Thursday, July 29, 2004
Does aid work?
Having spent some time at the World Bank myself, this was a question that I found myself asking consistently. Foreign aid and assistance have long been considered an integral part of anti-poverty programs. Whether this is effective or not is open to question. There seemed to be enough evidence floating around of misguided good intentions causing more problems than solving them, not to mention the opportunity cost of money spent on these misguided interventions (bridging the alleged "digital divide" immediately comes to mind). This is partly because there has been no real assessment made of whether these interventions delivered the results they were meant to achieve. Celia Dugger throws light on some new randomized assessment techniques being used.
A small band of development economists, who a year ago founded the Poverty Action Lab at the Massachusetts Institute of Technology, have become influential advocates for randomized evaluations as the best way to answer that question. Such trials, generally regarded as the gold standard in social policy research, involve randomly assigning people eligible for an antipoverty program to get the help or not, then comparing outcomes to see whether those who got the help fared better than those who did not.
It is the same approach that has helped drug companies figure out what medicines are effective and Americans decide how best to reform welfare. Advocates for rigorous evaluations hope to make aid more effective, not by directing money to particular countries, but by spending it on programs proven to work.
Adding an extra teacher to classrooms in rural India did not improve children's test scores. But hiring high-school graduates who were paid only $10 to $15 a month to give remedial tutoring to groups of lagging students in a Bombay slum markedly improved reading and math skills. A series of education experiments in Kenya found that providing poor students with free uniforms or a simple porridge breakfast substantially increased attendance. But giving them drugs to treat the intestinal worms that infect more than a quarter of the world's population was more cost effective, with a price tag of only $3.50 for each extra year of schooling achieved. Healthier children are more likely to go to school. "You can't answer the general question: Does aid work?'' said Esther Duflo, an economist and co-founder of the Poverty Action Lab."You have to go project by project and accumulate the evidence.''
The World Bank, a lumbering giant that employs more than 1,200 Ph.D.'s, is beginning to listen to critics like her. This summer, it is organizing large-scale impact evaluations, including randomized trials, of programs to upgrade slums, improve the performance of schools and keep children healthy and in class. The programs will be tested in dozens of countries.
Rigorous impact evaluations should become part of the bank's culture, he said.That will require deep change. A recent in-house review of bank projects during the past four to five years found that only 2 percent had been properly evaluated for whether they made a difference, according to Mr. Bourguignon.
A small band of development economists, who a year ago founded the Poverty Action Lab at the Massachusetts Institute of Technology, have become influential advocates for randomized evaluations as the best way to answer that question. Such trials, generally regarded as the gold standard in social policy research, involve randomly assigning people eligible for an antipoverty program to get the help or not, then comparing outcomes to see whether those who got the help fared better than those who did not.
It is the same approach that has helped drug companies figure out what medicines are effective and Americans decide how best to reform welfare. Advocates for rigorous evaluations hope to make aid more effective, not by directing money to particular countries, but by spending it on programs proven to work.
Adding an extra teacher to classrooms in rural India did not improve children's test scores. But hiring high-school graduates who were paid only $10 to $15 a month to give remedial tutoring to groups of lagging students in a Bombay slum markedly improved reading and math skills. A series of education experiments in Kenya found that providing poor students with free uniforms or a simple porridge breakfast substantially increased attendance. But giving them drugs to treat the intestinal worms that infect more than a quarter of the world's population was more cost effective, with a price tag of only $3.50 for each extra year of schooling achieved. Healthier children are more likely to go to school. "You can't answer the general question: Does aid work?'' said Esther Duflo, an economist and co-founder of the Poverty Action Lab."You have to go project by project and accumulate the evidence.''
The World Bank, a lumbering giant that employs more than 1,200 Ph.D.'s, is beginning to listen to critics like her. This summer, it is organizing large-scale impact evaluations, including randomized trials, of programs to upgrade slums, improve the performance of schools and keep children healthy and in class. The programs will be tested in dozens of countries.
Rigorous impact evaluations should become part of the bank's culture, he said.That will require deep change. A recent in-house review of bank projects during the past four to five years found that only 2 percent had been properly evaluated for whether they made a difference, according to Mr. Bourguignon.
