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# Aid effectiveness

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• http://www.oecd.org/countrylist/0,3349,en_2649_34447_25602317_1_1_1_1,00.html
• http://www.oecd.org/countrylist/0,3349,en_2649_34447_25602317_1_1_1_1,00.html
• http://www.oecd.org/countrylist/0,3349,en_2649_34447_25602317_1_1_1_1,00.html
• The key feature of the RD design is: assignment based on a cutoff value on a pre-program measure . The cutoff rule for the simple two-group case is essentially: all persons on one side of the cutoff are assigned to one group... all persons on the other side of the cutoff are assigned to the other need a continuous quantitative pre-program measure
• The key feature of the RD design is: assignment based on a cutoff value on a pre-program measure . The cutoff rule for the simple two-group case is essentially: all persons on one side of the cutoff are assigned to one group... all persons on the other side of the cutoff are assigned to the other need a continuous quantitative pre-program measure
• The key feature of the RD design is: assignment based on a cutoff value on a pre-program measure . The cutoff rule for the simple two-group case is essentially: all persons on one side of the cutoff are assigned to one group... all persons on the other side of the cutoff are assigned to the other need a continuous quantitative pre-program measure
• The key feature of the RD design is: assignment based on a cutoff value on a pre-program measure . The cutoff rule for the simple two-group case is essentially: all persons on one side of the cutoff are assigned to one group... all persons on the other side of the cutoff are assigned to the other need a continuous quantitative pre-program measure
• The key feature of the RD design is: assignment based on a cutoff value on a pre-program measure . The cutoff rule for the simple two-group case is essentially: all persons on one side of the cutoff are assigned to one group... all persons on the other side of the cutoff are assigned to the other need a continuous quantitative pre-program measure
• ### Aid effectiveness

1. 1. Does Aid Work? Michael Kevane Dept. of Economics Santa Clara University <ul><li>What is aid? How much is going where? </li></ul><ul><li>Who is answering the big question </li></ul><ul><li>Why this is a bad question </li></ul><ul><li>Reframing the question into smaller questions </li></ul><ul><li>My experiences with small-scale aid project: Friends of African Village Libraries </li></ul>
2. 9. Does Aid Work? Causality hard to determine Bad shock to economy Bad outcomes for people Increased flows of aid ?
3. 10. Time frame may not be knowable Project done Wow! Little to show 5 years 5 years
4. 11. Aggregating outcomes: Net cost-benefit Treadle pumps Cleft palate Solar lighting -\$2,000,000 \$1,000,000 \$50,000
5. 12. Aggregating outcomes: Moral sentiments Treadle pumps Cleft palate Solar lighting Save the planet Huh? Of course
6. 14. If we knew the answer to the question… Does aid work? So what? How to make it better? Yes/No
7. 15. Examples of evaluation issues <ul><li>Social entrepreneurship- selling to the bottom of the pyramid </li></ul><ul><ul><li>How to distinguish social good vs. social bad? E.g. cell phones as donuts </li></ul></ul><ul><li>Microfinance </li></ul><ul><ul><li>Joint liability lending to women with no collateral </li></ul></ul><ul><ul><li>Systemic risk in Burkina Faso </li></ul></ul>
8. 16. Examples of evaluation issues <ul><li>Darfur fuel efficient stoves </li></ul><ul><ul><li>Fuel collection poses multiple risks </li></ul></ul><ul><ul><li>Laboratory tests say FES do very well </li></ul></ul><ul><ul><li>What about in the camps? Not very effective </li></ul></ul><ul><ul><li>Markets for carbon credits </li></ul></ul>
9. 17. Reframing the question <ul><li>Using randomized evaluations of small-scale aid projects to measure impact and learn about effectiveness </li></ul><ul><ul><li>Among well-implemented projects, which have high impact? </li></ul></ul><ul><ul><li>Which have high measured “taxable” revenues relative to costs? </li></ul></ul><ul><li>All projects are bundles of attributes (process, messages, context) and have multiple causal pathways to outcomes. </li></ul><ul><ul><li>Key enable scaling and replicating </li></ul></ul>
10. 18. Reframing the question <ul><li>What makes some projects work and others not? </li></ul><ul><ul><li>Example: A water purification project is wildly successful </li></ul></ul><ul><ul><ul><li>Technology – system actually does more relaible purification at lower cost </li></ul></ul></ul><ul><ul><ul><li>Marketing – users think pure water makes them smarter </li></ul></ul></ul><ul><ul><ul><li>Design – users “see” the water getting pure </li></ul></ul></ul><ul><ul><ul><li>CEO – hands on and full of energy </li></ul></ul></ul><ul><ul><ul><li>Incentives – someone gets paid when water purification actually used </li></ul></ul></ul><ul><ul><ul><li>Community engagement – local activists are motivated to work on project </li></ul></ul></ul><ul><ul><li>Learning about which dimension of bundle is more important, and how bundle affects outcomes, is expensive. </li></ul></ul>
11. 19. Reframing the question <ul><li>What is the mechanism that changes behavior? Example: Establish coffeehouses to reduce social stress. Outcome, people frequent coffeehouses and social stress reduced. </li></ul><ul><li>But why did this happen? </li></ul><ul><ul><li>Behavioral predilection (i.e. want to see people’s faces) </li></ul></ul><ul><ul><li>Addiction – people addicted to coffee, channel stress away from social stress </li></ul></ul><ul><ul><li>Good taste – Any good food product makes people less stressed out </li></ul></ul><ul><ul><li>Want to hold warm thing – All warm and fuzzy projects have similar effects- distribute puppies </li></ul></ul>
12. 20. Randomized experiments to estimate intervention impact <ul><li>Randomly select samples to measure differences in outcomes </li></ul><ul><li>One sample gets treatment, the other is control </li></ul><ul><li>Use covariates to be more precise in statistical significance of measure of impact </li></ul><ul><li>Use power calculation to figure out sample size needed to estimate expected effect size as statistically significant difference </li></ul><ul><li>Problem of external validity </li></ul>
13. 21. Other approaches: Non-Experimental Designs <ul><li>Difference in differences </li></ul><ul><ul><li>E.g. radio stations established across country at different times, so look at changes in behavior over time and across regions </li></ul></ul><ul><li>Regression Discontinuity </li></ul><ul><ul><li>E.g. Families with older grandparent above 65 receive pension, so examine differences in behavior between families with grandparents aged 62-64 and those 65-67 </li></ul></ul><ul><li>Matching </li></ul><ul><ul><li>Some schools received solar panels, so match to similar sized schools with similar populations </li></ul></ul><ul><li>Instrumental Variables </li></ul><ul><ul><li>Find a variable that explains variation in “treatment” but not “outcome” </li></ul></ul><ul><ul><li>e.g. dust from rock crushing operation increases asthma, so acts like a random “treatment” of effects of asthma on schooling outcomes (unless dust directly changes schooling, or crushing operations not located near high asthma centers) </li></ul></ul>
14. 22. Community participation <ul><li>Defining community is a tricky issue </li></ul><ul><ul><li>Villages are often divided, government is not democratic </li></ul></ul><ul><li>Community assessment </li></ul><ul><ul><li>How to ensure multiple voices are heard? Lots of barriers </li></ul></ul><ul><li>Bottom-up </li></ul><ul><ul><li>But why is this a value? </li></ul></ul><ul><ul><ul><li>Because of evidence that more successful? </li></ul></ul></ul><ul><ul><ul><li>Because intervener values it? </li></ul></ul></ul>
15. 24. Problems of the pelleteuse <ul><li>Cost-benefit: Much more expensive to run, fewer benefits, appropriate technology: Were there any uses of pelleteuse ? </li></ul><ul><li>Credit constraint: Costs upfront, benefits over time </li></ul><ul><li>Incentives: Who was the residual claimant? </li></ul><ul><li>Village politics: Success changes distribution of power; power might be zero sum </li></ul><ul><li>Land tenure may not be resolved </li></ul><ul><li>Imagination and knowledge skills </li></ul><ul><li>Tradition? Often overplayed </li></ul><ul><li>Organization of foreign aid itself </li></ul>