Prof. Christelle Dumas (Chair of Development Economics, University of Fribourg), EA Global X Berlin 2017, Oct 14/15 2017

1. Introduction Aid Cash transfers Roads Conclusion
Using evidence to fight poverty
Christelle Dumas
Department of Economics
University of Fribourg
EAGxBerlin 2017
October 14th, 2017
Christelle Dumas Using evidence to fight poverty

2. Introduction Aid Cash transfers Roads Conclusion
Helping people
We have plenty of good reasons to try and help people
in particular to relieve poverty
That does not say how to do it.
“The road to hell is paved with good intentions.”
Christelle Dumas Using evidence to fight poverty

3. Introduction Aid Cash transfers Roads Conclusion
Some examples of well-intended policies
Aid.
aid is among the most debated questions in economics
proponents: poverty can be relieved with small amounts per
individual from the industrialized world
opponents: aid does more harm than good: does not reach the
poor people, encourages corruption, deficits...
Difficult to have a definitive answer on that question.
because countries who are beneficiaries differ markedly from
countries who are not beneficiaries.
Christelle Dumas Using evidence to fight poverty

4. Introduction Aid Cash transfers Roads Conclusion
Food aid
A compelling argument in favor of food aid: avoid starvation.
Problem: providing resources during a conflict might actually fuel
this conflict.
“US Food aid and Civil Conflict”, N. Nunn and N. Qian, American
Economic Review, 2014.
Idea: food aid is largely determined by US agricultural stocks.
Christelle Dumas Using evidence to fight poverty

5. Introduction Aid Cash transfers Roads Conclusion
Food aid (2)
(a) Wheat production ! US stocks (b) US stocks ! Food aid
Christelle Dumas Using evidence to fight poverty

6. Introduction Aid Cash transfers Roads Conclusion
Food aid (3)
(c) Irregular recipients of food aid (d) Regular recipients of food aid
Christelle Dumas Using evidence to fight poverty

7. Introduction Aid Cash transfers Roads Conclusion
Food aid (4)
Increasing food aid by 10% increases the incidence of conflict by 0.70
percentage points (+4% compared to the mean).
It does not say whether we should donate for hunger relief
Clearly some benefits that are not taken into account in the study
Christelle Dumas Using evidence to fight poverty

8. Introduction Aid Cash transfers Roads Conclusion
Another example of unintended adverse consequences
“The unintended effects of cash transfers on fertility: evidence
from the Safe Motherhood Scheme in India”, A. Nandi and R.
Laxminarayan, Journal of Population Economics, 2016.
Objective: reduce maternal and infant mortality by having women
give birth in hospitals.
Tool: cash transfers for birth delivery at hospital.
Christelle Dumas Using evidence to fight poverty

9. Introduction Aid Cash transfers Roads Conclusion
Another example of unintended adverse consequences
Consequences: increase in fertility.
Christelle Dumas Using evidence to fight poverty

10. Introduction Aid Cash transfers Roads Conclusion
Road infrastructure
reduction in transaction costs and spatial isolation
greater access to work opportunities,
greater market access for products,
lower price for factors,
improved access to health care, and the education system.
Christelle Dumas Using evidence to fight poverty

11. Introduction Aid Cash transfers Roads Conclusion
Evaluate the impact of a road rehabilitation programme in
Tanzania
Ongoing research with Ximena J´ativa.
2005 strategy for growth and reduction of poverty,
10-year transport sector investment programme: 9 road transport
corridors to be upgraded (10’300 km)
Data:
information collected by the World Bank and the Tanzania
national institute of statistics
households interviewed in 2008, 2010, 2012 and 2014.
Christelle Dumas Using evidence to fight poverty

12. Introduction Aid Cash transfers Roads Conclusion
Data (1)
Figure: LSMS-ISA Sampling and Tanzania Road Network 2008
Source: LSMS-ISA, TANROADS GIS data, author’s computation.
Christelle Dumas Using evidence to fight poverty

13. Introduction Aid Cash transfers Roads Conclusion
Data (2)
Figure: Blue = Rehabilitated Roads in 2011-2013
Source: LSMS-ISA, TANROADS GIS data, author’s computation.
Christelle Dumas Using evidence to fight poverty

14. Introduction Aid Cash transfers Roads Conclusion
Methodology (1)
Definition of a control group, on the basis of observed
characteristics in 2008.
Compare the evolution of the villages close to the “new” roads
with the evolution of villages that look similar.
Christelle Dumas Using evidence to fight poverty

15. Introduction Aid Cash transfers Roads Conclusion
Methodology (2)
Figure: Villages used in the evaluation
Christelle Dumas Using evidence to fight poverty

16. Introduction Aid Cash transfers Roads Conclusion
Results: Rural Households
For rural households in Tanzania, we find evidence that road
improvements lead to:
Market participation.
" Off-farm labor.
# On-farm labor.
# Agricultural sales (maize, cassava, cotton) and harvest (rice,
cotton).
Welfare
# Subjective Welfare: Financial Situation.
# Durable Assets.
! Consumption: overall no effect, but a reallocation.
# Prices: Irish Potato, Beans, Groundnut.
Christelle Dumas Using evidence to fight poverty

17. Introduction Aid Cash transfers Roads Conclusion
Results
Overall a reduction of welfare for rural households.
Urban households seem to gain.
Market participation.
No effect on Labor Supply and Demand.
Welfare
" Consumption: maize, plantains.
# Shocks: business failure; large rise in price of food.
Christelle Dumas Using evidence to fight poverty

18. Introduction Aid Cash transfers Roads Conclusion
Taking stock
Even the better-intended interventions might lead to adverse
effects
Systematize evaluations, build a corpus of knowledge
Also because the “same” policies might lead to different effects in
different places
Understand why it works or why it does not work
Spread the culture of “legitimate doubt”
Christelle Dumas Using evidence to fight poverty

19. Introduction Aid Cash transfers Roads Conclusion
How do we do that? Experiments
Use experiments when feasible.
Intervention made by an NGO - example: subsidize bednets to
eradicate malaria
Choose a set of people who could benefit from the intervention
Randomly allocate who benefits from the subsidy
Randomness ! beneficiaries and non beneficiaries are similar
Compare the outcomes of “treated” and “control” individuals
Costs:
Resources allocated to the evaluation (time, data collection)
Constraints
Why?
because it is “straightforward” to pin down consequences of the
intervention
because easy to communicate to funders, politicians...
Christelle Dumas Using evidence to fight poverty

20. Introduction Aid Cash transfers Roads Conclusion
How do we do that? Specificities of the intervention
Use econometric techniques
When interventions are implemented independently of a research
design
When randomization cannot be implemented (food aid, roads)
Because experiments also have their own limitations
(representativity)
Christelle Dumas Using evidence to fight poverty

21. Introduction Aid Cash transfers Roads Conclusion
The road to knowledge
Christelle Dumas Using evidence to fight poverty