Mulligan on Radomized Experiments


Casey Mulligan writes the following in a New York Times blog post regard RCTs:

The problems with randomized trials cannot be dismissed as mere philosophical challenges, because people react to the poor treatment they get from experimenters. Why should a patient agree to let a dice or random number generator decide his fate?

By insisting on randomization, experimenters have troubles recruiting study participants, and their reluctance to take part prevents us from learning as much as we could about new treatments (I owe this point to my colleagues Tomas Philipson and Gary Becker).

One approach to this problem is to prevent participants from knowing that they are participating in experiments or that researchers are introducing randomness into their environment, as natural or “unframed” field experiments do (see this paper by Omar Al-Ubaydli and John List on the different kinds of experiments in economics). Professor Sachs’s approach is to economize on the randomness.

Randomization is not a necessarily even the best way to advance science. More than a few statisticians suggest that study samples should be chosen more deliberately, and less randomly (see “The Unprincipled Randomization Principle in Economics and Medicine” by the econometricians Stephen T. Ziliak and Edward Teather-Posadas).

Jessica Goldberg responds here.  She writes:

We use RCTs to answer certain types of questions about the impact of a program or product. When the questions have been answered and we know whether, how, and for whom a product works, RCTs are neither necessary nor interesting.  But at the time of evaluation, we didn’t know whether tutoring improves student learning (or, for that matter, whether Millennium Villages improve welfare for their residents).



Australian Troubled Aid to Cambodia


From Ashlee Betteridge at Devpolicyblog:

Activists have long challenged the project’s forced resettlement of thousands of poor families who had made makeshift homes along disused railway tracks, alleging inadequate compensation, threats, harassment, inadequate facilities at resettlement sites and adverse impacts on livelihoods.

The CPR report [pdf], released on Friday, agreed with many of these concerns and found that the project was non-compliant with a number of ADB safeguards.

The review found that project caused “direct, adverse and material harm” to the resettled families, with “insufficient compensation for loss of property and incomes… lack of electricity and water services at resettlement sites as well as from poor access roads… weak or ineffective grievance redress mechanisms…  lack of timely assistance for income restoration…  indebtedness and insufficient information and consultation.”


A Living Example of the Military-Industrial Complex


In today’s The Washington Post Marjorie Censer writes about the tension between demanders of tanks (the Army) and private suppliers of tanks. The army has moved on to other military technologies, but private industry is pushing to continue production of tanks.  Here are some key excerpts from the article.

The manufacturing of tanks — powerful but cumbersome — is no longer essential, the military says. In modern warfare, forces must deploy quickly and “project power over great distances.” Submarines and long-range bombers are needed. Weapons such as drones — nimble and tactical — are the future.

The Army is just one party to this decision. While the military sets its strategic priorities, it’s Congress that allocates money for any purchases. And the defense industry, which ultimately produces the weapons, seeks to influence both the military and Congress.

And here is a key quote which captures the real (economic) issue:

‘For every dollar the Pentagon spends on something we don’t need . . . it is a dollar we can’t spend on something we do need.’


Afghan Roads are Falling Apart


From today’s The Washington Post:

They are motorists who drove on the road network built by the U.S. government and other Western donors — a $4 billion project that was once a symbol of promise in post-Taliban Afghanistan but is now falling apart.

Western officials say the Afghan government is unable to maintain even a fraction of the roads and highways constructed since 2001, when the country had less than 50 miles of paved roads. The deterioration has hurt commerce and slowed military operations. In many places, the roads once deemed the hallmark of America’s development effort have turned into death traps, full of cars careening into massive bomb-blast craters or sliding off crumbling pavement.

Since 2012, the United States has refused to fund the Afghan government’s road maintenance projects because it has no faith in the country’s ability to perform even simple tasks, such as dispatching a contractor to fill in a pothole or repaving a stretch of highway.


Nina Munk Econtalk Podcast


Nina Munk joins Russ Roberts of EconTalk to discuss “Poverty, Development and the Idealist.”  Here is the summary from EconTalk website:

Nina Munk, journalist and author of The Idealist: Jeffrey Sachs and the Quest to End Poverty, talks with EconTalk host Russ Roberts about her book. Munk spent six years following Jeffrey Sachs and the evolution of the Millennium Villages Project–an attempt to jumpstart a set of African villages in hopes of discovering a new template for development. Munk details the great optimism at the beginning of the project and the discouraging results after six years of high levels of aid. Sach’s story is one of the great lessons in unintended consequences and the complexity of the development process.

You can access the podcast here.


Acemoglu and Robinson on Why Aid Fails


Writing in The Spectator, Daron Acemoglu and James Robinson explore why foreign aid has failed to have the desired effect of ending poverty.  They write:

One could imagine that many factors have kept sub-Saharan Africa poor — famines, civil wars. But huge aid flows appear to have done little to change the development trajectories of poor countries, particularly in Africa. Why? As we spell out in our book, this is not to do with a vicious circle of poverty, waiting to be broken by foreign money. Poverty is instead created by economic institutions that systematically block the incentives and opportunities of poor people to make things better for themselves, their neighbours and their country.

They go on to emphasize the importance of what they call “extractive institutions” for fostering and perpetuating poverty:

The key to understanding and solving the problem of world poverty is to recognise not just that poverty is created and sustained by extractive institutions — but to appreciate why the situation arises in he first place. Again, South Africa’s experience is instructive. Apartheid was set up by whites for the benefit of whites. This happened because it was the whites who monopolised political power, just as they did economic opportunities and resources. These monopolies impoverished blacks and created probably the world’s most unequal country — but the system did allow whites to become as prosperous as people in developed countries.

The logic of poverty is similar everywhere. To understand Syria’s enduring poverty, you could do worse than start with the richest man in Syria, Rami Makhlouf. He is the cousin of President Bashar al-Assad and controls a series of government-created monopolies. He is an example of what are known in Syria as ‘abna al-sulta’, ‘sons of power’.

Here is their conclusion:

Recognising that poor countries are poor because they have extractive institutions helps us understand how best to help them. It also casts a different light on the idea of foreign aid. We do not argue for its reduction. Even if a huge amount of aid is siphoned off by the powerful, the cash can still do a lot of good. It can put roofs on schools, lay roads or build wells. Giving money can feed the hungry, and help the sick — but it does not free people from the institutions that make them hungry and sick in the first place. It doesn’t free them from the system which saps their opportunities and incentives. When aid is given to governments that preside over extractive institutions, it can be at best irrelevant, at worst downright counter-productive. Aid to Angola, for example, is likely to help the president’s daughter rather than the average citizen.

Ultimately, I find their conclusion unsatisfying. They argue that aid shouldn’t be reduced because it can do some good. But how are we to weigh this good against the bad of perpetuating extractive institutions? Further, Acemoglu and Johnson argue that aid should be used “to help manufacture inclusion.” How exactly this is to be done remains an open, yet crucial, issue if we are to avoid doing bad by attempting to do good.


France’s Humanitarian Inteventions


Arguably, if France wants genuinely to establish itself as a leader in purely humanitarian interventions, it should do so anywhere but Africa, where the past weighs so heavily. But past tradition is constraining in other ways. For France, a medium-sized power with perennial economic woes and budget crises, effective intervention may be possible only in Africa. It is where France has experience, expertise, long-standing contacts (facilitated by the French language), and important overseas military bases. So for the foreseeable future, whatever the goals of a particular operation, France’s effective sphere of military action is likely to remain pretty much what it has been for the past 130 years: its former colonial empire (and a few states that border it). In that sense, the recent interventions by Hollande augur nothing new at all — aside, perhaps, from the status accorded to France’s military valor by Americans.

That is David Bell writing for Foreign Affairs on “The Paradox of France’s Humanitarian Interventions.” Bell discusses France’s recent role in the interventions in Libya, Mali, and the Central African Republic.


Google Joins the Military-Industrial Complex


At the Daily Caller Scott Cleland discusses how Google has positioned itself to be a major player in the military-industrial complex. He writes:

Google CEO Larry Page has rapidly positioned Google to become an indispensable U.S. military contractor.

Google recently purchased Boston Dynamics, a robotics pioneer that produces amazing humanoid robots for the U.S. Defense Department.

This development invites attention to Google’s broader military contracting ambitions — especially since Boston Dynamics is the eighth robotics company that Google has bought in the last six months.

In “The Overlooked Costs of the Permanent War Economy,” Tom Duncan and I discuss how the lure of profits from defense contracts redirects entrepreneurial efforts from the private sector into the defense sector.  Cleland’s piece illustrates this dynamic nicely.


Some Disheartening Updates from Iraq and Afghanistan


An article in today’s Washington Post indicates that:

A rejuvenated al-Qaeda-affiliated force asserted control over the western Iraqi city of Fallujah on Friday, raising its flag over government buildings and declaring an Islamic state in one of the most crucial areas that U.S. troops fought to pacify before withdrawing from Iraq two years ago.

Of course Fallujah was a center piece of the U.S. military occupation with multiple attempts to secure control of the city. Fallujah, and the Al Anbar province within which it is located, was the location of a significant number of deaths and injuries to U.S. (and coalition) troops.

The New York Times has an article discussing the worsening hunger crises in Afghanistan. Here is a key excerpt:

What is clear is that, despite years of Western involvement and billions of dollars in humanitarian aid to Afghanistan, children’s health is not only still a problem, but also worsening, and the doctors bearing the brunt of the crisis are worried.

The article points to a variety of causal factors for the worsening problems facing Afghan citizens.