giovedì 31 ottobre 2019

People keep saying that the recent Nobelists "studied global poverty."  This is exactly wrong.  They made a commitment to a method, not a subject, and their commitment to method prevented them from studying global poverty.

At a conference at Brookings in 2008 Paul Romer (last years Nobelist) said: "You guys are like going to a doctor who says you have an allergy and you have cancer.  With the skin rash we can divide you skin into areas and test variety of substances and identify with precision and some certainty the cause.  Cancer we have some ideas how to treat it but there are a variety of approaches and since we cannot be sure and precise about which is best for you, we will ignore the cancer and not treat it."

Abhijit Banerjee (one of this years Nobelists), confronted with this nice analogy, doubled down.  He said (as I recall):  "That is exactly what we are going to do.  We are going to study those aspects that we can study scientifically, by which I mean using RCTs.  Anything we cannot study in that way we are going to ignore and not study and not talk about because if we cannot say something certain and precise we are not going to say anything at all."

This is a pre-commitment to not study the phenomena and facts of global poverty in four ways.

First, as has been known for a long time poverty rates across countries are almost perfectly correlated with the "typical" (median) income/consumption in that country.  It takes about an hour of "studying global poverty" with data easily downloadable from the World Bank to discover that the cross-country correlation of median and headcount poverty is .99.  If poverty programs are defined as those that improve poverty rates, conditional on the typical level of income in a country, they account for less than 1 percent of total variation in poverty.

Second, the same is true of changes in poverty, they are overwhelming associated with growth in median income/consumption.  We have seen low-bar headcount poverty go from high levels to low levels right in front of our eyes, with good household data, in many countries: China, Vietnam, Indonesia.  A commitment to "study global poverty" would probably ask:  "what accounts for the observed reductions (or lack thereof) in poverty across time and across countries?" and discover that variation in the size and efficacy of poverty programs had little or nothing to do with poverty reduction.

Third, I was part of a large scale study of poverty (our book Moving out of Poverty).  Through a sophisticated participatory method we identified 3,991 individuals whose neighbors identified as having moved out of poverty.  We then asked for their account of how they moved out of poverty.  Only .3 percent (3 of 1000) named NGO poverty programs, roughly the same number as mentioned "winning the lottery" or "crime."   So a focus on applying a method to the study of the effectiveness of (mostly) NGO programs is a commitment to not study global poverty.  

Fourth, even at that, most of their RCTs are not about poverty per se, they are about mitigating the consequences of some particular harm that is mostly the result of being poor:  giving lentils to encourage vaccinations, making nurses show up, de-worming, police scheduling are, perhaps, interesting phenomena to examine using your preferred method but they are not, except very indirectly, "studying global poverty."

So what the Nobelists really did was make a commitment to using a particular method to study whatever could be studied with that method in poor countries (lots of which were "interventions" by NGOs at very small scale), knowing that this commitment severely limited their ability to study the phenomena of global poverty.