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Poor Economics: dragging development policy from ideology to evidence

A colleague with many years of experience in development recently recommended Poor Economics as a must read. So after much delay I finally managed to start it on the flight from Zurich to Delhi, and it has proven to be a page-turner. While many reviews of this book have been written before, I cannot but add my own appreciative voice to the chorus.

Doing so is particularly important because I, like many others, have previously commented on other books on development and aid – most notably Dead Aid, The White Man’s Burden, and Common Wealth. Poor Economics, however, is very different – and I will venture better – than the others before it because it has the potential to change the level of debate one sees in this sector. This is for three reasons.

First, where the other books start with a worldview (respectively – aid is bad or good) and then look for examples to support that view, Poor Economics seeks to draw conclusions based on evidence. This is a refreshing change in a world where too much policy and debate (sometimes my own included) is based on assumptions drawn from ideology and taken to be fact.

Second, the books liberal use of randomized control trials should encourage a more evidence-based debate. RCTs are not an entirely new phenomenon in social science. But while they are being used with increasing frequency, such as in assessing the impact of microfinance and education, their findings have been mostly limited to academic journals. For the first time, Poor Economics brings this tool to the general public and draws on almost two decades of experience. This is important, because too often debates on development confuse correlation with causation and outputs with outcomes or impact. In microfinance, for instance, high repayment rates were taken, for a long time, as evidence of impact (i.e. higher incomes); in education, commentators often conclude that parents prefer private schools to public ones because they choose to send their children to the former rather than the later.

The most important impact of this book, however, should be to force us to ask the right questions. It may not, for instance, tell us if aid is good or bad, but eventually that is not important. In the words of the authors, “the endless debates about the rights and wrongs of aid often obscure what really matters: not so much where the money comes from, but where it goes.”

In answering that question, the book does extremely well. It not only points out what works – providing free volunteers to train poorly performing students is more effective than private schools; cash transfers achieve desired outcomes; school feeding and deworming are some of the most effective interventions in health. The book also explains why things that should work, may not – how people care more about buying a TV than buying enough food to feed themselves well; why they will pay a quack for an antibiotic injection to “cure” diarrhea where a free ORS dose would work; and why the poor view education as a lottery for their children. It also reveals deep seated biases we (development experts, governments, and people in general) hold that end up creating a self-fulfilling prophecy – particularly in education where we expect poor children to fail, they believe it too, and oblige.

Readers should gain, eventually, a more nuanced view of the world (something to celebrate), of how people behave, and how development policy itself has been held hostage to certain assumptions.  For instance, on the chapter on education the authors point out that while the MDG’s identify education as extremely important to development “somewhat bizzarely, the issue of learning is not very prominently positioned in international declarations.”

Proponents of a particular world view will be disappointed by the book not endorsing either side – this book will not put to rest debates on aid or privatization of education. But it should encourage us to ask the right questions and to look for answers in evidence rather than ideology. Most important, it should force us to review what we know, or presume to know, about the lives of those we seek to help. It is a useful reminder that in the big scheme of things ideology is less important than the goal of improving peoples lives – a goal that, it would appear, is eminently achievable.

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