Category: RCTs

When economists shut off your water

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Researcher Irene Nduta in Kayole-Soweto.

By Adrian Wilson, Faith Kasina, Irene Nduta and Jethron Ayumbah Akallah

In August 2020, people all over the development world   about water in Nairobi. There was a lot of anger, and some calls for sending people to the guillotine. The reason: the publication of  (RCT), run by two American development economists, working together with the World Bank. In order to compel property owners in Kayole-Soweto鈥攁 relatively poor neighborhood in eastern Nairobi鈥攖o pay their water bills, this experiment disconnected the water supply at randomly selected low-income rental properties.

There鈥檚 no doubt that water is a problem in Nairobi. As Elizabeth Wamuchiru , the water system in the city has a built-in spatial inequality inherited from the British colonial era. Visitors to the city can readily see the differences between the cool, leafy, green neighborhoods of Kilimani and Lavington鈥攕egregated white neighborhoods under colonialism, now home to rich Kenyans, foreigners, and NGOs鈥攁nd the gray and dusty tin-roof neighborhoods of Mathare, Kibera, Mukuru, and Kayole, home to the lower-income Kenyans excluded from Nairobi鈥檚 prosperity.

Today鈥檚 water system reflects this history of inequality. Nairobi鈥檚 water is harnessed from a combination of surface and groundwater sources; however, the city鈥檚 groundwater is naturally salty and . Piped water systems, provided to upper- and middle-income housing estates, do not exist in the vast bulk of the city鈥檚 poorer neighborhoods, where people must instead buy water from vendors鈥攐ften salty water pumped from boreholes, or siphoned off from city pipes through rickety connections that are frequently contaminated with sewage. In the richer neighborhoods, Nairobi Water Company, a public utility, sells relatively clean piped surface water for a fraction of the price paid by poorer Nairobians鈥攁 disparity that  to often be the case in other cities in the global South. , in poorer neighborhoods such as Kayole-Soweto, 鈥渨ater provision costs more, is less safe, and is less consistent than in other richer parts of the city.鈥�

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Neoclassical Economics and Urban Planning: A Contentious Theoretical and Policy Making Relationship

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Neoclassical economics 鈥� and contemporary extensions of it 鈥� has an outsized presence in academic and policy making circuits. This position of privilege builds upon more than a century of theoretical development, comprising the contemporary 鈥渕ainstream鈥� of economic science. The characteristics and rise of this mainstream, determined in many cases by means beyond pure intellectual merit, has been regularly documented in the existing scholarship.

Economic imperialism has been one of the results of mainstream dominance, and its academic impact on other social sciences has been widely documented, including their corresponding areas of policy making. In this regard, I present here an approach to the problematic relationship between Neoclassical Urban Economics and Urban Planning. These are two related social science disciplines, which however have very different epistemologies and approaches to policy advice.

The main difference between academic mainstream Economics and Urban Planning is methodological, in terms of what is considered a valid approach to scientific knowledge. Economics builds upon logical positivism; it first performs deductive theory construction that 鈥渄escribes鈥� reality, and then subsequently tests its theoretical predictions, which in some cases (not all the cases) lead to policy prescriptions. In contrast, Urban Planning is an action-oriented and problem-solving scientific discipline. It inductively produces normative theory, which explicitly shows the analyst鈥檚 point of view regarding the topic and how to intervene on it (public policy advice).

Mainstream Economics is in essence defined by the method and theoretical approach, not by the topic (the economy). This allows it to engage with a wide variety of topics, one of them being the spatial analysis of the built environment, which is also the topic of academic Urban Planning.

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On the perils of embedded experiments

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There is growing interest in 鈥榚mbedded experiments鈥�, conducted by researchers and policymakers as a team. Aside from their potential scale, the main attraction of these experiments is that they seem to facilitate speedy translation of research into policy. Discussing a case study from Bihar, Jean Dr猫ze argues that this approach carries a danger of distorting both policy and research. 

Evidence-based policy is the rage, to the extent that even village folk in Jharkhand (where I live) sometimes hold forth about the importance of 鈥�ebhidens鈥�, as they call it. No one, of course, would deny the value of bringing evidence to bear on public policy, as long as evidence is understood in a broad sense and does not become the sole arbiter of decision-making. However, sometimes evidence-based policy gets reduced to an odd method that consists of using randomised controlled trials (RCTs) to find out 鈥榳hat works鈥�, and then 鈥榮cale up鈥� whatever works. That makes short shrift of the long bridge that separates evidence from policy. Sound policy requires not only evidence 鈥� broadly understood 鈥� but also a good understanding of the issues, considered value judgements, and inclusive deliberation (, 2020a).

Enormous energy has been spent on the quest for rigorous evidence, much less on the integrity of the process that leads from evidence to policy. As illustrated in an earlier contribution to Ideas for India (), it is not uncommon for the scientific findings of an RCT to be embellished in the process. This follow-up post presents another case study that may help to convey the problem. It also illustrates a related danger 鈥� casual jumps from evidence to policy advice. The risk of a short-circuit is particularly serious in 鈥榚mbedded experiments鈥�, where the research team works 鈥榝rom within鈥� a partner government in direct collaboration with policymakers.

The case study pertains to an experiment conducted in Bihar in 2012-2013 and reported in Banerjee, Duflo, Imbert, Mathew and Pande (2020)1. This is a large-scale, influential experiment by some of the leading lights of the RCT movement 鈥� indeed, a formidable quartet of first-rate economists reinforced by one of India鈥檚 brightest civil servants, Santhosh Mathew. The high technical standards of the study are not in doubt, and nor is the integrity of the authors. And yet, I would argue that something is amiss in their accounts of the findings and policy implications of this study.

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Abolition Will Not Be Randomized

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叠测听 and听Casey Buchholz

In the wake of the current uprising in support of Black Lives Matter, there has been increasing interest in the use of mainstream empirical methods in economics — like randomized control trials (RCTs) and administrative data evaluation — to address issues of racism and violence in the institution of policing. These interests are well intentioned, but similar to prior debates, we are reminded that about the relevance of these approaches amidst a mass movement calling for deep structural and institutional change. In just two weeks, mass protests have sprung up across the U.S. and the world calling for the defunding, disbanding, and abolition of police as well as the dismantling of white supremacy. This moment has the potential to bring about an institutional and structural shift in our politics, society, and economy. Given this, we will echo many of the concerns shared by economists about the limits of some empirical methods, the biases embedded in administrative data, and the relevancy of these approaches to the current moment calling for immediate change.听Read More »

Misunderstanding the average impact of microcredit?

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Photo: . Microfinance center leaders tally the week’s loan payments in India.

By听and

A recent article on the 鈥�鈥� by Dr. Rachel Meager (LSE) has received much praise over the past few weeks. Meager deploys Bayesian hierarchical modelling to provide a new take on the argument in favour of a reformed system of microcredit. Her work builds on the data provided by six randomized control trials (RCTs) conducted by Abhijit Banerjee and colleagues (see ). Meager makes an attempt to exculpate the microcredit model from the awkward fact that its impact on the poor has been very much less than originally envisaged. She also claims to show that the critics have overstated the negative impact of microcredit. Microcredit should therefore continue to be a policy intervention, she goes on to say, but there need to be changes in the operating methodology for a more meaningful development impact to be possible in the future.

While seemingly a well-meaning attempt to explore the impact of microcredit, we were struck by the way that her overall argument appears to seriously misunderstand, and it definitely misrepresents, the existing research on microcredit as a development instrument. Read More »

Why positive thinking won鈥檛 get you out of poverty

Farwa Sial11 Comments

attitude-be-positive-draw-262532.jpgBy Farwa Sial and Carolina Alves

In a recent听, the development economist Seema Jayachandran discusses three studies that used听Randomised Controlled Trials (or RCTs) to understand听the benefits of enhancing the self-worth of poor people. Despite wide differences in context, all the cases explore the viability of 鈥榤odest interventions鈥� to 鈥榠nstill hope鈥� in marginalised communities, concluding that 鈥榬emarkable improvements鈥� in the quest for poverty reduction are possible.

听from Uganda, for example, argues that 鈥渁 role model can have significant effects on students鈥� educational attainment,鈥� so the suggestion for policy-makers might be 鈥渢o place more emphasis on motivation and inspiration through example.鈥�听Another听听argues that 鈥減sychological barriers impede such disadvantaged groups from breaking the vicious circle and achieving better outcomes in life,鈥� so small but effective changes that address these psychological constraints can alleviate the effects of poverty and social exclusion.

The underlying theme of these studies is that individuals can surmount the structural challenges of poverty through their own efforts using tools like 鈥榚ffective role models,鈥� the generation of 鈥榤ore hope,鈥� and the 鈥榠mprovement of their mental health.鈥� Positive psychology of this kind and an emphasis on behavior change to meet the goals of individuals have been around at least since the 1950s, first in the popular literature of self-help books and now in academia, where they form part of an increasingly fashionable trend to 鈥榙o poverty reduction differently.鈥�Read More »

Poor Behavior, Good Behavioral Policies? Double Standards for the North and South

Svenja Flechtner2 Comments

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Behavioral approaches to development economics and policy have gained momentum in recent years. A growing number of papers studying behavior of people in poor countries have been published in top journals, accompanied by the rise of randomized controlled trials (RCTs). In 2015, the was dedicated to behavioral and cognitive research and policy. Papers studying how to or have become classics in the field. Lots of hope has been placed into social experiments and behavioral policies .

Behavioral policies are of course not reserved for policy-making in poor countries. In fact, nudges became famous with a . Many behavioral instruments have been discussed and tested in and for rich countries. But there has been an important difference as compared to the debates in development economics: when debating behavioral policies in rich countries, scholars have also devoted lots of time to consider normative and ethical concerns. For example, following Thaler and Sunstein鈥檚 exposition of (see also ), a debate unfolded on whether nudges could be anti-libertarian (, , , or ). Implications of the use of nudges as a new form of government policy have been analyzed, for example, from a , or with a focus on . have been written about . The debate has reached a great level of differentiation, e.g. when authors argue that so-called (these are nudges that seek to stimulate voluntary cooperation in social dilemma situations) may be justified for different reasons than those targeting individual welfare. Overall, the debate has become really sophisticated, and the autonomy, welfare, and dignity of citizens in rich countries as well as consequences of the use of behavioral policies for these countries鈥� modes of government have received lots of careful scrutiny (recently again ).Read More »