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Measuring How and Why Aid Works—or Doesn’t

May 5, 2011

William Easterly in WSJ:

In 1998, economists Michael Kremer and Ted Miguel participated in a groundbreaking aid program distributing de-worming medicine to school children in western Kenya. There weren’t enough doses for every child, so the program administrators randomly selected who was treated. They later compared the results for the two groups. The children who were treated for worm disease, of course, suffered less of the debilitating parasitic infection. They also attended school much more faithfully. A decade later, a follow-up study found that these same students, who were by then young adults, were earning 20% more than those who did not get the drugs. It was quite a payoff for an aid program based on distributing a 20-cent pill. But the inspiring story also had a troubling side. It suggested the irrational behavior of parents: De-worming drugs are inexpensive and clearly beneficial—why weren’t parents already giving the medicine to their children?

The de-worming study was unusual for the late 1990s, but research on global poverty based on the study’s two essential elements—controlled experiments and irrational behavior—has exploded since. […]

The books’ signal achievement is in addressing two disgraceful problems that beset humanitarian aid. The first is that the effectiveness of aid is often not evaluated at all; the second is that even when aid is evaluated, the methods are often dubious, such as before-and-after analysis that doesn’t take into account variables that have nothing to do with the aid itself. Humanitarian aid is usually flying blind. These books take the blinders off—de-worming does work, many other efforts do not.

Among the “it’s working” solutions described in both books is the cure for the teacher absenteeism. What’s the fix? Just take time-stamped photos of the teachers in the classroom, penalize them for absences and—presto—they show up more. But things are not as simple as they first appear. [More]

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