Footbridges for higher wages

Lant Pritchett and other researchers often argue that development economists are too focused on one-off, micro interventions and fail to see the big picture. They are highly critical of the hype that develops around specific interventions following the release of studies using RCTs or other quasi-experimental methods to measure the impact of a specific program – microfinance, for example, had a big moment and, more recently, cash transfers have dominated many discussions of economic development.

Pritchett’s scorecard comparing first generation RCT practice to the approach of the non-RCT crowd is an especially brutal assessment of the micro development literature (second table in the link). He writes, “National Development leads to better well being. National development is ontologically a social process (markets, politics, organizations, institutions). RCTs have focused on topics that account for roughly zero of the observed variation in human development outcomes.”

There’s a lot that’s valid about this line of critique, although I think it’s more a call to be sure to contextualize learnings, ideally with qualitative research to investigate the how and why of a quantitative claim, rather than motivation to throw out the micro development approach altogether.

Besides, there is something so satisfying about how a small intervention can have a big impact.

Small bridges, big deal

Brooks and Donovan’s recent paper (full PDF here) found that building footbridges in Northern Nicaragua protected local workers from the typical wage loss seen during flooding, when travel routes are cut off, and even led to increased profits of local farmers.

Their primary finding is best seen through two graphics from the paper. The first shows the distribution of wage earnings before footbridge construction, and you can clearly see a massive disadvantage to those experiencing flooding. In the second, the gap has disappeared.

Figures 1 & 2: Distribution of wage earnings BEFORE footbridge construction

Figure 2: AFTER

They also find positive spillover effects. First, rural villagers were able to take higher paying jobs in nearby towns, increasing their wages and increasing the wages of those left behind, who faced less competition in the local labor market. (A similar mechanism to that found in the No Lean Season research, which offered select villagers incentives to migrate to cities for work and found positive income effects for those households and neighboring non-study households.)

Second, farmer profits increased. Not because of lower trade costs that allowed farmers to buy cheaper inputs, but because they were able to access new purchasing markets for their goods and diversify their income sources.

This paper is amazing because the data viz communicates clearly, the findings are meaningful and positive, and the idea for the research design had to have come from an intimate knowledge of the challenges facing rural citizens of Northern Nicaragua.

A national and local development tool

Infrastructure studies connect easily to those big questions about national development that anti-randomistas would prefer to focus on.While it won’t be footbridges in every location, there are lots of countries where road and transport infrastructure solutions are needed to promote both local and national development.

Papers like this one show how connectivity and access can be an important determinant of economic welfare via multiple mechanisms. Besides income effects like those measured in the Brooks and Donovan paper, there are possible effects for access to credit, healthcare, or other public services that isolated communities would otherwise miss out on.

Gaining entitlements with infrastructure and cash

There’s a seriously inspiring narrative in there – a simple change that leads to more options, more opportunities, more connectivity. As my colleague Sindy was discussing today, there is a pattern that interventions about increasing options and expanding opportunity, such as infrastructure improvements or cash transfers, seem more powerful to affect broad change than interventions targeting very narrow and specific goals.

Although, there is probably a gain in using both types of interventions at different times, or concurrently.

McIntosh and Zeitlin’s new paper compares a cash transfer program directly with a child nutrition program.The final line of their abstract made me think about paternalism and beneficiary preferences: “The results indicate that programs targeted towards driving specific outcomes can do so at lower cost than cash, but large cash transfers drive substantial benefits across a wide range of impacts, including many of those targeted by the more tailored program.”

People spend their money with different priorities than programs dictate and seem to get more out of it. That suggests to me that cash transfers (or infrastructure improvements) are a way to improve this baseline ability to provide for your household (“entitlements” à la Amartya Sen), while specific health or education interventions are more useful as public service-style campaigns to promote undervalued goods, such as immunizations.

A final thought

I’m generally curious how often Sen’s entitlements approach is explicitly applied to non-famine topics in development research. I’m guessing often. (A two-minute google led me to a PhD thesis called “Poverty as entitlement failures” that sounds interesting.)