More Evidence, Not Less Aid [Post-Op Notes]

A couple weeks ago I posted my review of the documentary “Poverty, Inc.” I was a bit critical and rambled a bit too long for a decent blog post. Despite it all, the folks over at Shared Justice, wanted to republish my review. So, here is a link to the (slimed down and edited) republished version of my review:

To End Poverty We Need More Evidence, Not Less Aid: A Review of “Poverty, Inc.”

Here are a few updates on the key points of the review:

TOMS Shoes: When Theory Doesn’t Hold in Reality

There is actually more to this story…

There is another research paper, written by the same core group of researchers, which studies the impact of TOMS Shoes more broadly. This study, which is currently in the peer-review process at the World Bank Economic Review, reports on data collected across a wide set of important outcomes, such as: school attendance, health, and psychological well-being. They find no evidence that there are any “life changing” impacts due to receiving a TOMS Shoe donation. Additionally, children who received free shoes were significantly more likely to agree with the statement: “Others should provide for my family’s needs” and less likely to agree with: “My family should provide for its own needs.”

So by no means am I stating that TOMS Shoes is getting it totally “right”. In fact, they are far from it, but at least they are aware of this reality. Here’s one of the lead authors talking about these two studies:

I have always been a greater fan of interventions that attack the root of poverty rather than give things away to the poor.  But in light of this study, what has made a great impression on each of us on the research team has been TOMS commitment to alter its program in response to shortcomings that have been manifest through our study as well as a number of other studies that the company has sponsored on its giving program.  TOMS is perhaps the most nimble organization any of us has ever worked with, an organization that truly cares about what it is doing, seeks evidence-based results on its program, and is committed to re-orienting the nature of its intervention in order to maximize results.   In response to children saying that the canvas loafer isn’t their first choice, they now often give away sports shoes.  In response to the appropriateness of their shoes in different contexts, in Mongolia they now give away these cute little kids’ snow boots.   In response to the dependency issue, they now want to pursue giving the shoes to kids as rewards for school attendance and performance.  Moreover, we are impressed with TOMS commitment to transparency.  Never once as researchers did we feel pressure to hide results that could shed an unfavorable light on the company.   By our agreement, they could have chosen to remain anonymous on the study; they didn’t.

Foreign Aid: A Simple Cost-Benefit Analysis

Since posting this piece, some readers have made comments that have called into question the idea of putting a dollar value on a human life. For those who remain uncomfortable with this practice, I’d just like to encourage you to read this recent article published in the Wall Street Journal: Why the Government Puts a Dollar Value on Life: To analyze the benefits of high-cost regulations, pricing the priceless is a necessary calculation.

Innovation in the Aid Industry: Cash Transfers

Here are a couple working papers on cash transfers recently presented at Oxford University’s Center for the Study of African Economies annual conference. More evidence that the development industry is continuing to learn. (Summaries provided by Dave Evens.)

• “We find strong evidence that cash transfer programmes has a mitigating role against the negative effects of weather shocks.” (Asfaw et al.)
• Cash grants for female entrepreneurs are more effective when women are willing to hide money from their husbands. (Fiala)
• Conditional cash transfers may lower political participation by pleasing voters and reducing interest in opposition activities. (Dodlova)
• If your neighbor gets a cash transfer and you don’t, it leads to “strongly decrease life satisfaction and moderately decrease consumption and asset holdings.” But the effects attenuate over time. (Haushofer et al.)
• A poverty graduation program with business skills training, business mentoring, savings training, and cash transfers to women improved income, savings, and food security. #Kenya #RCT (Gobin & Santos)

For more on this ‘more evidence, less poverty’ topic. Check out this old but still worthwhile Freakonomics podcast.