News & CommentaryArchive
Apr 26, 2011
Two New Books on Small Ways to Help the Poor: More Than Good Intentions and Poor Economics
Compassionate types may be feeling a bit sorry for Greg Mortenson this week. The author of Three Cups of Tea has been accused of fabricating details of his bestselling account of building schools for girls in Pakistan. He has thus joined the ranks of more than a few nonfiction authors who’ve leaned on the nonfactual, from the revered journalist Ryszard Kapuściński, to the former addict James Frey. In some ways we, the readers, are to blame. We cannot demand fiction-like entertainment from the nonfiction books we read and then act surprised when the writers feel like they have to fudge.
Mortenson is in a particularly tight spot for having to fulfill expectations for both nonfiction and for international development. Since its inception, development has thrived on Big Ideas, those major actions or programs that, in theory, will bring wholesale change for people living in poverty. Poor countries lack infrastructure, so let’s build a national network of roads. The poor need education, so let’s build schoolhouses.
Billions have been spent on such large-scale projects, but quite often, when their creators go back, they do not see major changes in income from market access, or major improvements in education levels for having that building (regardless of who built it). That is because Big Ideas often fail to account for the small changes in behavior necessary from the human beings that live near the roads or the schools. The roads are useless if they do not lead to buyers and the schoolhouses are not much good if the teacher never shows up. But would Three Cups of Tea and the Central Asia Institute Greg Mortenson runs have inspired so many devoted readers, and donors, if they had imagined their money would be used on an idea as small as getting teachers to show up (an act that most westerners take for granted—it’s their job, after all) rather than on one as large, solid and tangible as building a school?
Two new books from the world of development economics offer solid arguments for why all of us should care more about the small things than the big things: More Than Good Intentions, by Yale economist Dean Karlan and his co-writer Jacob Appel, and Poor Economics by MIT economists Abhijit Banerjee and Esther Duflo. (to read complete reviews of the books, click here for MTGI and here for PE).
Karlan, Banerjee and Duflo are members of a new cohort of development economists working at the intersection of behavioral psychology and economics. Their work shares a deep interest in how real people behave in real situations. There is a lot of attention right now on this mode of thinking, and as a result, all three are famous, insofar as economists can be, for pioneering the use of randomized control trials (RCTs), the classic tool of medical research, to test whether social programs implemented in the real world bring real benefits. Both books are rich with descriptions of RCTs that have taken place in many of the world’s poorest countries, and most of the same studies are highlighted in both, drawn respectively from Banerjee and Duflo’s work with the Latif Jameel Poverty Action Lab at MIT (J-PAL), which they co-founded, and from Karlan’s work at Innovations for Poverty Action (IPA), which runs RCTs in the field on behalf of researchers, including some JPAL affiliates. [FD: IPA is a client of Sona Partners, the sponsor of Philanthropy Action.]
The mutual focus on behavioral economics and the use of RCTs gives these books rigor, a significant amount of subject matter overlap, and a shared interest in the role that people play in development success. Despite these similarities, these are very different books; More Than Good Intentions is to Poor Economics much as Predictably Irrational is to Nudge. The books are trucking in the same material, but they are writing to very different audiences and they come to some distinct conclusions. Just as Predictably Irrational introduced the general reader to behavioral psychology and the illogical decisions that individuals make on a daily basis, More Than Good Intentions is for a layman reader largely unfamiliar with the use of RCTs (and only a passing knowledge of economics in general), the specific development questions they address and the studies they profile. The generalist tone and technique of More Than Good Intentions reflect Karlan’s ultimate goal of informing and influencing where the generalist’s individual donations of $10, $100, $1000 in giving go every year.
Poor Economics, in contrast, is more like the Nudge of development economics, well written and highly readable with a much greater focus on policy issues. As such it’s natural audience is institutional actors, those policy makers, practitioners and program officers who determine what is done when, where and how.