Hits-based development: funding developing-country economists
So far, the effective altruist strategy for global poverty has followed a high-certainty, low-reward approach. GiveWell mostly looks at charities with a strong evidence base, such as bednets and cash transfers. But there’s also a low-certainty, high-reward approach: promote catch-up economic growth. Poverty is strongly correlated with economic development (urbanization, industrialization, etc), so encouraging development would have large effects on poverty. Whereas cash transfers have a large probability of a small effect, promoting growth has a small probability of a large effect. (In general, we should diversify across high- and low-risk strategies.) In short, can we do “hits-based development”?[1]
How can we affect growth? Tractability is the main problem for hits-based development, since GDP growth rates are notoriously difficult to change. However, there are a few promising options. One specific mechanism is to train developing-country economists, who then work in government and influence policy in a pro-growth direction, ultimately increasing the probability of a growth episode. The key is that local experts have local knowledge of culture, politics, and law, which allows them to understand the impediments to growth in a way that foreign World Bank consultants cannot.[2] The goal is not to find the specific interventions that will boost growth in a specific country, but rather to find the experts who will be most capable of finding those interventions.
For example, Lant Pritchett mentions a think tank in India that influenced its liberalizing reforms, which preceded a large growth episode.[3] One way to think of the mechanism is having an economist “in the room” at a key moment to prevent the president from enacting a policy that would lead to hyperinflation (say). Since such an action is highly consequential, but also unlikely, it plausibly has high expected value.[4] A different angle is that local experts will improve the quality of solutions to important problems (urbanization, industrialization, health care, etc). This translates into a concrete goal: increase the number of local experts in developing countries, to increase the chance of a growth episode.
In terms of crowdedness, there are, for example, very few Africans doing economics PhDs in the US. Some developing countries (like China) already have many economists, and do not need to be targeted. One feature of this proposal is that, in principle, it has a clear stopping point: train developing-country economists until you reach N per country.
There are many ways that extra funding could relax budget constraints: GRE fees; PhD application fees; scholarships for undergrads, masters, and PhD students; research projects; thesis prizes; subsidizing RAships; TA buyouts; conference fees and travel; think tanks; translating textbooks; bootcamps/workshops/conferences; sabbaticals/research visits; and so on.
From initial conversations, it seems that the key constraint is the number of well-trained students who can get accepted into top PhD programs. Hence, funding should be targeted to training undergrads and Master’s students, as the African School of Economics is doing.[5] Hence, one option is to fund ASE and its satellite campuses. Donations need not be restricted to scholarships, for two reasons. First, because of the fungibility problem, such restrictions are difficult to guarantee. Second, ASE’s values are consistent with EA values. This matches GiveWell’s advice to “find an organization whose existing priorities you are comfortable with – and give unrestricted.”
Footnotes:
[1] See recent discussions on the forum here and here.
[2] Wantchekon says that his knowledge of culture and history led him to the research question of the effect of slavery on trust: “It was his data-mining skills that helped him find the answer. But it was his Beninese background that raised the question.”
[3] See also: “I think you invest in people in those countries who are researching, acting, and investigating, and talking about precisely those questions [about property rights, corruption, democracy, transparency]. I think investing $15 million in a group in Nigeria who was asking in an evidence- and experience-based way how to reduce corruption in Nigeria—I think that seems like a pretty plausible way to get those questions answered.”
[4] On this view, it’s worth training a generation of economists, with only one becoming a presidential advisor, in order to prevent a single hyperinflation.
[5] Note that ASE is partly funded by Princeton and the World Bank.
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TL;DR: when it comes to technical expertise, our problem is more a lack of technical literacy than absence of experts. Think about it as analogy with other sciences.
I work with lots of economists (some of them trained in top graduate programs), for a government in a developing country, and I can’t help thinking this proposal is a bit naïve. I’m pretty sure our problem is not that we lack economists, or that the President does not receive expert advice, but that they are seldom listened to—unless they confirm what the relevant stakeholders want. And, like in natural sciences, journalists will often find someone they can refer to as an expert in the field, but people are not able to assess what they say, unless their conclusions are stated in very simple terms, usually in a confirmatory tone. So probably our problem is more a lack of overal economics literacy—and not more experts.
On the other hand, I can say that things have actually been getting better in some sense in the last few years—I observe that basic literacy in economics have been improving in the media and among educated people from other fields. And yet, this has not led to better policy; part of it is that economic development is hard (as I have argued elsewhere), or that the causality here runs the other way around (i.e., people have been learning more about economics because we have dealt with recessions)… but then you also have the whole soldier vs. scout mindset all back again—even educated people will look for info to confirm their biases.
To be clear: I’m certainly not against training more economists from developing countries in US top graduate programs (quite the opposite: sometimes I think the best thing we can do around here is to send bright students away), but I don’t think that’s the bottleneck in economic development (in comparison to other hypothesis), nor that it’d more efficient than other policies concerning education in economics that are likely less expensive and have a broader scope—such as economic classes for youngsters, or funding more economists in these countries, or sending experts from top univerties to teach there, etc.
I think it’s too simplistic to say there’s a single bottleneck.
The latter two seem consistent with my proposal. Part of the problem is that there aren’t many economists in developing countries, hence the need to train more. And ASE does bring experts to teach at their campus.
Two other organizations doing similar work:
https://gain-network.net/
https://malengo.org/about-the-program
I am a returned Peace Corps volunteer who lived and worked in rural West Africa for three years, focused mainly on education issues. I agree with you that “local experts will improve the quality of solutions to important problems,” in part because they have “local knowledge of culture, politics, and law, which allows them to understand the impediments to growth in a way that foreign World Bank consultants cannot.” Funding and encouraging more Africans to get PhDs in economics would be a welcome step in the right direction of making Africa’s development policies more attuned to local knowledge.
But I actually don’t think it goes far enough in that direction to fund exclusively undergrad and Master’s students in seeking to develop strong PhD candidates. In developing contexts, tertiary education is far more accessible to urban, well-off, male students – and these students are themselves detached from local realities in the (often rural) places that most need help. The meaning of “local” is highly contextual. Simply being a home-country national does not guarantee “local knowledge” any more than someone attending a wealthy prep school in New York City grasps the realities facing Appalachian West Virginia. If the only experts “in the room” are those likely to have grown up in the capital (or another major) city who went to the best private schools, we’ll have continued the problem of “experts” with limited expertise. EAs should take care not to encourage misalignment between policymakers & rural communities in the global south, especially given the perverse effect this has had in developed nations.
Greater impact may come from funding quality rural education initiatives from the primary and secondary level through the tertiary level [as Educaid, for example, does in Sierra Leone]. This could enable more poor, female, and/or rural students to become educated policy leaders and make changes at the national level (that many are already making at the grassroots level).
Originally wrote this in Oct 2020 and wanted a version to share publicly, hence, publishing now.
Did you intend to publish this as a “personal blog”? That tag suppresses this post basically.
Yeah, I recall wanting to expand on the post, but I still have to track down my old notes. I hope to do that and publish it as a main page post.
I’d prefer to move this to the front page — would that be alright with you? I think it deserves more readers than it’s gotten.
Hey, go for it!
Related:
I love this idea! Perhaps Open Phil should give scholarships to econ students from developing countries—it’s pretty on-brand for them, as they’ve been spinning up scholarships for a while now. And funding the African School of Economics is a great idea!
I wonder how this idea relates to this initiative on educational migration to sponsor visas for Ugandan students studying BA programs in Germany.
Perhaps they should focus on Economics BA programs so that Uganda can benefit from return migration later on? (also AFAIK, economics graduates earn more than graduates from other programs, so the students’ incomes and remittances would both also be higher)
Yes, perhaps linking it to a masters program at ASE.
Very interesting concepts! I have one comment and one contact offering which may be helpful in adding a new perspective to your core assumptions (primarily that systemic solutions, such as empowering the next generation of African economics students to help change legislation, would indeed be effective altruism):
I performed a broad and rather unrigorous quantitative overview of the strategic qualities of the top charities of GiveWell’s top ten (OpenPhil, which is a major pioneer of bit-based giving, donates the most to GiveWell’s suggestions), GiveWell’s ‘ineffective’ charities (charities deemed not cost-effective or evidence-based enough) and Charity Entrepreneurship’s incubated charities to determine what strategic qualities are most utilised by the highest-impact charities. What I found was that qualities relating to hit-based principles (primarily that of prioritising high reward, high risk interventions such as innovations and systemic solutions) didn’t align with the high-impact charities and in fact the ‘ineffective’ charities aligned slightly more with the qualities of hit-based principles. The explanation I found most compelling was that the complexity necessary for high risk and high reward interventions (such as systemic wherein the results are fairly unclear) to success not only bumped up the costs considerably but also the resistance from donors to continue donating due to the complexity obscuring the direct effect of the charity (‘how can we know it was helping the African economists which helped improve development? There’s many other changes since then which could also have contributed’). And though there are a few statistical methods to try and tease out approximate benefit, systemic interventions may always be marred by unclear impacts, unforeseeable obstacles and undue resistance from donors and the system being changed. My documentation for this qualitative overview can be found here: https://6559c6fb-82b8-43c6-8296-70e9946338cc.filesusr.com/ugd/ed2a7c_e6005590c87341b1ac2e1d13d861d4d1.pdf with page 6 being the colour-coded summary spreadsheet.
The explanation above was mostly galvanised by the social innovator Andrew Benedict-Nelson (https://albnelson.com). Andrew’s explanation was rooted in a history of successful systemic change from within the private sector such as Carnegie & Rockefella spending their private wealth to fund, among other creative means, medical conferences designed to increase the scientific approach within the medical industry. Andrew’s suggestion was then to tie hit-based giving in with the private sector especially due to the private sector’s openness to high risk, high reward investments. If you’d like me to connect you to pick his brain, I’d be happy to!
There is an internet economic outreach group in Brazil that I am pleased to participate and financially support called Mainstream Economics (Economia Mainstream): https://economiamainstream.com.br
Particularly, I think that this project could have an important impact given the strength (and the damage) caused by economic ideas that deviate from the economic mainstream in Latin America and in Brazil, in particular.
I translated a small excerpt from the group’s presentation text (which can be read in Brazilian-Portuguese here: https://economiamainstream.com.br/artigo/o-que-e-o-projeto-economia-mainstream/)
1. Our goal
Our goal is to disseminate knowledge about economics as much as possible. More specifically, knowledge about mainstream economics, that is, the economics that are taught in the most relevant teaching and research centers and that serve as a framework for most scientific articles published in the major journals.
We want, through our content, to contribute to the propagation and expansion of economic knowledge. For this reason, our content is aimed at both the lay public and those who already have a certain knowledge of the subject.
1.1. Why do we have this goal?
First, for the simple fact that we love scientific dissemination for its own sake, for the pure and simple pleasure of talking about economics.
Second, because we believe that the lack of economic knowledge has generated disastrous results in Brazil. Throughout history, our country has suffered from preposterous economic plans and unsustainable political promises. The result of this is the permanent poverty in which we live, enormous inequality, a completely disorganized institutional environment, a lack of commitment to the future, and, ultimately, the erosion of the social fabric in which we find ourselves today.
We are aware that at this moment we are small players in the construction of the change we aspire to. But as much as our influence at this time is marginal, our ambition is gigantic.
...
4. Our future projects
We have projects that are either just in the field of ideas or in the embryonic stage or in the development stage. Some of these projects are:
“Microeconomics Project”: teaching the fundamentals of microeconomics (we want to write texts along the lines of this one).
“Programming Project”: teaching programming fundamentals to economists in R and Python languages.
Short videos for Youtube: make animations of short videos for our Youtube channel teaching some economics concepts.
Courses: organize courses such as finance, programming, etc.
Book: publish a book with a collection of articles – whether modified articles already posted on our website or completely new articles.