Saving the World’s Poor: A Nobel Prize Winner on Development

Jerry Wei, MPP

On October 12th, Angus Deaton, a Princeton economist, won the Nobel Prize in economics for his “analysis of consumption, poverty, and welfare.” The economist Tyler Cowen summarizes his research and ideas in a fantastic post here.

While he advanced the economics discipline by developing the poverty measurement tools we continue to use today), he also focused on the big questions in economics. His “Letters from America” provides trenchant commentary on a range of public policy issues facing U.S. policymakers.

Herein light of his Nobel, it is worth revisiting his thinking on the “big” development issues of today, especially on foreign aid and the best way to help the global poor. There are many ways to cut the global debate on development and aid, but one major fault line is between those who believe ideas and theory matter, and those who believe rigorous evidence can highlight “interventions” and “pathways” to development (often dubbed the Randomistas); The split between the philosophers and the technocrats; The surety of randomized controlled trials (RCTs) versus the caution of history and politics.

Deaton falls squarely on the side of ideas and theory. In an excellent Boston Review Forum on “The Logic of Effective Altruism,” Angus Deaton responds to the Princeton academic Peter Singer’s argument that giving money directly to the poor, or to organizations ranked by GiveWell based on RCT study outcomes, is the best way to reduce global poverty. He first takes on the weakness of experimental methodologies like the RCT:

“How can those experiments be wrong? Because they consider only the immediate effects of the interventions, not the contexts in which they are set. Nor, most importantly, can they say anything about the wide-ranging unintended consequences.”

He also argues that the technocratic outlook on development inadvertently supports repressive regimes. He highlights the case of Rwanda’s Paul Kagame:

“By providing health care for Rwandan mothers and children, he has become one of the darlings of the industry and a favorite recipient of aid. Essentially, he is “farming” Rwandan children, allowing more of them to live in exchange for support for his undemocratic and oppressive rule.”

In another piece titled “Weak States, Poor Countries,” he is more explicit. Technocratic interventions can result in some positive outcomes, but:

“Poor people need government to lead better lives; taking government out of the loop might improve things in the short run, but it would leave unsolved the underlying problem. Poor countries cannot forever have their health services run from abroad. Aid undermines what poor people need most: an effective government that works with them for today and tomorrow.”

What, then, can a well-meaning person do to alleviate suffering around the world? Back in the Boston Review he writes:

“I tell them to go to Washington or London and to work to stop the harm that rich countries do; to oppose the arms trade, the trade deals that benefit only the pharmaceutical companies, the protectionist tariffs that undermine the livelihoods of African farmers; and to support more funding to study tropical disease and health care. Or they could go to Africa, become citizens, and cast their lot with those they want to help. That is how they can save the lives of African kids.”

I expect this is not what many in international development programs want to hear. For those midway through their programs, it’s probably too late to switch course anyways. Furthermore, his Nobel win will not quell the unending debate between development economists over the optimal strategies for saving the world’s poor.

However, Deaton joins a chorus of others (among the many, Bill Easterly, Daron Acemoglu, and Lantt Pritchett) whose own analyses show that the political dimension of development may be more important than the Randomistas would have you believe. The debate is not close to being over, but for those interested in methods, development, and vigorous debate, there has never been a better time to be thinking about these issues.

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