circumstance.

I feel that most of development is (unfortunately) a lot like back pain. There are a lot of people out there who think they know the answer, but if they are living in worlds 1) or 2) where development is random or counties exhibit heterogeneity in the underlying structural prerequisites, then we’re in for a tough time. This isn’t a call to start lamenting – we just need to be aware of the various biases which lead us to over-prescribe certain policies (situation (1)) and under-prescribe others (situation (2)).

Is the land grab debate a proxy war?

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Is the land grab debate about property rights or consolidation?

So much to write, but so little time to do so. Instead I’d just like to end the week with a quick thought on the evolution of the land grabs debate. I’ve been slowly picking my way through Lorenzo Cotula’s fairly comprehensive book on large scale land acquisitions, an I was stuck by the following passage:

“Also, in some cases it is difficult to tell whether a reported deal relates to a new plantation, or to the acquisition of an existing plantation – for example, where a state farm is privatized. The two types of deals would have very different consequences for pressures on land, though even acquiring an existing farm can increase land competition – for instance, if an old state farm has been partly occupied by squatters who are evicted following the privatization, or if the deal involves expanding the existing plantation.”

Cotula is reflecting on the difficulties of discerning land purchases in the Land Matrix which involve some form of consolidation (land owner by multiple smallholder farmers being converted into large-scale farms) and those which do not change the scale of land ownership. This is an important distinction, as it implies entirely different concerns over large scale land acquisitions.

For a large part, the land grab debate has been presented as an issue of property rights: rural communities are having their (possibly customary) rights to land violated when governments lease or sell the land to large national or international firms. This implies direct welfare losses from losing control of a productive asset – imagine if someone showed up and stole your laptop or your main mode of transport (or your house).

But there is a second issue here: even if property rights were perfectly enforced  and all large scale land acquisitions were both fair and voluntary, they would still involve a significant amount of land consolidation, with smallholder plots being converted into much, much large farms. This raises an important question: once we sort out the rights issues, what form of agriculture would we actually like to encourage in these settings?

It is no secret that many NGOs, such as Oxfam, have a bias towards smallholder farming (let’s lead aside whether or not that bias is justified or not, it could very well be). Is the current onslaught on large scale land deals by these NGOs purely about protecting the rights of people, or is this just another front in a much larger war on land consolidation?

Not only the state will bleed

There wasn’t much for me to do when I first joined the Budget Division of Malawi’s Ministry of Finance back in 2006. My particular position had been vacant for almost a year, so it took a bit of time before the acting budget director grew accustomed enough to start diverting work my way. One of the very first things I worked on was an attempt to reconcile the difference between expenditure ceilings set by my department and actual reports of expenditure from the Accountant General’s department.

What complicated this process was the fact that the Accountant General had recently adopted an Integrated Financial Management System (IFMIS), essentially a comprehensive software platform for approving and tracking expenditure. A lot of promises came with IFMIS – the ability to track expenditure in real time and keep a tight leash on expenditure by line ministries. Yet, when I had arrived, the budget department had yet to fully adopt the platform, meaning that our (often fairly specific) budget ceilings had to be manually reconciled with IFMIS-generated expenditure reports.

I doubt that the budget director seriously believed that this greenhorn civil servant was really going to accomplish much with this work and probably saw the task as something to keep me busy while I grew more accustomed to my environment. Even so, I quickly noticed that IFMIS-generated reports seriously deviated from what was being approved by the Budget Division, sometimes even showing expenditure which was above and beyond what had been mandated by our department.

At my director’s prompting, I visited the relevant department at the Account General’s to request more detailed reports from IFMIS. The likely culprit was some of data problem, and I was curious to get to the bottom of it, seeing the whole exercise as a problem with some sort of technical solution. While the civil servants I spoke to at the AG were friendly enough and agreed to send me reports, upon my return to the Ministry of Finance it was later made clear to me that the AG wasn’t too fond of this unknown fresh-faced mzungu making random requests. Not long after, more pressing work diverted my attention, and this particular issue faded into the background.

Later, our own department grappled with the adoption of IFMIS. While technological solutions are frequently touted as solutions to institutional problems (this platform will eliminate corruption!), my experience was that without some basic level of capacity in place, even the most advanced platform was doomed to fail. Hence, if two government ministries can’t keep their budget tallies synchronised in Excel, they are unlikely to be able to get a more complex `black box’ system to work properly.  This is problematic, because when finance systems don’t work properly, it’s very difficult to tell the difference between corruption and incompetence.* My feeling at the time that the discrepancies between the AG’s expenditure records were due to the latter, even though I heard the occasional, unsubstantiated whisper that someone at the AG was stealing money.

This was surprising to me, as there had been a fairly visible crack down on corruption and leakage during the first term of then-president Bingu wa Mutharika. However, it was widely recognized that during his second, more tumultuous term (which began after I had left the country), government systems became more porous and corruption become more common.

One might have expected things to improve upon Mutharika’s sudden death and the ascension of the pragmatic Joyce Banda to the presidency. Yet despite wowing a lot of donors and even some skeptics – including yours truly – her government seems to have inherited many of its predecessors failings: a recent scandal has broken out over implications that there has been substantial theft by employees of the Accountant General’s department, who exploited loopholes in IFMIS to siphon off money.

We tend to lump all dodgy dealings into the broad category of corruption, but there is a clear difference between institutionalised corruption, where political leaders divert resources towards their own benefit, and the kind of rampant theft which goes on when you have a leader who either is unaware of or cannot control corrupt practices. Banda’s situation clearly falls in the latter – given that she has, until very recently, ruled over cabinet  of former members of Mutharika’s party as well as the opposition – she has always been in a precarious position and thus unable to fully keep everyone in her government in line.

The scandal hasn’t been completely bloodless. The recently-appointed director of the Budget Division, Paul Mphwiyo, was nearly shot to death following his attempts to close the loopholes leading to theft of public resources. I knew Paul during my time in Malawi: he was serving as an assistant budget director when I was working for the Ministry of Finance, although we didn’t often work closely together. Let’s hope he recovers quickly and his assailants are eventually apprehended, although I have my doubts about the latter.

For those wanting to keep tabs on the scandal, Kim Yi Dionne remains an excellent source for recent Malawi news and analysis.

 

*This confusion can be easily exploited.

Update: This post got a little more attention than I thought it would, so just wanted to add a little addendum.

I want to be cautious about drawing too many conclusions from my (very brief) interaction with the AG’s system – the Cashgate scandal is another animal entirely. In weighing the corruption or incompetence possibilities, it’s highly likely that my situation fell in the latter. I just felt it was worth noting that these things aren’t always clear, and that there was a bit of an administrative wall between the Account General’s Office and the Budget Division of the Ministry of Finance (they were, at least when I was there, separate `votes’ on the cabinet and in separate buildings.) Also, for the sake of my former department, I want to make it clear that this thing at least seems to be entirely of the AG’s making, and I saw nothing in the Budget Division during my time there that suggested any wrongdoing of this sort.

Of tribes and titles

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“Sol, we’re new here and don’t really know anybody, so get over to Swearengen and secure us a title deed to some property.”

Things have been a bit quiet recently – part of this is due to a lengthy field-based ethnographic research trip focused on the interaction between late 80s and early 90s UK dance music and Croatian culture. I also was tied up by the always-impressive `Growth Week‘ held by the International Growth Centre Growth at LSE. I’ll let you guess which was more fun.

So let’s start with some blatant self promotion – I’ve got a new working paper out. Here’s the short, short version: most unplanned settlements or `slums’  in most of SSA are dominated by informal tenure, where your right over land is more likely to be determined by customary law, social connections, or ad hoc semi-formal methods of establishing occupancy, than it is by a formal land title. Some households are going to have an easier time of securing their tenure through informal means, others who face higher costs to doing so might be more likely to accept property rights provided by the state. I examine this by looking to see whether or not households in Dar es Salaam which are ethnically-isolated (surrounded by neighbours from other tribes) are more likely to buy property rights offered by the Tanzanian government.

For more detail, head over to the CSAE blog, where I talk about the paper in a little more detail.

I’ll leave you with an image which sums up all the fears and uncertainties of tenure in slums: a landowner on Oxford Street, Accra, who desperately wants to avoid the sale of his/her property (thanks to Elwyn Davies for this photo):

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The property ladder here and there

Once plentiful, land has become scarce, and competition fierce. The district population has been growing fast………. Youths struggle to find any land to sustain their new families. In some villages, it is difficult to get even one hectare. In the village of Amanikrom a young man eager to farm could only get a fifth of a hectare. So the landless youth work their way up by starting as labourers or sharecroppers. In the past, sharecropping attracted migrants only from other parts of the country. Today, young members of the landowning family have to resort to sharecropping too. Meanwhile, much land is in the hands of absentee landlords who work in Accra and use part of their wages to pay for agricultural labourers.

That is from Lorenzo Cotula’s recent book on land grabbing in Africa. For those of you who consider this to be a third world problem: read the segment above one more time, but replace “land” with “housing”, “fifth of a hectare” with “studio apartment”, “sharecropping” with “renting”, and “agricultural labourers” with “council-approved extensions.”

Immigration smimmigration

"If you choose the red pill, then I'll show you just how deep the rabbit hole goes. But then we're going to stop releasing people from the Matrix. We're worried about wage effects in Zion."

“If you choose the red pill, then I’ll show you just how deep the rabbit hole goes. But then we’re going to stop releasing people from the Matrix. We’re worried about wage effects in Zion.”

Paul Collier writes about immigration for Bloomberg. I’m sure we’re only a matter of minutes away from some very serious commentary from the folks at CGD or from Roving Bandit, but here are a few of my own thoughts.

Firstly, Collier argues that new immigration inevitably will hurt the status of the recently-migrated, even if it does not hurt the native population:

The answer is that those who have already migrated lose, at least in economic terms, through the subsequent migration of others. Migrants lose because they compete with one another.

Migrants aren’t in close competition with indigenous workers. The advantage the indigenous have may be that they have better command of the language or that their greater tacit knowledge of social conventions makes them more productive.

The effects of immigration on the wages of indigenous workers vary between very small losses and modest gains. If immigration policy were to be set by its effects upon wages, the only interest group to campaign for tighter restrictions should be immigrants.

The individual behavior of immigrants evidently belies this interest: Immigrants typically devote considerable effort to trying to get visas for their relatives. But these two interests aren’t inconsistent.

An immigrant who enables a relative to join her receives benefits such as companionship. The increased competition in the job market generated by the extra migrant is suffered by other immigrants. In effect, a tightening of immigration restrictions would be a public good for the existing immigrant community as a whole.

So immigration doesn’t hurt the`indigenous’ population, but will hurt new migrants? Solution: every country in the world allows just one immigrant in its borders, then closes them forever. Seriously, it is unclear here what Collier’s assumed social welfare function is.* It’s perfectly understandable why immigration restrictions might be endogenous to levels of migration, but I’m struggling to recall any high-profile cases of recent-migrants calling for a curb on future migration.**

If we cared about general welfare and not just that of recent migrants, loosening restrictions are a bit of a no-brainer. Yes, it might depress wages in the short run for other migrants (evidence?) but compared against the enormous welfare benefits from the migration itself, this is really a second-order concern (a bit like arguing that we shouldn’t let anyone else into the life-boat because, damn it, it will be less comfortable).

Next, Collier argues that new immigration creates another set of externalities on existing migrants: more hate

There may be further social reasons that the existing stock of immigrants has an interest in tighter restrictions. The size of the immigrant stock also affects attitudes of the indigenous population. Contrary to the hope that exposure increases tolerance, the opposite appears to happen.

Heightened intolerance is a public bad suffered by immigrants as a whole, and is thus inadvertently generated by the individually maximizing migration decisions of each successive migrant. Hence, the paradox of migration. Individual migrants succeed in capturing the huge productivity gains from migration. But migrants collectively have an interest in precisely what individually is most detrimental: entry barriers.

Haters gonna hate – and haters gonna hate even more when there are more immigrants around, apparently. Again, no evidence is given to support this case. While I do think there is a worthwhile conversation to be had about how immigrants integrate into societies and how best to maintain social cohesion, falling back on the “We, the indigenous, are inherently racist, and are just going to get more racist as more foreigners show up and there’s nothing to be done about it” argument seems a bit silly.

Finally, Collier argues that migrants might not actually be that much happier and that, combined with the psychological cost of being in a new culture, immigration might be a bad deal. He turns to evidence from several studies showing happiness doesn’t increase when people are allowed to migrate.

This seems to me to be a better argument against using happiness as a welfare indicator, rather than against migration itself. It also leaves us with an entirely unsatisfactory explanation for current migration: that people are deluded about the benefits and would have preferred never to have traveled in the first place. This is particularly hard to swallow in an era where information is particularly cheap – it is relatively easy to send information back to one’s friends and family to clarify that, actually, it isn’t as cool here as I thought it was going to be.

In general, these feel like highly theoretical, armchair rationales for limiting migration. Surely we’ve moved past this by now?

 

*Update #1: To clarify, I mean the SWF Collier is using to make his case, not necessarily his personal preferences over migration!

**Update #2: a friend noted (via e-mail) that this is historically quite common – waves of immigrants turn around and try to stop the next group from landing. While I’d conceded that former-immigrants tend to resist those coming from a different national/ethnic origin, are there any cases where immigrants tried to close the door on immigration from their own country of origin?

NIMBY! Wait, where is my back yard?

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Most governments enjoy the ability to rely on eminent domain whenever land needs to be acquired for large scale development projects. China, a country where one would expect this sort of power to be exerted all the time, appears to be home to a surprising number of `nail houses‘ – property where owners refused compensation from private investors and refused to move out. If the government doesn’t exercise eminent domain and compensation cannot be agreed on, investors often go ahead anyway and build around the remaining property. There result is striking and more than a little funny – I stumbled across this collection of photos of Chinese nail houses (and a few from the US and Europe) on io9 – a few examples:

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nailhouse

 

It’s hard to know how to feel about these situations. For the past few years I’ve been working on a project that has been trying to extent formal property rights to slum residents in Dar es Salaam. I’ve often sold the benefits as being primarily expropriation-related, but several seminar attendees have (rightly) pointed out that sometimes it’s better off for society if people can’t, on the margin, hold out for enormous compensation amounts. This opens up the enormous can of worms which is the rights-versus-efficiency debate, something I’m not going to get into at the moment. Yet, it’s still worth pointing out that this issue is far from straightforward: we want large investment projects to be successful, and to do so they need land. We also don’t want to trample on the rights of owners, especially the poor, especially when compensation is often neither fair nor transparently handled.

Too cool for school

"Perhaps it's time to re-examine the notion that kids really love going to school."

“Perhaps it’s time to re-examine the notion that kids really love going to school.”

Despite, as Lee pointed out, having a bloody good time at the Cowley Road Carnival yesterday, I rolled out of bed in time today to get to the Young Lives conference on inequalities in child outcomes. I’ll share some thoughts on the other plenaries later on, but I was particularly entertained by the final talk of the day by Lant Pritchett on why kids in developing countries might not always want to spend all of their time in school.

Pritchett’s point was fairly simple: in many settings school can be a pretty awful place to be, especially if the curriculum is moving faster than you can keep up with it. Eventually, all but a select few are left behind, leading to a “flattening out” of the learning curve. At this point, you can’t really learn anything when you are this far behind, so why stick around? At one point – and without warning – Pritchett presented an entire slide in Spanish, to give the audience a sense of how this must feel.

His argument was backed up by some fairly disconcerting evidence – Karthik Muralidharan had presented results showing that learning trajectories were nearly flat in many Indian schools, the result of a system which adheres too strictly to a curriculum designed to weed out the best at the expense of other children (which Pritchett referred to as the Russian gymnastics theory of education).

This all reminded me of my time spent running a survey in Dar es Salaam – for simplicity and safety I would meet with my enumerators within a primary school compound. Often, when the school’s security guards opened the front gate for me, they’d physically strike at children with a switch to prevent them from slipping out and running off. Not exactly the picture painted by most of those working on education in developing countries.

While Pritchett laid most of the blame on overambitious curriculum, there were some complains about teachers themselves, especially from the audience, who pointed out that dismal learning outcomes were equally a result of teacher discrimination and absenteeism.

This is a popular line to take nowadays – and has led to a focus on interventions which directly change incentives for teachers, such as improving local accountability, performance pay, or using cameras to make sure they show up. Of course, these interventions feel increasingly marginal when the entire system is broken.

We also tend to forget that schools can also be miserable places for teachers. You might have to live in places you really don’t want to live in. Teaching dozens of children whose learning outcomes are all over the place. Not everyone can be Edward James Olmos. When I lived in Malawi, I briefly volunteered at a local orphanage – attempting to teach math to a group of kids aged 8-15, whose understanding was all over the place. I lasted one day.

Perhaps the most successful interventions are those which are complementary – incentivising both teachers and students to show up and make things happen.

PS – there should be a video of Pritchett’s talk up sometime soon – watch this space. Dude is so famous he doesn’t even bother wearing a name tag.