Unofficial Economist

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.)

Weekly Development Links #1

Each Wednesday at IDinsight, one of our tech team members, Akib Khan, posts a few links (mostly from Twitter!) to what he’s been reading in development that week. For the next three weeks, he’s on leave and I am taking over! Thought I should cross-post my selections (also mostly curated from #EconTwitter):

Cash Transfer Bonanza: The details matter
Blattman et al. just released a paper following up on previous 4-year results from a one-time cash transfer of $400, now reporting 9-year results (see first 3 links). To liven up the internal discussion, I’m adding critiques by Ashu Handa (UNC Transfer Project / UNICEF-Innocenti economist and old family friend), who has cautioned against lack of nuance in interpretation of CT study results, esp. around program implementation details like who is distributing grants, the size of the grants, and how frequently they are given – he studies social protection programs giving repeat cash transfers.

Diff-in-diff treatment timing paper… with GIFs!
Andrew Goodman-Bacon (what a name!) has a new paper that all of #EconTwitter is going crazy over. It deals with some methodological issues using diff-in-diff when treatment turns on at different times for different groups, and other scenarios where timing becomes important. Real paper not for the faint hearted, but the Twitter thread has some great GIFs!

African debt to China: reality doesn’t match the hype

Bonus link: Eritrea & Ethiopia border opening party

Thesis revamp: All hail Ted Miguel, PhD, god of economic writing!

      Ted Miguel, god of economic writing

In order to have a high-quality writing sample for the RA jobs I’m applying to this fall, I am revamping my thesis! Joy of joys!

I thought about doing this earlier in the year and even created a whole plan to do it, but ended up deciding to work on this blog, learning to code, and other, less horrifying professional development activities.

I say horrifying because the thesis I submitted was HORRIBLY WRITTEN. So so so bad. I cringe every time I look back over it. I had tackled a 6-year project (the length of time it took to write the paper I was basing my thesis on, I later found out) in four months time. Too little of the critical thinking I had done on how to handle the piles and piles of data I needed to answer my research question actually ended up in writing.

I thought it would be a drag to fix up the paper. I didn’t expect to still be as intrigued by my research topic (democracy and health in sub-Saharan Africa!) or to be as enthusiastic about practicing my economic writing. I’m taking the unexpected enjoyment as a positive sign that life as a researcher will be awesome.

I’ve been thinking critically about the question of democracy and health and how they’re interrelated and how economic development ties into each. I’ve read (skimmed) a few additional sources that I didn’t even think to look for last time and I already have some good ideas for a new framing of why this research is interesting and important. The first time around, I focused a lot on the cool methodology (spatial regression discontinuity design) because that’s what I spent most of my time working on.

My perspective on the research question has been massively refreshed by time apart from my thesis, new on-the-ground development experience, and the papers I’ve read in the interim.

My first tasks have been to re-read the thesis (yuck), and then gather the resources I need to re-write at least the introduction. I am focusing on the abstract and introduction as the first order of business because some of the writing samples I will need to submit will be or can be shorter and the introduction is as far as most people would get anyways.

To improve my writing and the structure of my introduction, my thesis advisor – who I can now call Erick instead of Professor Gong – recommended reading some of Ted Miguel’s introductions. I printed three and all were well-written and informative in terms of structure; one of them (with Pascaline Dupas) even helped me rethink the context around my research question and link it more solidly to the development economics literature.

The next move is to outline the introduction by writing the topic sentence of each paragraph (a tip taken from my current manager at IDinsight, Ignacio, who is very into policy memo-style writing) using a Miguel-type structure. I’ll edit that structure a bit, then add the text of the paragraphs.

Welcome to the Unofficial Economist

The Unofficial Economist name reflects the fact that I want to start working on and practicing economics, thinking deeply about it, but I’m only an aspirant to graduate-level training so far.

Being ~unofficial~ allows me room to experiment, take guesses, and dig into economic ideas that interest me without too much pressure to get it completely right yet.

The blog is really a conglomeration of everything that’s interested me (and that I’ve found time to write about) in the past half year. I try my hand at interpreting economic papers and development blog posts; I send news / proof of life to my parents via the life updates section; I recommend books and podcasts; and I share other bits of my life, like the Bollywood dances I’ve been practicing.

The menu to the left breaks the posts into four categories: economics, life updates, recommendations, and other. I hope you enjoy!

Noble work: Anand Giridharadas on the EKS

There was a recent discussion on the IDinsight #philosophy Slack channel about a recent Ezra Klein Show (EKS on this blog from now on, since I talk about it all the time) podcast with Anand Giridharadas. My contribution built off someone else’s notes that Giridharadas is spot on about how companies (also IDinsight in some ways) sell working for them as an extension of the camaraderie and culture of a college campus, how he doesn’t offer concrete solutions and that’s very annoying, and some reflections on transitioning from private sector consulting to IDinsight’s social sector, non-profit consulting model. I related more to the moral arguments in the podcast, and this is what I shared:

I connected most with his argument about how the overall negative impact of many big for-profit companies on worldwide well-being vastly outweighs any individual good you can do with the money you earn. One of EA’s recommended pathways to change is making a ton of money and giving it to effective charities, but if you do that by working for an exploitative company, then you’re really contributing to the maintenance of inequality and of the status quo racist, sexist, oppressive system.

My dad was always talking about having a “noble” profession when I was growing up (he’s a teacher and my mom’s a geriatric physical therapist) and even though “noble” is a strange way to put it, I think it is really important to (as much as possible) only be party to organizations and companies that are doing good or at least not doing active harm.

That being said, there are more reasons for going into the private sector and aiming to make money than are really dealt with in the podcast. For example, a few people we’ve talked to in South Africa have mentioned that many highly skilled South Africans are responsible for the education costs for all siblings/cousins and that is a strong motivator to take a higher paying salary.

It becomes very related to the debate about how much development or social sector workers should get paid, relative to competitive private sector jobs. I think IDinsight does a pretty good job of being in the middle for US associates anyways – paying enough that you can even save some, which is more than a lot of non-profits provide, but not necessarily trying to compete with private sector jobs because our model relies a lot on hiring people who are in it to serve, not for the money. Something for us to continue thinking about is how this might exclude candidates who have other financial responsibilities and how we should respond to this issue in how we hire and set salaries.

It’s so frustrating when people identify a problem without offering solutions. The closest he comes to offering solutions is to have organizations stop lobbying for massive tax breaks or in other ways deprioritize the bottom line of profitability. Sounded to me like his vision involves a lot more socialist ideas: the full solutions to these issues would involve massive-scale reorganizing of the existing economic system… although maybe we are heading in that direction with more co-op style companies and triple bottom line for-profit social enterprises? (Don’t know a ton about this co-op stuff – mostly from another Ezra Klein show episode probably, but it sounds cool!) …Maybe his next book will try to map out solutions, though?

Feminism contains multitudes: Annotated critique of WSJ op-ed on day care in Sweden

My annotated critique of “The Human Cost of Sweden’s Welfare State” – a poorly argued op-ed in the WSJ by psychoanalyst Erica Komisar.

Follow up research

  • Andersson, 1989: “Children with early day care (entrance before the age of 1) were generally rated more favorably and performed better than children with late entrance or home care.”
  • OECD report, 1999, p. 60: Acknowledges that children with poor immune systems or who are not good in group settings, could fare better at home or in home-style day cares (similar language to what the op-ed author uses). But points out that the increased feasibility of mothers staying home with young children for longer alleviates some concerns about mother-child early separation, giving parents flexibility to choose what option works best.
  • Another poorly supported op-ed from the Irish Times, 2011:

    “Working as a management consultant, Himmelstrand heard from women how sad they were about leaving their one-year-olds in daycare. He began to notice there were no children in the playgrounds during the day. If you walked down the street with a three-year-old toddler, people were amazed and disapproving the child was not in daycare.

    He also found educational standards were slipping in Sweden, and rates of psychological distress and psychosomatic illnesses among teens had gone up dramatically, not to mention disruptive behaviour in schools.”

  • Institute of Marriage and Family in Canada, 2015 blog post by Himmelstrand from a site with the tag line “Latest developments in family friendly research”: Not much research has been done on the Sweden day care system since the 70s and 80s. Highlights some staffing issues I saw mentioned elsewhere, as well, and again mentions the shaming of parents who don’t put their kids in pre-schools. Actually has citations, but most in Swedish and couldn’t follow-up on them.
  • Another Himmelbrand op-ed, 2013: “A study done a few years ago showed that today even socially stable middle class families have problems with their children.” Okay… that’s literally always true of any family. What kinds of problems qualify here? He doesn’t elaborate, but uses this as supposed evidence of poor parenting skills. Research in Swedish, can’t follow-up.
  • Perusing various chat boards and blogs: There does seem to be a general consensus that there’s pressure to fit in and do what other parents are doing across the board in Sweden that stands out to foreign and Swedish parents alike. And a few different posters mentioned pressure to put kids in day care, but never before age 1 unless you’re a crazy foreigner. BUT, there may be a correlation between those who post online about child care and those who feel alienated by the mainstream thought on it. So hard to judge whether the pressure is meaningful, and also whether it’s gov’t promoted or peer-enforced if it is a big deal.

Look out for: Market impacts of cash transfers

Forthcoming – “General Equilibrium Effects of Cash Transfers,” from Paul NiehausJohannes HaushoferTed Miguel and Michael Walker, answering the question: What are the market impacts of an inflow of ~15% of local GDP?

I have to say I barely understand what’s going on in a “market” … my economic background is very individual- and household-focused.

But understanding the effect of an intervention on a community as a whole, not just on those treated, seems really important. Partially, this is why we look at and consider spillover effects – the effect of an intervention on the neighbors of the treated, who didn’t receive the program themselves.

General equilibrium or market effects investigate a level up from spillover effects and treatment effects – they look at the cumulative impact of the program to the way the economy operates.

I couldn’t explain how one studies a specific market, or what counts as being part of the market, in any clear terms, but I’m still excited for this upcoming paper on the market-level effects of cash transfers, a point that has been debated recently, after evidence of potential negative spillover effects came out.