[Book Review] Cents and Sensibility – Forthcoming in F&E

Over winter break this year I had time to read… books… not just journal articles for a change. It was nice. One book I read was, Cents and Sensibility: What Economics Can Learn from the Humanities by Gary Saul Morson and Morton Schapiro. As someone who doesn’t spend enough time reading literary classics (or much fiction at all), this book challenged me to change my behavior.

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[Book Review] Experimental Conversations – Forthcoming in the AJAE

Randomized control trials (RCTs) have taken development economics, and even the broader discipline of economics, by storm. Whether this is “good” or “bad” or just another methodological “fad” largely depends on one’s perspective on development and empirical science. Timothy Ogden, the Managing Director of NYU’s Financial Access Initiative, has documented a number of these perspectives from not only those who implement RCTs, but also those who are skeptical of the use of RCTs, and those who fund and consume research. These conversations, recorded verbatim as interviews, make the subject of a new book that was published at the beginning of this year: Experimental Conversations: Perspectives on Randomized Trials in Development Economics.

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[Book Review] Slow Kingdom Coming

Over the past few weeks – in the break between semesters – I’ve been able to find time to read. I’ve read less than I wanted to (of course), but have thoroughly enjoyed each of the books I read. In this post, I will review one of these books, Slow Kingdom Coming: Practices for Doing Justice, Loving Mercy, and Walking Humbly in the World by Kent Annan. Kent is an author and speaker on the broad topic of faith-based development. He is the co-director of the NGO, Haiti Partners, which works in Haiti providing educational opportunities to children. Additionally, Kent is a brother in law to (probably) the most famous development economics blogger ever, Chris Blattman, and this relationship shows when Kent writes about data and rigorous evidence.

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[Book Review] From Aid to Trade: Lessons Learned from Haiti

Haiti is a country that has been almost “NGO’d” to death. In their new book, From Aid to Trade, Daniel Jean-Louis and Jacqueline Klamer (full disclosure: two former colleagues of mine) highlight this issue in a clear and meaningful way. They make the case that even with this vast abundance of NGOs, Haiti as a nation has not seen very much of an improvement in the last several decades.

The book begins with a vivid story of Laurent Auguste, owner of a local soap manufacturing company in Port-au-Prince, Haiti. After the cholera outbreak in 2010, bars of soap were being donated and distributed for free in Haiti by everyone from the United Nations to small churches across the United States. According to Daniel and Jackie, these donations effectively pushed Laurant and his soap company out of business.

This is just one anecdotal example of perhaps thousands of stories demonstrating the misallocation of good intentions in Haiti. More recently, in early March 2016 The New York Times Magazine ran a story highlighting a group of older Christian missionaries who volunteered their time in the hills above Port-au-Prince by “struggling with heavy shovels to stir a pile of cement and sand.”

They were there to build a school alongside a Methodist church. Muscular Haitian masons stood by watching, perplexed and a bit amused at the sight of men and women who had come all the way from the United States to do a mundane construction job… Imagine how many classrooms might have been built if they had donated that money rather than spending it to fly down themselves. Perhaps those Haitian masons could have found weeks of employment with a decent wage. Instead, at least for several days, they were out of a job.

One of the key lessons of these stories is that poverty alleviation and economic development always requires more than good intentions.

I, myself, learned this lesson while volunteering with a student organization in college. Our group was affiliated with an organization that facilitated trips for business and economics students to travel to Panama (and other countries) in order to perform microenterprise consulting and financial literacy training. I went on two trips, each a week long, in back to back summers. During the first trip, we worked with a microfinance institution (MFI) in a rural village. Through that MFI our group provided funds for the village to build a roadside stand to sell their hand-made crafts and souvenirs. Returning a year later, the materials that had been purchased with these funds were sitting—unused—in a pile on the side of the road.

This is a crucial lesson for anyone who possess the persistent desire to help the less fortunate, the oppressed, the poor, or the marginalized around the world. If you are new to the field of international development then this may be a worthwhile book for you. The stories told by Daniel and Jackie introduce the complexity of our world and exposes this inconvenient reality: that good intentions are necessary but not sufficient in our world.

If, however, you are more experienced in the field of international development, then continue reading because even this complexity is complicated. My remaining thoughts can be separated under two headings: ‘economies not economics’ and ‘war aid, what is it good for?’.

Economies not Economics

(Some may catch this as one of the key points of Morten Jerven’s book Africa: Why Economists Get it Wrong. It’s important, so I’ll expound on it a bit.)

In From Aid to Trade, Daniel and Jackie develop and present a strategy of economic development, what they call, opportunity-based economic development (OBED). This strategy is defined as the following (pp. 66):

As a comprehensive strategy, OBED means harnessing assets and capital through entrepreneurial opportunities to increase balanced transactions, a key activity to implement OBED, thereby meeting needs profitably and generating resources. It means that needs should be met through market-based opportunities and initiatives, not through projects or programs that do not generate profit.

To me, this sounds a lot like the so-called “Washington Consensus” policies of the late 1970s and 1980s. Here’s a brief summary of the goals of these policies: The term “Washington Consensus” denotes the ambitious agenda that considered developing nations as no different than economics 101 textbook cases of free-market economies. Basically, the agenda reflected an urge to “unshackle” these economies from the “restraints” of government regulation and in return institute “market-based” policies that “stabilized”, “privatized”, and “liberalized.”

Looking back on the outcomes of these policies, it’s not very controversial to state that they “didn’t work” – by that I mean they didn’t deliver the expected outcomes. Why? Well, in short, because policymakers, at the time, were studying economics and not economies. They treated the diversity of the developing world as being characterized by oversimplified stylized facts often found in an economics 101 textbook.

Never mind that the critical assumptions of a free and efficient market as presented in economics 101 (i.e. individuals maximizing self-interest, secure property rights, full information, no monopoly power, access to a complete set of markets) fail to hold in many, if not all, of the local economies of developing nations. Never mind the institutional underpinnings of market-oriented economics. Never mind that the very institutions that allow market-oriented policies to “work” – by that I mean create flourishing societies – in developed countries took decades, or perhaps even centuries, to form and mature. Never mind the intricacies of local contexts, of local history, of local culture that effect how people make decisions and behave. Never mind political interests that may make certain policies more urgent or feasible in a given country.

There is little doubt – or at least I’m not arguing – about the goal of developing countries to become self-sufficient, industrialized, market-oriented countries. I just want to suggest that achieving this goal is tricky. It’s context specific. There is no universal recipe. And the solutions almost certainly lie beyond the realm of economics 101 textbooks. I would have loved more specific details, from Daniel and Jackie, on when and where the OBED strategy works best and a discussion of the limitations of OBED as a strategy for the development of economies.

War Aid, What is it Good For?

The title of the book is catchy, and I’d say a bit jarring. Both words, “aid” and “trade” carry a lot of baggage and are difficult to wrap one’s head around. The idea of moving “from aid to trade” sounds nice on the surface. But what do we actually mean?

As I’ve written about before, painting “aid” as a singular thing uses a brush that is a bit too wide. Aid takes many different forms. There is humanitarian aid. Food aid. Aid for education. Aid for health. Aid for infrastructure. Aid for energy. Aid for the environment. Aid for security. Aid for political stabilization. Aid for economic reform. Aid for data collection. Aid for policy analysis. And on and on and on. Do all of these “not work”? Should all of these be replaced by trade? I’m not sure if that’s even possible, let alone desirable.

Next, lets relax the assumption that aid is altruistic. Instead lets allow ourselves to live in a world where countries give aid for purposes of their own benefit. In this case, countries like the United States give foreign aid primarily for self-interested purposes – i.e. for reasons explained by public choice theory. As much as I dislike this reality, I’d argue this is the world we live in.

If the reality is that the primary reason for countries like the United States giving foreign aid is for self-interested reasons, then it’s no wonder that lots and lots of foreign aid funded programs haven’t delivered growth or development. Additionally, if this characterization of foreign aid spending is true, then the bulk of the effort from those of us who actually do have so-called altruistic intentions should be to figure out how aid can be used most effectively. In a sense, we should move away from the “aid vs. trade” characterization and think more carefully about aid plus trade.

Now, this “aid plus trade” characterization is (I think) actually what Daniel and Jackie’s book is all about. So don’t let the title discourage you, From Aid to Trade is a book that (thankfully) moves us beyond the tired “aid debate” and is more about how aid can facilitate trade. This much is alluded to in the subtitle: “How Aid Organizations, Businesses, and Governments Can Work Together”. But remember, these are lessons learned from Haiti. Be careful when applying them to different economies.

[Book Review] The Taste of Many Mountains

I write this as I sit in a coffee shop sipping a cappuccino. The coffee beans were grown in Kenya. They had to be irrigated, harvested, packed into bags, imported, roasted, packaged again, transported, marketed, and brewed. The milk was likely farmed in the United States. It was taken from the cow, pasteurized, homogenized, packaged, transported, marketed, steamed, and finally aesthetically mixed into my cappuccino. Remarkably the whole thing cost me only $4.25! I say ‘only’ because, just think about all the people involved, all the families that this product influences. Still I tend to wonder: Who benefited most? And was anyone exploited?IMG_2195

This is the topic of Bruce Wydick’s novel about coffee production and consumption in today’s world. Yes, that’s right, a novel. An empirically minded development economist has written a story (with a setting, a plot, complications, a crisis, a climax, and denouncement). And, I’m not kidding, it is quite a page turner. This is a unique quality of a book with the topic of globalization and agricultural value chains. Not only does the book present the nuances of poverty and globalization, it includes themes of love, life, joy, and lament.

TMM_CoverThe Taste of Many Mountains‘ follows four graduate students – Angela, Alex, Rich, and Sofia – on a summer of fieldwork in Guatemala where they are charged with the task of calculating the value added and profits at each link in the global coffee supply chain. A primary research objective being: is fair trade coffee better for poor farmers than free trade coffee? The answer, of course, is nuanced and rather technical, but this book explains the concept as well as I’ve ever read.

What sets this book apart from other books is it is both a story that doesn’t loose sight of the evidence and a research report that doesn’t loose sight of the story. The story is based on actual research that has recently published in The Review of Economics and StatisticsAdditionally the book is filled with impassioned discussions about the core tenants of international trade economics and the sometimes visceral (perhaps spiritual) call to help the poor and vulnerable. These conversations engage a tension anyone who has spent time in a developing country has likely considered. For example, After Angela’s first day in Guatemala, she has the following conversation with Sofia:

“Sofia, about what we saw today… why? I know I’m probably being too persistent, but why is there so much poverty in places like this?”

“Again, I don’t have a satisfying answer to that question.”

“Try me. I just might be satisfied.”

Sofia turned out her own light and lay in a sleeping bag that she had thrown on her bed. She gazed upward where some lights from the town illuminated the pine boards that made up the ceiling. “Well, it seems to be related to a couple of basic things, one being how people in society organize themselves.”

“You mean institutions? That always sounded king of boring.”

“Trust me, it’s not boring. Understanding them is something people win Nobel prizes for.”

“I guess I don’t really get it,” said Angela.

“The rules of the game that society makes for itself. Institutions either encourage people to make a living by creating or doing things that benefit other people, or by siphoning off what other people have earned doing just that. In rich countries it’s mainly the former, and in poor countries it’s more of the later. When people learn that the rewards of creativity and hard work are mostly confiscated, they don’t bother. So a lot of people say that it’s all about institutions.”

Sofia stopped. Angela figured that Sofia wanted to go to sleep, but she’d had a cup of coffee after dinner, her bed was hard, and she was surprisingly wired even though it had been a long day. So my relatives are poor because their rules of the game aren’t any good, she thought.

“So what’s the other part of it?” Angela asked. There was another pause.

Sofia turned her head on the pillow back to face her. “Well, probably another part of it has to do with things like the aspirations people have for their lives and their identity. Sometimes it’s hard for, say, the son of a peasant to see himself as capable of being anything other than a peasant. But if your dad was a doctor or an engineer, then you might have higher aspirations.”

Angela thought about herself for a moment. “My dad was a doctor, at least my American dad. I have plenty of aspirations, but I think also plenty of identity issues.”

The book is stuffed with engaging yet informative dialogues like this one. Discussing cutting edge topics in development economics such as institutions and aspirations to debating the merits and demerits of International Trade Theory vs. World Systems Theory.

It is a really enjoyable read and is applicable for almost anyone interested in helping others across national borders. If I ever get the chance to teach an introduction to development economics class at an undergraduate level, I would seriously consider crafting a curriculum around this book. For those interested, the book also includes a list of references to the papers that inform the various dialogues throughout the book.

And (SPOILER ALERT) Bruce recently wrote about The Flaw in Fair Trade on his blog. But I suggest reading the book.

[Book Review] Africa: Why Economists Get it Wrong

Morten Jerven strikes again! Back by popular demand (or due to a lack of a supply of good economic research about ‘Africa’).

51oNbFt0MmL._SY344_BO1,204,203,200_In 2000 The Economist ran a cover page with a headline calling Africa a hopeless continent. In the cover article of that issue The Economist asked the question: “Does Africa have some inherent character flaw that keeps it backward and incapable of development?” In 2011 The Economist had changed it’s tune with a cover page singing the song of Africa rising. In his newest book, Morten Jerven asks the provocative question: “Do economists have a character flaw that makes them incapable of doing good scholarly work on Africa?

The book is short and approachable by all who are really interested in economic growth and poverty reduction on the African continent. I urge my non-academic friends and readers to pick up this book. One of the objectives is to equip non-economists to read economics more critically.

The first book I read about development economics was Paul Collier’s “Bottom Billion”. In it Collier made the claim that almost a billion people live in countries that do not experience economic growth. He coined the term “Africa+” which identified over 60 countries that do not grow and experience various poverty traps: the conflict trap, the natural resource trap, the being landlocked with bad neighbors trap, and the bad governance in a small country trap.

Morten’s point is that their is no such thing as the “Bottom Billion” and this notion that Africa is a place experiencing chronic failure is misleading and outdated.

The Subtraction Strategy

A substantial pile of literature in development economics regards trying to understand the lack of economic growth in Africa. This leads to study after study trying to find variables and characteristics that explain why Africa has experienced slow economic growth. Jerven sites a study that reviews this literature and reports that 145 variables have been found to be statistically significant explanatory variables for Africa’s low growth rate.

Not only has this approach failed to provide informative information, Jerven calls this approach the “Subtraction Approach” – where the characteristics of a developed country are compared with the characteristics of an underdeveloped and the differences are taken to explain the lack of economic prosperity. In this approach the lack of growth is explained by the lack of something else. This leads to statements that sound very tautological: Underdeveloped counties are underdeveloped because they are underdeveloped.

This search for “why Africa is so poor” has missed the critical nuances of the diversity of a continent of 54 countries. Since independence some countries on the continent have experienced periods of growth, some countries have experienced periods of negative growth, and many countries have experienced both. Averaging all of these experiences together causes us to ask wrong and uninteresting questions about Africa as a whole.

Africa Rising

If there is no “Bottom Billion” then surely the “Africa Rising” trope must jive with reality. Jerven, however, isn’t hot on the idea of “Africa Rising” either.

Jerven points out the recent experiences of Ghana and Nigeria when they updated the base year for the GDP calculation. In the case of Ghana this statistical maneuver made them a middle-income country overnight. But, it didn’t happen overnight in the lives of those living in Ghana. It happened slowly over the course of many years. And that’s Jerven’s point, we don’t have good enough economic data in many countries in Africa to make broad statements such as ‘Africa is rising’.

In 2011 Jerven surveyed the state of the GDP calculations among countries in Africa. He collected information on 34 of 54 countries. Only ten of those countries had a base year that was within the last ten years. In seven countries the base year was over twenty years old. Only six countries had a base year within the last five years. This brings up several important points to keep in mind:

  1. The ‘Africa Rising’ trope makes claims based on information on just over half of the countries on the African continent (the other 20 countries were not currently calculating annual GDP statistics.)
  2. Many of those countries are calculating their economic activity through a grossly outdated market basket of goods and services. In Nigeria for example, before they rebased in 2013, they were not including cell phones into their GDP calculation.
  3. GDP is a remarkably rough measurement of wellbeing. For example: if you marry your cook, GDP decreases. If your country is rebuilding after a natural disaster, that activity counts as GDP (see post-2010 Haiti earthquake for a recent example).

Additionally we need to be careful with statements like “seven out of the 10 fastest growing countries in the world are in Africa”. While this statement may not technically be wrong, it presents a misleading realty. To make this statement one must do the following calculations: Countries with less than 10 million people are excluded, which leaves 81 countries, 28 of which are in Africa. If OECD countries are omitted because it is unlikely that these countries are going to be growing at a rate greater that 7 percent per year, then half of the remaining countries are in Africa. A less misleading statement could be “on average some African countries are expected to grow slightly faster than other non-OECD countries”, but that is boring.

Economies not Economics

I hope I’ve demonstrated some of the important contributions this book makes. I strongly recommend anyone to read it.

In summary, the book reminds us to study economies not economics. While this may seem like a meaningless statement, there has been an unfortunate trend toward cross-country studies based on macro-analysis and away from country-level studies that embrace the nuances of the local context. This is a welcome critique, because books like Collapse, Why Nations Fail, and The End of Poverty have all been popular and influential books in their time.

Morten Jerven has been a guest on two great podcasts. So along with reading the book, give these a listen:

Development Drums with Owen Barder and Econ Talk with Russ Roberts.

Measuring Well-being

Martha Nussbaum, perhaps one of the sharpest thinkers on development, poverty, and inequality, writes a critical yet constructive review of Angus Deaton’s recent book, “The Great Escape: Health, Wealth, and the Origins of Inequality“. This review (almost) has it all – from discussing the practical use of GDP as a measure of wellbeing to breaking down the inherent difficulty in cross-country purchasing power comparisons in terms of marmite and bourbon, Nussbaum exemplifies true academic criticism.

Really quite a necessary read, I’ve cut out my favorite section of the piece – but you should really read the entire article.

Basically, Deaton’s view is that welfare, or the good human life, has many component parts, each one valuable in its own right. The good life is much more than money: it includes health, education, freedom from discrimination and oppression (including “not to be the victim of others’ search for enrichment”!), and the ability to participate in democratic society on a basis of equality. Even that list of components is too simple, given that each component is itself plural. Health, for example, has many dimensions, including physical robustness, cognitive well-being, and life expectancy. Deaton is at his best when he insists that measures of well-being rest on ethical judgments, even in an area as apparently simple as health. Accentuating life expectancy, for example, has the effect of prioritizing mortality decline among the very young. Meanwhile a focus on height, used judiciously, can supply a part of the picture of how people are really faring in the prime of their lives, since height, affected by maternal and child nutrition, is strongly correlated with both bodily robustness and cognitive capacity.

Thus Deaton is strongly, and repeatedly, critical of the idea that we can measure human well-being by GDP per capita, a standard shortcut in the development literature, and one with large political implications. (Narendra Modi, India’s recently elected prime minister, campaigned on his alleged development achievement in Gujarat: but closer inspection shows that, while Gujarat did very well on average GDP, it did much less well than Kerala and Tamil Nadu on health and education, in part because of the excellent quality of government services in those states, while Modi appears opposed to a large role for government.) Even if average GDP were the best single number to use as an index of welfareand Deaton disputes this, making the familiar point that the profits of foreign investment are often repatriated by the investing country, so average household income would tell us more about how people are really doingno single number is much good, given the complexity of human lives and what is worthwhile about them. Average GDP, moreover, does not include work done in the home (a point often stressed by Nancy Folbre and other feminist economists that has finally made it into the mainstream), and it does not include the value of leisure. And although there is a general correlation between GDP and some of the other good things Deaton mentions, the correlation can be disrupted. The high average GDP in the United States, for example, does not tell us about the inequalities that make for ill-fare (bad health, bad education, lack of political voice) in a distressingly large number of the nation’s inhabitants. These points are not new; they have pervaded the development literature for some time; but it is good to see them ringingly endorsed.

Nor does Deaton succumb to the lure of the once-again fashionable idea that we can measure welfare by “happiness,” defined as moment-to-moment feeling. (“Once again” because the similar view of Jeremy Bentham in the late eighteenth century, soon aptly criticized by his student John Stuart Mill, has now been revived with great éclat by the psychologist Daniel Kahneman, though without attention to Mill’s critique.) Feelings are important, says Deaton, but they are not reliable indicators of how people are really faring, because people adapt to hard conditions and to some extent tailor their satisfactions to what they think they can achievethe phenomenon known in the economic literature as “adaptive preferences.” Moreover, Deaton adds, some valuable pursuits, such as love and the struggle for justice, require risk and effort, and may be accompanied at times by pain. Happiness, he concludes, is “a poor measure of overall wellbeing.” If we are to pay attention to survey data, he wisely suggests, we ought to prefer “life evaluation” surveys, which at least allow people to ponder many parts of their lives. But the important conclusion to draw, he says, is that there is no single measure of this complex notion, and “no magic question that provides a touchstone for judging well-being.”

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The Challenges of Simple Problems

Book Review: The Idealist: Jeffrey Sachs and the Quest to End PovertyNina Munk131010125449-idealist-cover-459xa

It is hard to come up with something to say about Nina Munk’s magnificent book that hasn’t already been said. The sincerity of this statement is proven by the fact that those very words have already been said. Due to this reality and the fact that I’ve been meaning to review this book since I read it several months ago; I will review Nina’s work by reviewing the most popular reviews already written. Four key lessons stick out to me while reading the actual book and its many reviews.

Nina spent the better part of six years following Jeff Sachs around to meetings with African diplomats, to seminars with large aid agencies, and flash-mob appearances in various rural African villages. She also spent considerable time in two of the Millennium Villages. Dertu, an arid Kenyan village close to the Somali boarder and, Ruhiira, a village in Western Uganda.

Joe Nocera in a New York Times Op-Ed sets the stage:

Nina Munk’s new book, “The Idealist,” is about the well-known economist Jeffrey Sachs and his “quest to end poverty,” as the subtitle puts it. I know: That subtitle sounds like classic book-industry hyperbole, but, in this case, it’s not. That really is what Sachs has been trying to do. The question of whether or not he is succeeding is where things get tricky.

The quest began in 2005, when Sachs, who directs the Earth Institute at Columbia University, started an ambitious program called the Millennium Villages Project (MVP). He and his team chose a handful of sub-Saharan African villages, where they imposed a series of “interventions” in such areas as agriculture, health and education. The idea was that these villages would show Africa — and the world — how the continent could loosen the grip that extreme poverty had on so many of its people.

From the start, the Millennium Villages Project has been controversial. It has soaked up large sums of money — the original seed money was $120 million — which its critics believe could have been better used on more targeted, less grandiose forms of aid. Because Sachs, for years, refused — on ethical grounds, he said — to rigorously compare the results at his villages with villages that didn’t get the same kind of help, development experts complained that there was no way of knowing if the project was making a difference.

Jeffrey Sachs is a brilliant man. This much is clear. As a world-renowned economist Sachs successfully (more or less) turned around the economic fortunes of Bolivia and Poland with “Shock Therapy”—a plan that aimed to jolt an economy out of socialism and into a market economy and gave him the nickname “Dr. Shock”. It is important to note that Sachs is a macro-economist. He is trained to think about the world at the country level, rather than at the individual level. To be sure he is very good at analyzing the country level of the world. This is the reason, however, macro-economists typically are not called to evaluate projects, programs, or policies. It is the job of the micro-economist to consider individual behavior in aggregate and evaluate success or failure.

If the first lesson is that Sachs is brilliant—on the level of his grad school age-mates Paul Krugman and Larry Summers—the second lesson is that solving poverty is not easy. Erika Fry summarizes a few of the challenges faced by Sachs the MV Project in her review in Fortune:

But Sachs’s quest—which plays out in the handful of villages in sub-Saharan Africa that comprise his Millennium Villages Project—seems to falter at every turn. A livestock market is abandoned two months after it opens. Villagers use their new mosquito nets (distributed to prevent malaria) on goats. Water-carrying donkeys drop dead. Hospital generators break down. Much-anticipated markets for banana flour and pineapple never materialize. And, because there is no market or local storage facilities, a bumper crop of maize—thanks to fertilizer and high-yield seeds—goes to the rats.

 

Bill Easterly articulates the third lesson in his first review of Nina’s book. “As the author makes clear, no one has worked harder to help the world’s poor than Jeffrey Sachs, or made more of the world’s affluent care about their plight.” This lesson put in context with Sach’s idea that, “we have enough on the planet to make sure, easily, that people aren’t dying of their poverty”, presents a harrowing conclusion. That nobody has worked harder, than Jeff Sachs, trying to show ending poverty is easy.

But as Easterly writes in his second review of the book:

Sachs’ technical fixes frequently turned out to be anything but simple. The saga of Dertu’s wells is illustrative. Ahmed Mohamed, the local man in charge of the effort, discovers that he needs to order a crucial part for a generator that powers the wells. The piece takes four months to arrive, and then nobody knows how to install it. Eventually a distant mechanic arrives at great expense. A couple of years later, Munk returns to find Mohamed struggling with the same issues: The wells have broken down again, the parts are lacking, and nobody knows how to fix the problem.

A little more than a year after that, the wells are up and running again, and the Millennium Villages blog celebrates Dertu as having “the most reliable water supply within the region.” Yet by 2011 the wells have run completely dry due to a drought—a not-uncommon occurrence in the arid region.

Such examples multiply in Munk’s book, showing that purely technological answers to poverty fall well short of Sachs’ promises. It turns out that technology does not implement itself; it requires the assistance of real people subject to widely varying incentives and constraints in complex social and political systems.

The final lesson comes from Angus Deaton’s review:

Modern technology, with its models and manuals, has an irresistible fascination for social engineers, and has done so for most of the past century. New knowledge and new ways of doing things have indeed been the source of much of human progress. Yet the schemes of the planners have rarely brought the improvement in the human condition that their well-intentioned architects had hoped for, and have often brought disaster. Thousands of years of painstakingly accumulated local knowledge cannot be incorporated into such plans. Nor can technocratic methods make up for bad politics, or provide a substitute for the two-way contract between politicians and people that provides public goods in exchange for taxes and that underpins development.

….

The Millennium Villages come with none of the coercion that accompanied the rural development projects of Stalin or of Nyerere, let alone the murderous horrors of Mao’s Great Leap Forward. For that we should be grateful. Yet the crying shame is that while the hubris came from Sachs, the nemesis came to the villagers.

The fourth lesson is tragic. When technical “experts” fail to act with humility or seriously consider the local challenges not mentioned in textbooks, suffering comes not to the foreign experts but to the local poor.

about-ninaThese lessons, which are discussed and summarized in the podcast Development Drums in which Nina is interviewed, are important for everyone wishing to do something good in this world. In this podcast Nina dispels several misguided reactions to this book. Some people when they read The Idealist say, “I’ve read your book, you must be against foreign aid” or “I’ve read your book, helping the poor must be hopeless”. Nina is vehemently against either of these reactions. In the former foreign aid is not the problem; it is hubris, an unwillingness to recognize failure, a disregard for the difficulties of specific contexts, and a general lack of appreciation for the challenges inherent in development projects led by outsiders. In the later helping the poor is not trivial, it is an imperative. We must however understand the challenges at play and approach the situation with humility, especially as an outsider.

If this all hasn’t been enough to convince you to read The Idealist, perhaps the following quotes will. The book is about poverty, development, and economics; but unlike most books in this genre, it is an absolute pleasure to read. Don’t take my word for it, others have already said the same thing.

Angus Deaton, in The Lancet: “Beyond the enormous punch that the book delivers, the quality of the writing is that of a fine novel, not of the usual tract in social science. We get to know and care about the characters, including Munk herself; we share their dedication, their optimism, and their dreams of improving lives. We also care when their illusions are destroyed, and their dedication is betrayed. Much of the message is conveyed by the arc of the story, and by the change in Munk’s own voice as she moves from her initial optimism and her commitment to reporting on something that really matters—the fight against global poverty—into final disillusion. It is a trip that many of us have made over the years, but few with so much knowledge from the field and none whose experiences are so eloquently and movingly reported.”

Erika Fry, in Fortune: “A fine writer with a gift for deploying spare, vivid detail, Munk overcomes the burden of what could be duller-than-dirt subject matter—the politics of foreign aid; the ins and outs of Uganda’s matoke market; NGO infighting over anti-malaria efforts—into a lively and at times, quite funny book.”

Andrew Jack, in The Financial Times: “Nina Munk’s The Idealist, [is] a highly readable examination of Jeffrey Sachs’s Millennium Villages Project in Africa.”

Laura Seay, in The Christian Science Monitor: “[The Idealist] is an absolute must-read for anyone who is interested in doing good for those in need. Far from writing a cheerleader’s account about someone who “just wants to help,” Munk raises questions about whether poverty actually has technical solutions, or whether cultural norms and behaviors can derail even the most well-funded and planned activities.”

The Plagues of the Poor

Book Review: The Locust Effect: Why the End of Poverty Requires the End of Violence by Gary Haugen

Every Saturday, after exchanging polite Swahili greetings with the security guard, I walk the dusty and unpaved road into town. I walk past shops made from scraps of wood and torn plastic tarp. Heaps of corn kernels dry in the hot sun. Children practicing their English shout, “Mzugu, how are you! How are you?” and some run beside me begging for money. I cross the dilapidated colonial-era railroad tracks and finally make my way toward the bustling center of town to do my shopping for the week.

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Book Review: “Nudge”

I recently finished reading a fascinating book entitled Nudge: Improving Decisions About Health, Wealth, and HappinessThe most basic idea behind the book is everything matters. Humans are constantly influenced unconsciously by seemingly trivial details. Put simply we are always being “nudged”. This book aims to harness the ways humans are nudged and use “choice architecture” in increase our quality of life.

The book begins by outlining some of the ways humans make decisions. Using insights from the growing field of behavioral economics, the authors explain how the vast majority of humans fail to follow the rules of rational choice theory in economics. Understanding these insights is paramount to understanding how humans make decisions and how to help humans make better decisions. (If these details sound interesting to you, read the book or take a microeconomics class, I am not going to take the time to outline them here.)

I will jump to some of the unique ideas proposed in this book about how to solve some of our world’s most complex and pressing challenges. As you will see choice architecture, seems to introduce interesting and innovative ideas for families, business people, and policy makers to consider.

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