Esther Duflo is a French economist and professor at the Massachusetts Institute of Technology. Specializing in development economics, Duflo focuses on the causes of poverty, as well as practical and effective solutions to eradicate it. In her most recent TED Talk, Duflo questions the impact of aid. While it is unlikely that we will ever know if aid is helping or hurting developing countries overall, there are certain small scale projects that have been proven to be effective. In her presentation, Duflo addresses questions of how to immunize, how to stop malaria and how to send children to school. Ultimately, she uses random control trials to answer these questions and demonstrate proven solutions.
Esther Duflo begins her presentation with an alarming statistic: approximately 9 million children under the age of five die every year; each day 25,000 children die of preventable causes. She then explains that lack of aid is not to blame for this problem. Rather, she suggests, it is improper and ineffectual allocation of aid.
Her first experiment looks at how to immunize. She asserts that immunizations are the cheapest way to save a child’s life. Although large sums of money are devoted for this cause, approximately 25 million children a year are not getting their necessary immunizations. According to Duflo, this is a “last mile problem”—the necessary technology exists, the necessary infrastructure is in place, but for some reason immunizations are still not happening. To understand why, Duflo examines Kajakistan.
In Kajakistan vaccinations are available and free, however, only 1 % of children are fully immunized. One reason is that people do not fully understand the benefits of vaccinations. Another reason is that there is a problem in going from attention to action. People know the vaccines are available but they continue to put it off and eventually it never gets done. To solve this problem, it is critical to make vaccinations accessible and provide people with a reason to go get the vaccine now. In Kajakistan, a random control trial was done of 134 villages. To make immunizations easier, monthly camps were established where children could come to receive their vaccinations. To encourage people to act now, incentives were added (1 kilo of lentil per immunization). The results were astonishing; coupling the monthly camps with incentives lead to a 32 % increase in the number of immunized children in the region.
Next, Duflo examined how to stop Malaria, the leading cause of mortality in children under five. Bed nets are an effective solution to mitigating this problem. They are inexpensive and provide contagion benefits for whole communities. Duflo argues that society should subsidize bed nets—make them free or even pay people to use them. This, however, brings up an important problem: if bed nets are free, people will not value them, and may use them for other purposes like fishing nets. Duflo examined a random control trial in Kenya to present an effective solution to this problem.
In this experiment, vouchers for bed nets were distributed. Some individuals received the bed nets for free; others received some level of discount. The results, however, demonstrated that when people have to pay, even a discounted price, the coverage rate decreases. The trial also illustrated that if people have bed nets, they will use them even if they received them for free. In the long term, the results showed that people who received free bed nets were more likely to purchase additional bed nets in the future.
In her final experiment, Duflo looked at the most effective ways to get children into school. Many potential solutions to this problem were tested including increasing teachers, providing meals, providing uniforms, giving scholarships, building more schools, ect. However, the most effective results came from simply informing individuals about the benefits of education and de-worming children at school in localities where worms are prevalent. On the other hand, the least effective results occurred when parents were bribed.
After explaining how aid can be effective in a very scientific matter, Duflo commented on another issue—why it is so difficult to raise funds for poverty. Poverty is invisible, huge in scope, and many are unconvinced of whether or not aid really works. Duflo asserts, however, that aid is effective in some circumstances. Thus, aid should be directed to these small, effective projects in order to make a noticeable and positive difference.
Esther Duflo takes an interesting approach to assessing the impact of aid. Her use of random control trials provides solid evidence that aid does work if implemented correctly. While Duflo does acknowledge that policy that works in one area might not work in another, this point is worth highlighting. Wide variations in culture, tradition, and ideology exist in the developing world. These variations will make it extremely difficult, if not impossible, to find one solution that works everywhere or will achieve the same degree of success in multiple areas.
Additionally, Duflo fails to discuss the problem of delivery in her talk. She presents an overly optimistic view of governments in the developing world. She seems to overlook that in developing countries, especially when there is a presence of corruption, help does not reach the segment of population most in need. In some instances, when there is an increase of government revenues from foreign aid, rent-seeking behavior may increase and productive public spending may actually decrease. Jacob Svensson highlights this problem in his report Foreign Aid and Rent Seeking. He explains that if implemented incorrectly, foreign aid may actually lead to decreased provisions of public goods.
Additionally, it is important to look at whom aid is being delivered to—is it being given to the central government, local government, or to individuals? Research has demonstrated that aid given to women is more effective in poverty reduction than aid given to the male head of the household. Women are more likely than men to allocate their income on necessities and distribute funds evenly throughout the family (See: Fighting Poverty in Developing Countries: Should the Focus be on Households or Women?).
Finally, Duflo focuses on saving the life of a child in her presentation but seems to overlook the larger institutional problems in implementing successful aid. Education is definitely an important part of poverty reduction but without infrastructure and a stable society in place, the benefits of education cannot be fully reaped. In a country with little infrastructure, an unstable society, and a poor economy, it is likely that the educated will flee and there will be a “brain drain, see “Brain Drain and Economic Growth: Theory and Evidence” Ultimately, this could make the society worse off than it was to begin with. Similarly, when there is a lack of infrastructure, small-scale projects may be hard to implement. For example, malaria drugs are available but there may be no health system to distribute or administer these vital drugs. Without macro-level, institutional changes, the benefits of small scale projects cannot be fully realized.
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