Growth and the case against randomista development

Authors: John Halstead, Hauke Hillebrandt

Opinions are ours, not those of our em­ploy­ers.

Summary

Ran­domista de­vel­op­ment (RD) is a form of de­vel­op­ment eco­nomics which eval­u­ates and pro­motes in­ter­ven­tions that can be tested by ran­domised con­trol­led tri­als (RCTs). It is ex­em­plified by GiveWell (which pri­mar­ily works in health) and the ran­domista move­ment in eco­nomics (which pri­mar­ily works in eco­nomic de­vel­op­ment).

Here we ar­gue for the fol­low­ing claims, which we be­lieve to be quite weak:

  1. Promi­nent economists make plau­si­ble ar­gu­ments which sug­gest that re­search on and ad­vo­cacy for eco­nomic growth in low- and mid­dle-in­come coun­tries is more cost-effec­tive than the things funded by pro­po­nents of ran­domista de­vel­op­ment.

  2. Effec­tive al­tru­ists have de­voted too lit­tle at­ten­tion to these ar­gu­ments.

  3. Assess­ing the sound­ness of these ar­gu­ments should be a key fo­cus for cur­rent gen­er­a­tion-fo­cused effec­tive al­tru­ists over the next few years.

We hope to start a con­ver­sa­tion on these ques­tions, and po­ten­tially to cause a ma­jor re­ori­en­ta­tion within EA.

We also be­lieve the fol­low­ing stronger claims:

4. Im­prov­ing health is not the best way to in­crease growth.

5. A ~4 per­son-year re­search effort will find dona­tion op­por­tu­ni­ties work­ing on eco­nomic growth in LMICs which are sub­stan­tially bet­ter than GiveWell’s top char­i­ties from a cur­rent gen­er­a­tion hu­man welfare-fo­cused point of view.

How­ever, eco­nomic growth is not all that mat­ters. GDP misses many cru­cial de­ter­mi­nants of hu­man welfare, in­clud­ing leisure time, in­equal­ity, fore­gone con­sump­tion from in­vest­ment, pub­lic goods, so­cial con­nec­tion, life ex­pec­tancy, and so on. A top pri­or­ity for effec­tive al­tru­ists should be to as­sess the best way to in­crease hu­man welfare out­side of the con­straints of ran­domista de­vel­op­ment, i.e. al­low­ing in­ter­ven­tion that have not or can­not be tested by RCTs.

We pro­ceed as fol­lows:

  1. We define ran­domista de­vel­op­ment and con­trast it with re­search and ad­vo­cacy for growth-friendly poli­cies in low- and mid­dle-in­come coun­tries.

  2. We show that ran­domista de­vel­op­ment is over­rep­re­sented in EA, and that, in con­tradis­tinc­tion, re­search on and ad­vo­cacy for growth-friendly eco­nomic policy (we re­fer to this as growth through­out) is underrepresented

  3. We then show why some promi­nent economists be­lieve that, a pri­ori, growth is much more effec­tive than most RD in­ter­ven­tions.

  4. We pre­sent a quan­ti­ta­tive model that tries to for­mal­ize these in­tu­itions and al­lows us to com­pare global de­vel­op­ment in­ter­ven­tions with eco­nomic growth in­ter­ven­tions. The model sug­gests that un­der plau­si­ble as­sump­tions a hy­po­thet­i­cal growth in­ter­ven­tion can be thou­sands of times more cost-effec­tive than typ­i­cal RD in­ter­ven­tions such as cash-trans­fers. How­ever, when these as­sump­tions are re­laxed and com­pared to the very good RD in­ter­ven­tions, growth in­ter­ven­tions are on a similar level of effec­tive­ness as RD in­ter­ven­tions.

  5. We con­sider var­i­ous pos­si­ble ob­jec­tions and qual­ifi­ca­tions to our ar­gu­ment.

Acknowledgements

Thanks to Ste­fan Schu­bert, Stephen Clare, Greg Lewis, Michael Wiebe, Sjir Hoeij­mak­ers, Jo­hannes Ackva, Gre­gory Th­waites, Will MacAskill, Ai­dan Goth, Sasha Cooper, and Carl Shul­man for com­ments. Any mis­takes are our own.

Marinella Capriati at GiveWell com­mented on this piece, and the piece does not rep­re­sent her views or those of GiveWell.

1. Defin­ing Ran­domista Development

We define ran­domista de­vel­op­ment (RD) as an ap­proach to de­vel­op­ment eco­nomics which in­ves­ti­gates, eval­u­ates and recom­mends only in­ter­ven­tions which can be tested by ran­domised con­trol­led tri­als (RCTs).

RD can take low-risk or more “hits-based” forms. Effec­tive al­tru­ists have es­pe­cially fo­cused on the low-risk form of RD: speci­fi­cally, di­rectly fund­ing in­ter­ven­tions that have been tested by RCTs, such as malaria bed­net dis­tri­bu­tions and cash trans­fers. How­ever, even within di­rect fund­ing of such pro­grammes, there is sig­nifi­cant vari­a­tion in the prob­a­bil­ity of suc­cess. For ex­am­ple, GiveWell thinks that de­worm­ing is a high risk/​high-re­ward bet with a sig­nifi­cant chance of hav­ing small effect but some chance of hav­ing a large effect. Other GiveWell recom­mended pro­grammes offer a much more cer­tain prob­a­bil­ity of im­pact.

More clearly hits-based forms of RD are pos­si­ble. GiveWell has done var­i­ous forms of more hits-based giv­ing, in­clud­ing for ex­am­ple its sup­port for the Cen­ter for Suicide Preven­tion, which ad­vo­cates for policy change at the na­tional level in In­dia and Nepal. Co-Im­pact, a col­lab­o­ra­tive philan­thropy group, is ad­vo­cat­ing for na­tional scale-up of the RCT-sup­ported ed­u­ca­tion pro­gramme Teach­ing at the Right Level across Africa. By this defi­ni­tion, RD also in­cludes ad­vo­cacy and scale-up of sci­en­tific re­search that can be tested by RCTs, such as mosquito gene drives, re­search­ing vac­cines or an­tibiotics, or the agri­cul­tural re­search that led to the Green Revolu­tion.[1]

2. Ran­domista de­vel­op­ment is pop­u­lar in EA

Global poverty re­mains a pop­u­lar cause area among peo­ple in­ter­ested in EA.[2] EA has es­pe­cially fo­cused on di­rectly fund­ing RCT-backed in­ter­ven­tions. GiveWell moved $161m to RCT-backed char­i­ties in 2018.[3] The Effec­tive Altru­ism Global Health and Devel­op­ment Fund has dis­bursed most of its funds to char­i­ties that di­rectly im­ple­ment RCT-backed in­ter­ven­tions.

Re­cently, GiveWell an­nounced that they will ex­pand their re­search be­yond RD to in­clude difficult-to-eval­u­ate in­ter­ven­tions. This could in­clude eco­nomic growth, though their ini­tial fo­cus is on im­prov­ing health policy. Nonethe­less, as things stand at the mo­ment, most of the EA money in global de­vel­op­ment fo­cuses on di­rectly fund­ing in­ter­ven­tions that can be tested by RCTs. Al­most all EAs in­ter­ested in global de­vel­op­ment we have met at events like EAG seem fo­cused on di­rectly fund­ing, or work­ing for, or­gani­sa­tions im­ple­ment­ing in­ter­ven­tions that can be tested by RCTs.

We too used to sup­port di­rect fund­ing of in­ter­ven­tions that can be tested by RCTs, but now be­lieve it is sub­op­ti­mal. We will ar­gue that re­search and ad­vo­cacy for growth-friendly eco­nomic poli­cies can of­ten be or­ders of mag­ni­tude more cost-effec­tive than di­rect fund­ing of ev­i­dence-based in­ter­ven­tions. The case against hits-based RD is less clear and we leave that to fu­ture work.

The ideas here rely heav­ily on work by Lant Pritch­ett of the Bla­vat­nik School of Govern­ment in Oxford.[4] How­ever, within eco­nomics there is con­sid­er­able sup­port for similar views (see Ap­pendix 1).

3. The case for eco­nomic growth and against ran­domista development

In this sec­tion, we set out three ar­gu­ments for the propo­si­tion that re­search and ad­vo­cacy for growth is more cost-effec­tive than di­rectly fund­ing in­ter­ven­tions tested by RCTs. How­ever, since eco­nomic growth is not all that mat­ters, this does not nec­es­sar­ily mean that ad­vo­cacy for growth is the best way to in­crease hu­man welfare. To re­it­er­ate: we fo­cus on eco­nomic growth here, and aim to show that re­search and ad­vo­cacy for growth is bet­ter than ran­domista de­vel­op­ment. How­ever, there may be other ways to cost-effec­tively in­crease hu­man welfare out­side of the con­straints of RD (e.g. through de­creas­ing in­equal­ity or im­prov­ing the pro­vi­sion of pub­lic goods that are not prop­erly re­flected in GDP).

3.1. Eco­nomic growth ex­plains a sub­stan­tial frac­tion of the var­i­ance in hu­man welfare today

In this sec­tion, we dis­cuss the re­la­tion­ship be­tween in­come per head and differ­ent ob­jec­tive and sub­jec­tive mea­sures of welfare.

In­come per head and broad mea­sures of welfare

To­day, there is sig­nifi­cant vari­a­tion in in­come per head across the world:

If mar­kets func­tion rea­son­ably well and peo­ple are broadly ra­tio­nal, then richer peo­ple will buy more goods which have a sub­stan­tial pri­vate good el­e­ment,[5] such as:

  • Food

  • Transport

  • Shelter

  • Lighting

  • Electricity

  • Education

  • Healthcare

There­fore, we have strong rea­sons to think that these large cross-na­tional differ­ences in in­come per head cause large differ­ences in hu­man welfare due to differ­en­tial con­sump­tion of pri­vate goods.

This does not mean that GDP is all that mat­ters. The met­ric of GDP per cap­ita misses some cru­cial con­trib­u­tors to hu­man welfare, in­clud­ing:

  • Public goods: In­creas­ing in­come per head re­li­ably in­creases con­sump­tion of pri­vate goods. How­ever, it might not nec­es­sar­ily in­crease pub­lic goods, such as pub­lic health in­ter­ven­tions, clean air, pub­lic safety, elec­tric­ity grids, san­i­ta­tion, and so on.

  • Con­sump­tion: High lev­els of in­vest­ment in­crease GDP but also con­sti­tute fore­gone con­sump­tion, which in­volves a loss of welfare that is not re­flected in GDP.

  • Leisure: High hours worked per cap­ita de­liver higher GDP but also con­sti­tute fore­gone leisure time, which in­volves a loss of welfare that is not re­flected in GDP

  • Inequal­ity: In­di­vi­d­u­als get diminish­ing marginal util­ity from in­come, so in­come gains to the bet­ter-off should be val­ued less than in­come gains to the worse-off. Thus, hold­ing in­come per cap­ita and ev­ery­thing else equal, so­cieties with a more equal in­come dis­tri­bu­tion must have greater welfare per per­son. In ad­di­tion, in­come and other re­sources might be po­si­tional goods—per­ceiv­ing oth­ers to be richer might be an­other mechanism by which in­equal­ity might lead to lower over­all welfare. This is a differ­ence in welfare that is not cap­tured by GDP.

  • So­cial con­nec­tion: So­cial con­nec­tion is not rep­re­sented in GDP statis­tics but is a ma­jor de­ter­mi­nant of hu­man welfare.

  • Health: A coun­try can have higher in­come per head than an­other, but the lives of its cit­i­zens could be worse if they die ear­lier or suffer greater mor­bidity.

It is there­fore in­ter­est­ing to ex­plore how well GDP per cap­ita cor­re­lates with more holis­tic mea­sures of welfare that try to ac­count for these other de­ter­mi­nants. There have been nu­mer­ous at­tempts to build a more holis­tic mea­sure of welfare than GDP per cap­ita. In a 2016 pa­per, Jones and Klenow used mea­sures of con­sump­tion, leisure, in­equal­ity, and mor­tal­ity, to cre­ate a con­sump­tion-equiv­a­lent welfare mea­sure that al­lows com­par­i­sons across time for a given coun­try, as well as across coun­tries.[6]

This mea­sure of hu­man welfare sug­gests that the true level of welfare of some coun­tries differs markedly from the level that might be sug­gested by their GDP per cap­ita. For ex­am­ple, France’s GDP per cap­ita is around 60% of US GDP per cap­ita.[7] How­ever, France has lower in­equal­ity, lower mor­tal­ity, and more leisure time than the US. Thus, on the Jones and Klenow mea­sure of welfare, France’s welfare per per­son is 92% of US welfare per per­son.[8]

Although GDP per cap­ita is dis­tinct from this ex­panded welfare met­ric, the cor­re­la­tion be­tween GDP per cap­ita and this ex­panded welfare met­ric is very strong at 0.96, though there is sub­stan­tial vari­a­tion across coun­tries, and welfare is more dis­persed (stan­dard de­vi­a­tion of 1.51 in logs) than is in­come (stan­dard de­vi­a­tion of 1.27 in logs).[9]

GDP per cap­ita is also very strongly cor­re­lated with the Hu­man Devel­op­ment In­dex, an­other ex­panded welfare met­ric.[10] If mea­sures such as these are ac­cu­rate, this shows that in­come per head ex­plains most of the ob­served cross-na­tional vari­a­tion in welfare. It is a dis­tinct ques­tion whether eco­nomic growth ex­plains most of the ob­served vari­a­tion across in­di­vi­d­u­als in welfare. It is, how­ever, clear that it ex­plains a sub­stan­tial frac­tion of the vari­a­tion across in­di­vi­d­u­als.

This sug­gests that: tak­ing this ex­pan­sive ac­count of hu­man welfare, only so much can be achieved for a coun­try hold­ing its in­come per head at a low level. For in­stance, un­less a coun­try’s in­come per per­son is at least a quar­ter that of the US, then, em­piri­cally, its welfare per per­son can also not be more than a sixth that of the US.

Cru­cially, on the Jones and Klenow welfare met­ric, most de­vel­op­ing coun­tries are sub­stan­tially poorer than in­comes sug­gest be­cause of a com­bi­na­tion of shorter lives and ex­treme in­equal­ity. Lower life ex­pec­tancy re­duces welfare by 15 to 50 per­cent in the de­vel­op­ing coun­tries Jones and Klenow ex­am­ine, which im­plies that global welfare in­equal­ity is greater than global in­come in­equal­ity.[11] There­fore, en­sur­ing evenly shared growth and im­proved health is also im­por­tant for hu­man welfare. We do not in­ves­ti­gate the best way to do that here, though we think that these goals are best ad­vanced out­side of the con­straints of di­rectly fund­ing RCT-backed in­ter­ven­tions.

We will now look in more de­tail at the re­la­tion­ship be­tween in­come per head and some other in­di­ca­tors of hu­man welfare.

Life expectancy

GDP per cap­ita and life ex­pec­tancy are cor­re­lated:

As this chart shows, the life ex­pec­tancy as­so­ci­ated with a given level of real in­come is ris­ing over time. If eco­nomic de­vel­op­ment were the only de­ter­mi­nant of health, coun­tries that get richer would just move along the same curve. Since this is not the case, we can con­clude that eco­nomic de­vel­op­ment can­not be the sole de­ter­mi­nant of health: highly effi­cient pub­lic health in­ter­ven­tions also play a ma­jor role. 60 years of pub­lic health im­prove­ments since 1950 in­crease cross-na­tional life ex­pec­tancy on av­er­age by around 8 years.

Nonethe­less, the graph above shows that GDP per cap­ita ex­plains a sig­nifi­cant frac­tion of the vari­a­tion in life ex­pec­tancy across coun­tries. 60 years of sus­tained growth could shift a coun­try from in­come per head of $1,000 to $32,500.[12] To­day, this would be cor­re­lated with, though would not nec­es­sar­ily wholly cause, an in­crease in life ex­pec­tancy by more than 20 years, on av­er­age. To­day, al­most no coun­tries with in­come per head above $10,000 have life ex­pec­tancy be­low 70 years. Most coun­tries with in­come be­low $5,000 per head have life ex­pec­tancy be­low 70 years, and a sig­nifi­cant frac­tion have life ex­pec­tancy be­low 60.

Life satisfaction

GDP per cap­ita is also cor­re­lated with self-re­ported life satis­fac­tion:

Once GDP per cap­ita is above $20,000, no coun­tries have av­er­age life satis­fac­tion scores be­low 5; once it is be­low $3,000, al­most no coun­tries have self-re­ported life satis­fac­tion scores above 5. The chart be­low shows the strength of the re­la­tion­ship more clearly as it does not put in­come on a log­a­r­ith­mic scale:

Source: 80,000 Hours

This shows the value of eco­nomic de­vel­op­ment for life satis­fac­tion in low-in­come coun­tries (as well as the limited benefits for rich coun­tries).

Poverty

GDP per cap­ita is very strongly as­so­ci­ated with poverty re­duc­tion, on stan­dard low-bar poverty thresh­olds. In­creas­ing me­dian in­come above a cer­tain level is em­piri­cally suffi­cient to elimi­nate $1.90 a day poverty. Above a me­dian in­come of $5,000, no coun­try has low-bar poverty above 2.5%:

In­creas­ing me­dian per cap­ita in­come above a cer­tain level is also em­piri­cally nec­es­sary to elimi­nate poverty. No coun­try (but one) has pushed $5.50/​day poverty be­low 10 per­cent with­out in­creas­ing me­dian in­come above $3,535.[13]


GDP and other in­di­ca­tors of welfare

There is also a strong cor­re­la­tion be­tween GDP per cap­ita and other in­di­ca­tors of welfare such as:

Eco­nomic growth as a driver of progress and the limi­ta­tions of RD

The fore­go­ing ar­gu­ments show that GDP per cap­ita is strongly cor­re­lated with many ob­jec­tive and sub­jec­tive mea­sures of welfare. Thus, em­piri­cal ev­i­dence shows that only so much can be achieved for a coun­try at a low level of in­come per head. If a coun­try has an in­come per head be­low $5,000, it is very likely to do poorly on most ob­jec­tive and sub­jec­tive mea­sures of welfare. If a coun­try’s in­come per head is above $20,000, it is very likely to do well on most ob­jec­tive and sub­jec­tive mea­sures of welfare.

As dis­cussed above, there are also good rea­sons to be­lieve that in­creased GDP per cap­ita causes many of these in­creases in welfare. This sug­gests that when we are work­ing out how to in­crease hu­man welfare to the great­est ex­tent pos­si­ble, then we should start by figur­ing out how best to in­crease GDP per cap­ita. How­ever, to our knowl­edge, EAs have not pub­li­cly pub­lished any in­ves­ti­ga­tions of this ques­tion.

More­over, the vast ma­jor­ity of pro­po­nents of RD do not tackle the ques­tion of whether the in­ter­ven­tions they as­sess in­crease eco­nomic growth. In­stead, RD is over­whelm­ingly fo­cused on eval­u­at­ing the suc­cess of pro­gram­matic at­tempts to solve a prob­lem in a spe­cific tar­get pop­u­la­tion, such as de­pres­sion, ed­u­ca­tional at­tain­ment, in­testi­nal worms or malaria. This does not mean that the things as­sessed by RD do not in­crease eco­nomic growth at all: in­deed some RD health in­ter­ven­tions in­crease earn­ings and con­sump­tion later in life, and thus do in­crease growth to an ex­tent. How­ever, eval­u­at­ing whether the effect size is triv­ial or not should be a top pri­or­ity for pro­po­nents of RD. (Hauke dis­cusses the re­la­tion­ship be­tween health and growth in Ap­pendix 3.4)

In­de­pen­dently of this, we do not be­lieve that the vast ma­jor­ity of RD in­ter­ven­tions are plau­si­bly among the top 100 ways to in­crease growth. For ex­am­ple, it is im­plau­si­ble that di­rect fund­ing of the fol­low­ing in­ter­ven­tions is the best way to in­crease GDP per cap­ita:[14]

  • Malaria bednets

  • Deworming

  • HIV education

  • Mo­bile phone re­minders for vaccinations

  • Im­proved cookstoves

  • Cash transfers

  • Etc.

The rea­son these things are un­likely to be the best way to in­crease growth is that they play no role in the causal story of the huge differ­ences in GDP per cap­ita across space and time. To illus­trate:

  • It is not the case that Dan­ish peo­ple are bet­ter off than Ugan­dans be­cause they have im­ple­mented di­rect pro­gram­matic efforts of this kind to a greater ex­tent.

  • It is not the case that Dan­ish peo­ple to­day are bet­ter off than Dan­ish peo­ple 100 years ago be­cause they im­ple­mented this type of in­ter­ven­tion.

  • When look­ing at the huge hu­man welfare gains in China, In­done­sia, Viet­nam, Sin­ga­pore, South Korea and Hong Kong in the sec­ond half of the 20th cen­tury, no-one ar­gues that this was be­cause they en­gaged in more in­ter­ven­tions of this type.

The role of di­rect pro­gram­matic as­sis­tance in ex­plain­ing the var­i­ance in eco­nomic out­comes is mir­rored in sur­veys of peo­ple who have moved out of poverty. The role of di­rect NGO pro­gram­matic as­sis­tance is as small as we would ex­pect, given the above. In a sur­vey of 4,000 peo­ple across three states in In­dia, 3 named “NGO as­sis­tance” (only slightly ahead of one per­son each nam­ing “ille­gal ac­tivity” and “win­ning the lot­tery”).


Source: Pritch­ett, ‘Alle­vi­at­ing Global Poverty: La­bor Mo­bil­ity, Direct As­sis­tance, and Eco­nomic Growth’, Cen­ter for Global Devel­op­ment, page 8.

It is true that there might be bi­ases at play here that may cause un­der-re­port­ing of NGO as­sis­tance as a cause of es­cape from poverty. Firstly, peo­ple may nat­u­rally want to at­tribute their suc­cess to their own hard work, even if NGOs did play a role. Se­condly, the im­pact of some NGOs may be difficult to see, even for benefi­cia­ries. For ex­am­ple, most peo­ple may not be able to no­tice the sub­stan­tial effect of salt iodi­s­a­tion or the Green Revolu­tion on their lives be­cause such work is largely in­visi­ble to them. Nonethe­less, this sur­vey does sug­gest that di­rect fund­ing of RCT-backed in­ter­ven­tions have played a very small role in es­cape from poverty.

More­over, and more con­tro­ver­sially, we do not be­lieve that health in­ter­ven­tions (whether di­rectly funded or im­ple­mented by the state) are the best way to in­crease growth in the poor­est coun­tries.[15] Here, we want to start a dis­cus­sion on what the most effec­tive causes of growth are, given its huge im­por­tance.

Over­all, it would be very sur­pris­ing if di­rectly fund­ing RD in­ter­ven­tions turned out to be the best way to in­crease growth (es­pe­cially given that they were not recom­mended on that ba­sis in the first place). Given the strength of the cor­re­la­tion be­tween growth and welfare, this should lead us to ques­tion whether RD is the best way to in­crease welfare.

What does ex­plain cross-na­tional differ­ences in GDP per cap­ita?

Thus, many RCT-backed in­ter­ven­tions do not seem to ex­plain much of the cross-na­tional vari­a­tion in GDP per cap­ita. What does? There are a range of fac­tors in­clud­ing:

  • Growth-friendly policies

  • Geography

  • Nat­u­ral resources

  • Hu­man capital

  • Culture

Within growth-friendly poli­cies gen­er­ally, some hits-based forms of RD may be promis­ing. For ex­am­ple, the Green Revolu­tion was a form of ran­domista de­vel­op­ment, and scale-up of that agri­cul­tural tech­nol­ogy has saved the lives of hun­dreds of mil­lions of peo­ple. There is also a cor­re­la­tion be­tween ed­u­ca­tional perfor­mance and GDP per cap­ita.[16] Thus, it is pos­si­ble that scal­ing up RCT-backed ed­u­ca­tional in­ter­ven­tions would in­crease GDP per cap­ita. Assess­ing whether this and other RD in­ter­ven­tions would be the most cost-effec­tive way to in­crease GDP per cap­ita should be a top pri­or­ity for effec­tive al­tru­ists.

How­ever, many of the most promis­ing growth-friendly poli­cies are eco­nomic poli­cies that can­not be tested by RCTs (though their im­pact is not out­side the realm of em­piri­cal in­ves­ti­ga­tion, see Ap­pendix 2.2). Th­ese would in­clude things like:

  • In­fras­truc­ture spending

  • Eco­nomic liber­al­i­sa­tion (Hong Kong, China)

  • Trade liber­al­i­sa­tion (In­dia)

  • Ex­port-led de­vel­op­ment and state pro­tec­tion of in­dus­try (South Korea, China)

As Pritch­ett writes:

“… [Devel­op­ment] is fun­da­men­tally a pro­cess of so­cial trans­for­ma­tion—mar­kets (and their sup­port­ing in­sti­tu­tions and or­ga­ni­za­tions (e.g. firms)) are so­cial mechanisms that struc­ture how peo­ple co­op­er­ate, gov­ern­ments (and their sup­port­ing in­sti­tu­tions (e.g. agen­cies)) are so­cial mechanisms. This so­cial pro­cess of na­tional de­vel­op­ment re­li­ably pro­duces higher hu­man well-be­ing in ev­ery di­men­sion. How­ever, no one can re­li­ably and rigor­ously demon­strate ex­actly which ac­tions best pro­mote de­vel­op­ment (as, al­most cer­tainly they are con­tex­tual and com­plex) and cer­tainly no one can re­li­ably at­tribute de­vel­op­ment to spe­cific or­ga­ni­za­tions (and do­ing so may, in and of it­self, cause less effec­tive­ness).”[17]

This should lead us to be scep­ti­cal about RD. Growth is ar­guably the ma­jor driver of hu­man progress, but pro­po­nents of RD rarely ar­gue that the in­ter­ven­tions that they recom­mend do in­crease growth.

Ex­cur­sus on kinky poverty lines

RD might look like a plau­si­bly effec­tive way to re­duce poverty, be­cause of ‘kinky poverty lines’[18] — which define “ex­treme poverty” as liv­ing on less than $1.90 per day, and then do not mea­sure progress above that level. On this poverty line, di­rectly fund­ing RCT-backed aid could ‘pull peo­ple out of poverty’. Globally, around $180bn is spent on aid per year—roughly $500 mil­lion per day. There are 500 mil­lion peo­ple who are ex­tremely poor. As­sum­ing that all the ex­treme poor have $1 per day already, we could erad­i­cate ex­treme poverty through cash trans­fers.

But this would raise their in­come by around $1 per day. And some­one on $2 per day is still very poor even if they are above the kinky $1.90 thresh­old. In­deed, this poverty line is dis­crim­i­na­tory and would never be used for cit­i­zens in a high-in­come coun­try: in the US, the poverty line is $17 per day.[19] There is no rea­son that such thresh­olds should not ap­ply to peo­ple out­side high-in­come coun­tries. On this more ex­pan­sive defi­ni­tion of poverty, it is very difficult for di­rect fund­ing of pro­gram­matic aid to lift peo­ple out of poverty.

In­deed, me­dian in­come, rather than di­rect anti-poverty pro­grammes at a given level of in­come, pre­dicts nearly all of the ob­served vari­a­tion in poverty, at any poverty line:

Source: Pritch­ett, ‘Ran­dom­iz­ing de­vel­op­ment: Method or mad­ness?’ (2019)

Direct anti-poverty pro­grammes usu­ally favoured by pro­po­nents of RD, such as cash trans­fers, microfi­nance, or the grad­u­a­tion ap­proach, aim to raise the in­come of the poor at a given level of na­tional me­dian in­come. How­ever, differ­ences across the coun­try/​years in the im­pact of these tar­geted poverty pro­grammes con­di­tional on the me­dian ac­count for at the very most 1.2 per­cent of the to­tal cross-na­tional vari­a­tion in poverty rates.[20] This sug­gests that iden­ti­fy­ing the best di­rect anti-poverty pro­grammes cur­rently be­ing im­ple­mented and scal­ing them up can at most have very limited low-bar poverty re­duc­tion benefits, un­less these can be shown to in­crease na­tional me­dian in­come per head. There is no rea­son to think that many cur­rent RD pro­grammes, such as cash trans­fers or the grad­u­a­tion ap­proach, in­crease na­tional me­dian in­come.

(This is not to say that de­creas­ing in­equal­ity is not im­por­tant: as we saw above, in­equal­ity can have large effects on a coun­try’s welfare per per­son.)

3.2. The suc­cess of the de­vel­op­ment era

The story of hu­man welfare is well illus­trated by this graph:

Un­til 1800, av­er­age hu­man welfare was stag­nant, but af­ter the In­dus­trial Revolu­tion, liv­ing stan­dards ex­ploded. This pre­ceded most de­vel­op­ment eco­nomics. How­ever, the end of the Se­cond World War marked the start of what Pritch­ett calls the ‘de­vel­op­ment era’ with:

  • The end of colon­i­sa­tion with the liber­a­tion of In­dia, Pak­istan and Indonesia

  • The found­ing of the Bret­ton Woods in­sti­tu­tions—the IMF and the World Bank

  • Tru­man’s Four Point plan to provide tech­ni­cal as­sis­tance to de­vel­op­ing countries

  • Over­all a con­certed effort by economists and sovereign states to in­crease de­vel­op­ment[21]

The de­vel­op­ment era was a huge suc­cess: since 1950, hu­man welfare has im­proved on all ob­jec­tive mea­sures by more than all prior hu­man his­tory com­bined.[22] On the chart be­low, coun­tries can move ver­ti­cally up from the di­ag­o­nal line (mean­ing that they had pos­i­tive growth), or ver­ti­cally down from the di­ag­o­nal line (mean­ing that they had nega­tive growth).

It is im­por­tant to note that the de­vel­op­ment era was not all plain sailing and that there have been some ma­jor growth de­cel­er­a­tions, as we dis­cuss be­low. Nev­er­the­less, the net effect of the era has been over­whelm­ingly pos­i­tive.

If things are go­ing so well, why would we start work­ing on a com­pletely differ­ent form of de­vel­op­ment eco­nomics? It seems like the best course would be to broaden and ac­cel­er­ate this pro­cess globally, and repli­cate pre­vi­ous suc­cesses. More­over, the failures that do ex­ist seem to make the case for im­prov­ing our knowl­edge of growth and the like­li­hood of policy suc­cess. (We dis­cuss this in more de­tail be­low).

RD has moved in an en­tirely differ­ent di­rec­tion. In­stead of repli­cat­ing this suc­cess, it asks: among in­ter­ven­tions that we can test with RCTs, what is most im­pact­ful? In the wake of the pe­riod with by far the great­est progress in hu­man welfare of all time, this change in strat­egy is difficult to jus­tify.

As a way to guide the com­par­i­son with RD, it is in­ter­est­ing to com­pare this progress with the es­ti­mated effect of de­worm­ing. Of GiveWell’s top char­i­ties, De­worm the World is es­ti­mated to offer the most cost-effec­tive way to im­prove eco­nomic out­comes for the very poor. But given the story above, it would be very sur­pris­ing if this was the case: differ­ences in rates of de­worm­ing ex­plain a minis­cule frac­tion of the vari­a­tion in in­di­vi­d­ual eco­nomic out­comes across the world. No-one ar­gues that de­worm­ing is among the top 1000 causes of the huge eco­nomic trans­for­ma­tion doc­u­mented above.

More­over, given that GiveWell es­ti­mates that de­worm­ing has similar im­pact on welfare (broadly con­ceived) to their other top char­i­ties, this should lead us to ques­tion whether their other top char­i­ties are the best way to in­crease hu­man welfare, broadly con­ceived.

4. Cost-effec­tive­ness anal­y­sis: RD vs. Growth

Though growth is a ma­jor de­ter­mi­nant of hu­man welfare to­day, it does not fol­low that re­search and ad­vo­cacy for growth and na­tional de­vel­op­ment are more cost-effec­tive than RD in­ter­ven­tions. While the pay­off might be large, the prob­a­bil­ity of in­fluenc­ing policy, or the prob­a­bil­ity that you know bet­ter than poli­cy­mak­ers, might be low enough to make the ex­pected value of such work lower than RD.

Pritch­ett has a con­vinc­ing re­sponse to this ar­gu­ment. He com­pares a pop­u­lar form of RD, the Grad­u­a­tion ap­proach, with re­search on and ad­vo­cacy for growth.

The Grad­u­a­tion Approach

The Ul­tra Poor Grad­u­a­tion pro­gram gets peo­ple out of ex­treme poverty via liveli­hood train­ing, pro­duc­tive as­set trans­fers, con­sump­tion sup­port, sav­ings plans, and health­care. It is one of the most well-tested and im­pact­ful di­rect anti-poverty pro­grams. (Founders Pledge re­search sug­gests that Band­han, a char­ity car­ry­ing out the Grad­u­a­tion ap­proach, is 5x a cost-effec­tive as cash. GiveWell es­ti­mates that Malaria Con­sor­tium is 15.8 times as cost-effec­tive as cash. Thus, it seems fair to roughly as­sume that Malaria Con­sor­tium is around 3 times more cost-effec­tive than the Grad­u­a­tion ap­proach.)

A range of RCTs in differ­ent con­texts have shown that the Grad­u­a­tion ap­proach raised year 3 in­comes in 5 out of 6 study sites. The study sug­gests that the in­ter­ven­tion on av­er­age pro­duces a 1.6x re­turn in net pre­sent value.[23] Thus, $1000 in­vested in the in­ter­ven­tion would pro­duce $1,600 in net pre­sent value. There are around 100 mil­lion peo­ple in Ethiopia, so $1 billion in­vested in the grad­u­a­tion ap­proach there would in­crease per cap­ita in­come by $16.

Com­pare this to the per-per­son value of growth ac­cel­er­a­tions and de­cel­er­a­tions doc­u­mented by Pritch­ett et al (2016). Th­ese are defined as the change in out­put per cap­ita re­sult­ing from one struc­tural break in the trend growth of out­put to the next. Th­ese ac­cel­er­a­tion or de­cel­er­a­tion typ­i­cally range from 10 to 30 years. The per per­son benefits (costs) of these growth ac­cel­er­a­tions (de­cel­er­a­tions) are or­ders of mag­ni­tude greater than the im­pact of the Grad­u­a­tion pro­gramme:[24]


Many of the largest growth ac­cel­er­a­tions pro­duce to­tal benefits in the hun­dreds of billions of dol­lars in net pre­sent value.[25] The costs of growth de­cel­er­a­tions are similarly vast.[26] The top 20 growth ac­cel­er­a­tions and de­cel­er­a­tions have a Net Pre­sent Value of $30 trillion and minus $35 trillion.[27] (It should be noted that the later stages of the growth ac­cel­er­a­tions af­fect pro­gres­sively richer peo­ple, so pro­duce less util­ity from ad­di­tional con­sump­tion.)

Thus, the benefits of growth are huge. And, as we shall now ar­gue, the prob­a­bil­ity that eco­nomics can af­fect growth is also large enough to make the ex­pected benefits of growth-friendly re­search and ad­vo­cacy much larger than di­rectly fund­ing RD. There are a few ways to get pur­chase on this in­tu­ition.

All economists

The Amer­i­can Eco­nomics As­so­ci­a­tion has 20,000 mem­bers. As­sume there are twice as many economists globally cost­ing around $150,000 each – at a to­tal of $6bn. Sup­pose this was con­stant for 50 years and hence it cost $300bn to sus­tain the mod­ern eco­nomics pro­fes­sion from 1960 to 2010. To be bet­ter than the grad­u­a­tion ap­proach, the eco­nomics pro­fes­sion would need to have pro­duced ex­pected benefits in ex­cess of ($300bn*1.6) = $480bn in NPV.

China’s growth ac­cel­er­a­tion from 1977 on­wards pro­duced $14 trillion NPV in cu­mu­la­tive eco­nomic out­put. Thus, if the only thing the eco­nomics pro­fes­sion achieved in 50 years was to in­crease by 4 per­centage points the prob­a­bil­ity that the Chi­nese gov­ern­ment shifted to this new eco­nomic strat­egy, then it would have had greater eco­nomic benefits than the Grad­u­a­tion ap­proach.[28] It is im­plau­si­ble that the eco­nomics pro­fes­sion had an in­fluence this small, and there is in fact a lot of ev­i­dence for sub­stan­tial de­vel­op­ment eco­nomics in­fluence on Chi­nese eco­nomic think­ing at this time.[29] From the blurb of a re­cent book Un­likely Part­ners:

“When Mao Ze­dong died in 1976, his suc­ces­sors seized the op­por­tu­nity to re­assess the wis­dom of China’s rigid com­mit­ment to Marx­ist doc­trine. With Deng Xiaop­ing’s bless­ing, China’s eco­nomic gu­rus scoured the globe for fresh ideas that would put China on the path to do­mes­tic pros­per­ity and ul­ti­mately global eco­nomic power. Lead­ing for­eign economists ac­cepted in­vi­ta­tions to visit China to share their ex­per­tise, while Chi­nese del­e­ga­tions trav­eled to the United States, Hun­gary, Great Bri­tain, West Ger­many, Brazil, and other coun­tries to ex­am­ine new ideas. Chi­nese economists part­nered with an ar­ray of brilli­ant thinkers, in­clud­ing No­bel Prize win­ners, World Bank offi­cials, bat­tle-scarred vet­er­ans of Eastern Europe’s eco­nomic strug­gles, and blunt-speak­ing free-mar­ket fun­da­men­tal­ists.”

More­over, this does not count the in­fluence the pro­fes­sion had over all of the other growth ac­cel­er­a­tions and avoided de­cel­er­a­tions. There is clear ev­i­dence of the in­fluence of de­vel­op­ment eco­nomics on growth ac­cel­er­a­tions in In­dia, Taiwan, In­done­sia, Viet­nam and other coun­tries (see Ap­pendix 2.2). We be­lieve that on a re­al­is­tic as­sess­ment of the ev­i­dence on the im­pact of de­vel­op­ment eco­nomics, the av­er­age cost-effec­tive­ness of stan­dard de­vel­op­ment eco­nomics is or­ders of mag­ni­tude bet­ter than RD. It re­mains to be seen whether growth-friendly de­vel­op­ment is more cost-effec­tive on the mar­gin. That de­pends on what fund­ing op­por­tu­ni­ties are available within the cause of ad­vo­cacy for growth-friendly eco­nomic poli­cies.

The World Bank

The World Bank’s ex­pen­di­ture on all of de­vel­op­ment eco­nomics in 2016 was about $50 mil­lion. To be bet­ter than the Grad­u­a­tion ap­proach, this would have to have pro­duced ex­pected benefits greater than (1.6 * $50 mil­lion =) $80 mil­lion. The 2002 In­dian growth ac­cel­er­a­tion was worth $2.5 trillion. Even if the only thing the World Bank achieved was to in­crease the prob­a­bil­ity of this oc­cur­ring by 0.003%, then it would be bet­ter than the Grad­u­a­tion Ap­proach.

The IMF

The to­tal an­nual bud­get of the IMF is around $1.2 billion. If the IMF ex­isted at that bud­get for 50 years at a cost of $60 billion cu­mu­la­tively and even if all it ever did was have a 7% chance of avert­ing a sin­gle $1 trillion crisis, then it would be bet­ter than the Grad­u­a­tion ap­proach.

Philan­thropic impact

Pritch­ett ar­gues that philan­thropists, and not just in­ter­na­tional in­sti­tu­tions, have in the past helped to in­crease growth in low-in­come coun­tries. For ex­am­ple, due to eco­nomic liber­al­i­sa­tion caus­ing growth ac­cel­er­a­tions in 1991 and 2002, In­dia cre­ated an ad­di­tional $3.6 trillion in GDP, rel­a­tive to its “busi­ness as usual” growth tra­jec­tory.[30]

Pritch­ett ar­gues that Ford Foun­da­tion fund­ing of the In­dian Coun­cil for Re­search on In­ter­na­tional Eco­nomic Re­la­tions (ICRIER) was in­te­gral in this growth epi­sode:

“There is a nar­ra­tive in which Ford Foun­da­tion, a global philan­thropy, pro­vides some mil­lions of dol­lars of fund­ing that play some role in cre­at­ing a think tank [ICRIER] that it­self then plays some role in pro­vid­ing the con­di­tions in which good policy choices are made that then re­sults in the cre­ation of $3.6 trillion in ad­di­tional out­put of In­di­ans.” [31]

Pritch­ett asks us to sup­pose that the Ford Foun­da­tion gave ICRIER $36m.

“Op­ti­misti­cally, sup­pose this gift in­creased by 50 per­cent the chance ICRIER was cre­ated and be­came an effec­tive think tank (per­haps other fund­ing could have come along, per­haps not) and sup­pose the ex­is­tence and ac­tions of this think tank in­creased by 10 per­cent the odds In­dia adopted growth ac­cel­er­at­ing poli­cies (my read of the situ­a­tion is that it was higher). Then the ex­pected value of Ford Foun­da­tion’s 36 mil­lion of sup­port was 180 billion dol­lars (brack­et­ing dis­count­ing), a 5000-fold re­turn per dol­lar of in­vest­ment.
Pes­simisti­cally, sup­pose the Ford Foun­da­tion fund­ing only in­creased the like­li­hood of an effec­tive think tank by 10 per­cent (some­one else al­most cer­tainly would have funded it) and the im­pact of ICRIER on the like­li­hood of a growth ac­cel­er­at­ing policy out­come was only 1 per­cent, the in­vest­ment still re­turns 100-fold—3.6 billion on 36 mil­lion.
Sup­pose in­stead the Ford Foun­da­tion had given 36 mil­lion in what many re­gard as the high­est re­turn in­di­vi­d­u­al­ized in­vest­ment: girl’s ed­u­ca­tion. There are hun­dreds of stud­ies show­ing a pos­i­tive re­turn both to wages and to other out­comes—fer­til­ity, child sur­vival, em­pow­er­ment, etc. Let’s sup­pose, su­per op­ti­misti­cally, the re­turn on this in­vest­ment was 20 per­cent. This means an ad­di­tional 7.2 mil­lion dol­lars.”[32]

Spread­sheet model

Below we have a spread­sheet model com­par­ing the rel­a­tive effec­tive­ness of di­rect fund­ing of RD with a hy­po­thet­i­cal growth in­ter­ven­tion us­ing some of the pa­ram­e­ters from above.

Note that the model’s as­sump­tions are based on figures from other sources. As such, this model aims to high­light and dis­en­tan­gle the de­bate about the rel­a­tive effec­tive­ness of the ran­domista ap­proach in the liter­a­ture.

The case for Growth:

Here, the Grad­u­a­tion ap­proach has a 1.7x ROI. Ethiopia’s pop­u­la­tion is around 100 mil­lion. $1bn spent on the Grad­u­a­tion pro­gram would in­crease the GDP/​cap­ita by $17 and the over­all re­turn would be $1.7bn.

Pritch­ett com­pares this to spend­ing $36m on re­search and ad­vo­cacy in­creases the prob­a­bil­ity by 50% that a think tank is cre­ated. He as­signs 10% prob­a­bil­ity that the think tank then af­fected In­dia’s 1993 and 2002 growth epi­sodes (3,572 billion or roughly 3.6 trillion). This would cre­ate $178.58bn in benefits and be 2918x as cost-effec­tive as the Grad­u­a­tion ap­proach.

The case for Ran­domista de­vel­op­ment:

In con­trast to the case above, we find that the ran­domista ap­proach is on a similar or­der of effec­tive­ness as our hy­po­thet­i­cal growth in­ter­ven­tion, if we make the fol­low­ing as­sump­tions:

  • We use Pritch­ett’s pes­simistic num­bers where $36m on re­search and ad­vo­cacy only in­creases the prob­a­bil­ity by 10% that a think tank is cre­ated by 1% that the think tank af­fects policy

  • We use only the me­dian growth epi­sode in Pritch­ett’s sam­ple (which is Viet­nam, 1989, cor­re­spond­ing to an in­crease of $6,914 GDP per cap­ita) to be af­fected by a think tank

  • We com­pare this to Malaria Con­sor­tium, which is 15.8x more cost-effec­tive than the cash-trans­fers[33] and 3x as effec­tive as the grad­u­a­tion ap­proach[34]


5. Pos­si­ble responses

5.1 Ex­treme scep­ti­cism about growth economics

One coun­ter­ar­gu­ment to this is to ap­peal to ex­treme scep­ti­cism about growth eco­nomics, speci­fi­cally the claim that we know which eco­nomic poli­cies can spur growth in the fu­ture. For ex­am­ple, Chris Blattman, a promi­nent ran­domista ar­gues that “[the ar­gu­ment that ad­vo­cacy for eco­nomic growth] has to be made partly on faith, be­cause it is very, very difficult to con­nect the salary of a growth economist to some­body’s life be­ing bet­ter off in 40 years.”[35] Ban­er­jee and Du­flo make a similar ar­gu­ment in ‘How Poverty Ends’ in For­eign Af­fairs es­sen­tially ar­gu­ing that we know very lit­tle about how to in­crease growth.

The first thing to say about this ar­gu­ment is that eval­u­at­ing it should be the fo­cus of sig­nifi­cant re­search at­ten­tion from effec­tive al­tru­ists work­ing to re­duce global poverty. Within EA fund­ing alone, there is >$150m per year at stake in the choice be­tween ad­vo­cacy for growth and RD. If the case against growth re­lies on such a con­tro­ver­sial claim, then as­sess­ing that claim should be a top pri­or­ity in EA. In spite of this, to our knowl­edge, this ques­tion has re­ceived no pub­li­cly pub­lished at­ten­tion from the EA com­mu­nity.

There are some ar­gu­ments for the ex­treme scep­tic po­si­tion. The In­dus­trial Revolu­tion in England hap­pened be­fore the vast ma­jor­ity of de­vel­op­ment eco­nomics, and the cause of the In­dus­trial Revolu­tion is still a sub­ject of ac­tive de­bate in the field.[36] How­ever, as we have ar­gued above, the ‘de­vel­op­ment era’ had started by 1950.

The ex­treme scep­tic view out­lined above im­plies that though in the last 70 years, we have wit­nessed more eco­nomic de­vel­op­ment than all prior hu­man his­tory com­bined, the de­liber­ate and promi­nent efforts of economists had no effect on this hap­pen­ing. This is prima fa­cie im­plau­si­ble. It is worth here quot­ing Pritch­ett at length:

“This ar­gu­ment is at odds with com­monly ac­cepted in­ter­pre­ta­tions of events in a num­ber of coun­tries. One, there are a num­ber of coun­tries (e.g. China, In­dia, Viet­nam, In­done­sia) that said (1) “Based on our read­ing of the ex­ist­ing ev­i­dence (in­clud­ing from economists) we are go­ing to shift from policy stance X to policy stance Y in or­der to ac­cel­er­ate growth”, (2) these coun­tries did in fact shift from policy stance X to Y and (3) the coun­tries did in fact have a large (to mas­sive) ac­cel­er­a­tions of growth rel­a­tive to [busi­ness as usual] as mea­sured by stan­dard meth­ods (Pritch­ett et al 2016).
One had to be par­tic­u­larly stub­born and clever to make the ar­gu­ment: “Poli­ti­ci­ans changed poli­cies to pro­mote growth based on ev­i­dence and then there was growth but (a) this was just dumb luck, the policy shift did not ac­tu­ally cause the shift in growth some­thing else did or (b) (more sub­tly) the adopted poli­cies did work but that was just dumb luck as there was not enough ev­i­dence the poli­cies would work for this to count as a win for ‘ev­i­dence’ chang­ing policy.”
There are also a fairly large num­ber of coun­tries that did the op­po­site. Economists (from their coun­try and oth­ers) have said to the lead­er­ship of coun­tries: (1) “If you per­sist in policy stance X you are go­ing to ex­pe­rience large (to mas­sive) nega­tive con­se­quences for eco­nomic growth,” (2) the lead­ers have not listened, and (3) there have been pre­cisely the pre­dicted nega­tive con­se­quences. The Venezue­lan econ­omy is not in 2018 spiral­ing into hy­per­in­fla­tion and in the midst of a tragic eco­nomic de­pres­sion be­cause “economists have lit­tle use­ful to say about eco­nomic growth” in the sense the ad­vice, if fol­lowed, would be use­ful. If the ar­gu­ment is that re­search can learn re­li­able ad­vice but this doesn’t mean it will change the course of events, then the ques­tion is whether it never changes the course of events. There are also cases in which gov­ern­ments have said “based on what economists say we are go­ing to switch paths to avoid mas­sive down­turns/​hy­per­in­fla­tion”, have done so, and it has worked (in the sense at least that a crisis did not hap­pen). While the “growth ac­cel­er­a­tions” might have been hard to pre­dict with stan­dard poli­cies (Haus­mann, Pritch­ett, Ro­drik 2005) there is em­piri­cal ev­i­dence that “growth col­lapses” are rather more pre­dictable (Breuer and McDer­mott 2011).
This is not to say that all re­search based claims about poli­cies for growth have been right. The “lost decades” in Latin Amer­ica and the “tran­si­tion de­pres­sion” in some (not all) former Soviet dom­i­nated coun­tries are both ex­am­ples of adopt­ing poli­cies for growth based on recom­men­da­tions that seemed not to work. How­ever, as a pa­per in this vol­ume points out, among the top ten most pre­scribed medicines many work on only a third of the pa­tients. So be­cause a recom­men­da­tion is not uni­ver­sally suc­cess­ful does not mean it is not a good recom­men­da­tion. If I can give you a tip that in­creases your odds of win­ning a mil­lion dol­lar lot­tery by 10 per­cent, it is mas­sively worth­while. More re­cent re­views sug­gest the “pox on all the houses of growth re­search” stance and a view recom­men­da­tions had been worth­less are too ex­treme (e.g. Easterly 2018 on the “Wash­ing­ton Con­sen­sus”, Ir­win 2019 on trade).”[37]

In ad­di­tion to this, as we have ar­gued above, there is clear ev­i­dence that growth eco­nomics had an effect on Chi­nese eco­nomic policy, and this alone prob­a­bly makes growth eco­nomics more cost-effec­tive than the best that RD could do. We of course can­not set­tle the de­bate on the over­all effect that growth eco­nomics has had here. How­ever, as we have said, as­sess­ing its truth should be a top pri­or­ity for pro­po­nents of RD and the EA com­mu­nity.

5.2. Eco­nomic growth and risk of harm

One other crit­i­cism of ad­vo­cacy for growth is that it in­volves sub­stan­tial risk of harm. Economists were in­volved in some of the growth de­cel­er­a­tions that we have seen since the Se­cond World War. The risk of harm is in­deed a down­side of ad­vo­cacy for growth against RD.

Sev­eral things may be said in re­sponse to this. Firstly, this in effect con­cedes the ar­gu­ment against the ex­treme scep­ti­cism out­lined above that de­vel­op­ment eco­nomics does in­fluence na­tional policy, and is there­fore po­ten­tially high lev­er­age. One can­not both claim that ad­vo­cacy for growth-friendly eco­nomic poli­cies has no effect on policy or on growth and also that it in­volves un­ac­cept­able risk of harm.

Se­condly, RD also in­volves the risk of harm. For ex­am­ple, there was re­cently con­tro­versy about whether GiveDirectly’s cash trans­fer pro­gramme in the past im­posed harm on non-re­cip­i­ents.[38]

Thirdly, the his­tor­i­cal record since 1950 sug­gests that the net ex­pected gains from ad­vo­cacy for growth have been very large, even if they have some­times in­volved harm.

One could re­spond that we ought to avoid in­ter­ven­tions risk­ing sub­stan­tial harm, even if the ex­pected value of the in­ter­ven­tion is higher than all oth­ers. If this is the eth­i­cal as­sump­tion un­der­ly­ing RD, then it should be made ex­plicit go­ing for­ward.

Fi­nally, we are here ar­gu­ing for high-qual­ity effec­tive re­search on how to en­courage growth, and ad­vo­cacy for that re­search. If such re­search could pre­vent harm be­ing done by in­ter­na­tional in­sti­tu­tions or oth­ers, then there is good rea­son to think, per the cost-effec­tive­ness ar­gu­ment above, that do­ing such re­search would be bet­ter than RD. Prevent­ing, at rea­son­able cost, just one er­ror by the IMF or the World Bank would have ex­pected benefits far in ex­cess of RD. More­over, if harm min­imi­sa­tion is the eth­i­cal aim, then re­search on how to pre­vent bad growth policy looks highly promis­ing.

Economists have been study­ing growth, cre­ated mod­els of how coun­tries grow, cre­ated a field of “growth di­ag­nos­tics” (which uses his­tor­i­cal and quan­ti­ta­tive anal­y­sis to de­ter­mine the causes of growth with the view of pre­dict­ing growth bot­tle­necks of on a coun­try-by-coun­try ba­sis), and make con­crete policy pre­scrip­tions to cause growth (or pre­vent de­cel­er­a­tion). Hauke dis­cusses this in Ap­pendix 2.

5.3. Is there any­thing to fund?

Another coun­ter­ar­gu­ment is that there are limited fund­ing op­por­tu­ni­ties for philan­thropists and that the space is already crowded with states and iNGOs, which usu­ally aim to in­crease growth. Three things may be said in re­sponse. Firstly, es­tab­lish­ing the truth of this claim should be a top pri­or­ity for EAs who are fo­cused on re­duc­ing global poverty. EAs are now mov­ing more than a hun­dred mil­lion dol­lars ev­ery year in this space, so eval­u­at­ing a cru­cial con­sid­er­a­tion such as this is of paramount im­por­tance.

Se­condly, it is less clear whether ad­vo­cacy for growth is crowded rel­a­tive to its scale, which is the more rele­vant com­par­i­son. The scale of the prob­lem eco­nomic growth solves are at least in the tens of trillions of dol­lars in net pre­sent value.

Thirdly, we pre­sent sev­eral sug­ges­tions for the kinds of things that could be funded in Ap­pendix 4. Th­ese are not meant to be recom­men­da­tions, but they do sug­gest that it is un­likely that care­ful anal­y­sis will find no promis­ing fund­ing op­por­tu­ni­ties in this space.

5.4. Politicisation

One ad­di­tional down­side of re­search and ad­vo­cacy for growth-friendly eco­nomic poli­cies is the poli­ti­cised na­ture of such work. Direct poverty and health pro­grammes, such as cash trans­fers or dis­tribut­ing malaria bed­nets, are fairly un­con­tro­ver­sial. In con­trast, ad­vo­cacy for eco­nomic poli­cies like trade liber­al­i­sa­tion or open­ing up economies to mar­kets are highly poli­ti­cised. Thus, if the EA move­ment did get in­volved in fund­ing this sort of work, it would take on ad­di­tional poli­ti­cal risks. This is es­pe­cially con­cern­ing for Western fun­ders work­ing in low- and mid­dle-in­come coun­tries.

How­ever, it is worth not­ing that EA fun­ders are already in­volved in some highly poli­ti­cised work, such as ad­vo­cacy for in­creas­ing mi­gra­tion and crim­i­nal jus­tice re­form. Nonethe­less, the poli­ti­cal risks are a strike against ad­vo­cacy for growth-friendly eco­nomic poli­cies, and need to be con­sid­ered care­fully.

5.5. GDP isn’t everything

We noted at the start of this post that eco­nomic growth is not all that we care about from a near-ter­mist hu­man welfare-max­imis­ing point of view. In­come per head does not ac­count for:

  • Inequality

  • Fore­gone con­sump­tion from investment

  • Leisure time

  • So­cial connection

  • Public goods

  • etc

To take the ex­am­ple of pub­lic goods, some pub­lic goods are at best weakly cor­re­lated with GDP per cap­ita:

For pub­lic good pro­vi­sion, two fac­tors are cru­cial: the re­spon­sive­ness of the polity (i.e. how demo­cratic it is) and state ca­pac­ity. Pritch­ett has shown that en­vi­ron­men­tal qual­ity cor­re­lates well with mea­sures of state ca­pac­ity and re­spon­sive­ness of polity.[39] To give an­other ex­am­ple, mea­sures of per­sonal safety do not cor­re­late strongly with in­come per head or state re­spon­sive­ness, but do cor­re­late with state ca­pac­ity.[40]

Pritch­ett con­structs a broad mea­sure of na­tional de­vel­op­ment that in­cludes in­come per head, polity re­spon­sive­ness and state ca­pac­ity. Na­tional de­vel­op­ment, thus defined, is ex­tremely strongly cor­re­lated with sub­jec­tive and ob­jec­tive mea­sures of wellbe­ing.[41] At a given level of na­tional de­vel­op­ment, a coun­try can only in­crease welfare mod­estly, whereas in­creas­ing a coun­try’s level of na­tional de­vel­op­ment can in­crease welfare sub­stan­tially.

In sum, while we have fo­cused on GDP here to make the case against RD, growth is not ev­ery­thing: ac­count­ing for in­equal­ity, leisure time and con­sump­tion is cru­cial, as is ac­count­ing for the pro­vi­sion of pub­lic goods, which is best en­sured by a re­spon­sive and ca­pa­ble state. Assess­ing the best way to im­prove these things, out­side of the con­straints of RD, should also be a pri­or­ity for effec­tive al­tru­ists.

6. Conclusion

Eco­nomic growth has been a ma­jor driver of hu­man progress so far. In spite of this, within global de­vel­op­ment, EAs have largely ig­nored the ques­tion of how to in­crease growth. In­stead they have in­stead fo­cused on (pro­mot­ing) di­rectly fund­ing the best in­ter­ven­tions that can be tested by RCTs. There are plau­si­ble ar­gu­ments which sug­gests that fo­cus­ing on growth could be sub­stan­tially more cost-effec­tive than this dom­i­nant ap­proach. This ques­tion should be the sub­ject of sig­nifi­cant at­ten­tion from EAs work­ing on global health and de­vel­op­ment. This is a cru­cial con­sid­er­a­tion, which could cause a ma­jor shift in our view of in­ter­ven­tions.[42]

More strongly, we be­lieve that a 4 per­son-year re­search effort would find dona­tion op­por­tu­ni­ties work­ing on growth that are sub­stan­tially more cost-effec­tive than GiveWell’s top char­i­ties.

It is less clear whether ad­vo­cacy for growth-friendly eco­nomic poli­cies is bet­ter than more “hits-based” ran­domista de­vel­op­ment, such as ad­vo­cacy for na­tional scale-up of RCT-backed pro­grammes, re­search into vac­cines and an­tibiotics, or gene drives for malaria. More­over, as we have said, eco­nomic growth is not ev­ery­thing and there may be even larger gains from im­prov­ing re­duc­ing in­equal­ity, or im­prov­ing state re­spon­sive­ness and state ca­pa­bil­ity. In­ves­ti­gat­ing these ques­tions should be a top pri­or­ity for near-term hu­man welfare-fo­cused effec­tive al­tru­ists.

In any case, we would like to open a dis­cus­sion on whether, by re­lax­ing con­straints on risk and am­bi­guity aver­sion, and tak­ing more of a hits-based ap­proach in global de­vel­op­ment, donors can greatly in­crease their im­pact.

7. Fur­ther reading

8. Hauke’s appendices

Hauke has writ­ten some ap­pen­dices to this doc­u­ment, but these do not nec­es­sar­ily rep­re­sent John’s view.

9. References

[1] How­ever, the hits-based ver­sion of RD does raise ques­tions for pro­po­nents of RCT-fo­cused de­vel­op­ment. Ad­vo­cacy cam­paigns for ev­i­dence-based in­ter­ven­tions can­not be tested by RCTs, but few pro­po­nents of RCTs would take this to be a rea­son not to do such cam­paigns. Why then should evalua­bil­ity by RCTs be a con­di­tion on other in­ter­ven­tions?

[2] Which cause is most pop­u­lar de­pends on cause cat­e­gori­sa­tion and most sur­veyed EAs seem to be long-ter­mists in some broad sense. EA Sur­vey 2018 Series: Cause Selec­tion” 18 Jan 2019, EA Sur­vey 2018 Series: Cause Selec­tion. Ac­cessed 29 Oct. 2019.

[3] “Cur­rently, the best giv­ing op­por­tu­ni­ties we’ve found in this cat­e­gory are recom­mended by GiveWell”. Open Philan­thropy Pro­ject ‘Global Health and Devel­op­ment

[4] Pritch­ett, “Ran­dom­iz­ing Devel­op­ment: Method or Mad­ness?” Ac­cessed 29 Oct. 2019.

[5] Th­ese goods have a pri­vate good el­e­ment be­cause their con­sump­tion also re­quires the pro­vi­sion of cer­tain pub­lic goods, such as an elec­tric­ity grid, pub­lic safety, trans­port net­works and so on. We dis­cuss pub­lic goods in more depth in sec­tion 4.5.

[6] Jones and Klenow, ‘Beyond GDP? Welfare across Coun­tries and Time’, Amer­i­can Eco­nomic Re­view 2016, pp. 2426–2457

[7] Jones and Klenow, ‘Beyond GDP? Welfare across Coun­tries and Time’, Amer­i­can Eco­nomic Re­view 2016, p.2427.

[8] Ibid.

[9] Jones and Klenow, ‘Beyond GDP? Welfare across Coun­tries and Time’, Amer­i­can Eco­nomic Re­view 2016, p.2439.

[10] We should in part ex­pect this be­cause the HDI in­cludes GDP per cap­ita. How­ever two things may be said about this. Firstly, GDP per cap­ita is in­cluded in the HDI be­cause it is recog­nised to be a key de­ter­mi­nant of hu­man welfare. Se­condly, GDP per cap­ita is also cor­re­lated with the other weighted com­po­nents of the HDI—life ex­pec­tancy, liter­acy and ed­u­ca­tional en­rol­ment.

[11] Jones and Klenow, ‘Beyond GDP? Welfare across Coun­tries and Time’, Amer­i­can Eco­nomic Re­view 2016, pp.2427-2428.

[12] This was South Korea’s ex­pe­rience from 1950 to 2010. Data from the Our World in Data Eco­nomic Growth en­try.

[13] Pritch­ett, “Ran­dom­iz­ing Devel­op­ment: Method or Mad­ness?” Page 7.

[14] Pritch­ett, “Is your im­pact eval­u­a­tion ask­ing ques­tions that mat­ter?

[15] A re­cent meta-anal­y­sis by Brown Univer­sity economist David Weil con­cludes “If im­prov­ing health leads to growth, this would be a rea­son, be­yond the welfare gain from bet­ter health it­self, that gov­ern­ments might want to make such in­vest­ments. How­ever, the ev­i­dence for such an effect of health on growth is rel­a­tively weak. Cross-coun­try em­piri­cal analy­ses that find large effects for this causal chan­nel tend to have se­ri­ous iden­ti­fi­ca­tion prob­lems. The few stud­ies that use bet­ter iden­ti­fi­ca­tion find small or even nega­tive effects. The­o­ret­i­cal and em­piri­cal analy­ses of the in­di­vi­d­ual causal chan­nels by which health should raise growth find pos­i­tive effects, but again these tend to be fairly small. Put­ting the differ­ent chan­nels to­gether into a simu­la­tion model shows that po­ten­tial growth effects of bet­ter health are only mod­est, and ar­rive with a sig­nifi­cant de­lay.” “Health and Eco­nomic Growth—CDN.” Health and Eco­nomic Growth. Ac­cessed 20 Nov. 2018.

[16] World Bank, Ed­u­ca­tion Qual­ity and Eco­nomic Growth (2007).

[17] Pritch­ett, The Per­ils of Par­tial At­tri­bu­tion: Let’s All Play for Team Development

[18] Pritch­ett, Get­ting Kinky with Chickens

[19] Pritch­ett, Get­ting Kinky with Chickens

[20] Pritch­ett, “Ran­dom­iz­ing Devel­op­ment: Method or Mad­ness?” (2019), page 12.

[21] Pritch­ett, The Per­ils of Par­tial At­tri­bu­tion: Let’s All Play for Team Development

[22] Pritch­ett, The Per­ils of Par­tial At­tri­bu­tion: Let’s All Play for Team Development

[23] Ban­er­jee et al. ‘A mul­ti­faceted pro­gram causes last­ing progress for the very poor: Ev­i­dence from six coun­tries’ Science, (2015): table 4 line 11. This is the av­er­age of all of the in­ter­ven­tions.

[24] Alle­vi­at­ing Global Poverty: La­bor Mo­bil­ity, Direct As­sis­tance, and Eco­nomic Growth by Lant Pritch­ett 25. Note that Pritch­ett’s es­ti­mate of the im­pact of the Grad­u­a­tion ap­proach is slightly differ­ent to ours. We are not sure of how Pritch­ett ar­rived at his es­ti­mate.

[25] Pritch­ett, Trillions gained and lost: Es­ti­mat­ing the mag­ni­tude of growth epi­sodes, p289. Trillions gained and lost: Es­ti­mat­ing the mag­ni­tude of growth episodes

[26] Pritch­ett, Trillions gained and lost: Es­ti­mat­ing the mag­ni­tude of growth epi­sodes, p290. Trillions gained and lost: Es­ti­mat­ing the mag­ni­tude of growth episodes

[27] Pritch­ett, trillions, p289. Trillions gained and lost: Es­ti­mat­ing the mag­ni­tude of growth episodes

[28] 480 billion /​ 14 trillion = 3.4%

[29] “Western economists and China’s rise—The Economist.” 5 Jan. 2017, Out­siders and the Mid­dle King­dom—Western economists and China’s rise | Books and arts. Ac­cessed 4 Nov. 2019.

[30] Pritch­ett, per­ils of par­tial, The Per­ils of Par­tial At­tri­bu­tion: Let’s All Play for Team Devel­op­ment

[31] “The Per­ils of Par­tial At­tri­bu­tion: Let’s All Play for Team Devel­op­ment ….” 26 Oct. 2017, The Per­ils of Par­tial At­tri­bu­tion: Let’s All Play for Team Devel­op­ment. Ac­cessed 19 Nov. 2018.

[32] “The Per­ils of Par­tial At­tri­bu­tion: Let’s All Play for Team Devel­op­ment ….” 26 Oct. 2017, The Per­ils of Par­tial At­tri­bu­tion: Let’s All Play for Team Devel­op­ment. Ac­cessed 19 Nov. 2018.

[33] “2019 GiveWell Cost-Effec­tive­ness Anal­y­sis—Google Docs.” 25 Nov. 2019, 2019 GiveWell Cost-Effec­tive­ness Anal­y­sis — Ver­sion 6 (pub­lic). Ac­cessed 15 Jan. 2020.

[34] Re­call that Founders Pledge re­search sug­gests that Band­han, a char­ity car­ry­ing out the Grad­u­a­tion ap­proach, is 5x a cost-effec­tive as cash. GiveWell es­ti­mates that Malaria Con­sor­tium is 15.8 times as cost-effec­tive as cash. Thus, it seems fair to roughly as­sume that Malaria Con­sor­tium is around 3 times more cost-effec­tive than the Grad­u­a­tion approach

[35] “Two views on fight­ing world poverty—Chris Blattman.” 28 Mar. 2017, Two views on fight­ing world poverty Ac­cessed 7 Nov. 2019.

[36] Gre­gory Clark, A Farewell to Alms: A Brief Eco­nomic His­tory of the World, Prince­ton Univer­sity Press (2009).

[37] Pritch­ett, ‘Ran­dom­iz­ing Devel­op­ment: Method or Mad­ness?’ (2019), p. 23-24.

[38] Berk Özler, ‘Most good you can do. But for whom?’, World Bank Blogs (Oc­to­ber 2018)

[39] Pritch­ett, “Ran­dom­iz­ing Devel­op­ment: Method or Mad­ness?” Page 17.

[40] Pritch­ett, “Ran­dom­iz­ing Devel­op­ment: Method or Mad­ness?” Page 17.

[41] Pritch­ett, “Ran­dom­iz­ing Devel­op­ment: Method or Mad­ness?” Page 14.

[42] “Cru­cial Con­sid­er­a­tions and Wise Philan­thropy—Effec­tive ….” 9 Jul. 2014, Cru­cial Con­sid­er­a­tions and Wise Philan­thropy. Ac­cessed 6 Nov. 2019.

[43] “Lant Pritch­ett on Poverty, Growth, and Ex­per­i­ments—Econ­lib—EconTalk.” 22 May. 2017, Lant Pritch­ett on Poverty, Growth, and Ex­per­i­ments. Ac­cessed 6 Nov. 2018.