What do (cutting-edge, leading, academic) development economists do?

Apparently not what developing country policy-makers want to know about. Jeffrey Hammer has a fairly damning report from the recent IGC conference in Lahore on the World Bank blog. The IGC funds research by many of the world's top development economists, and apparently none of them are answering the kind of policy questions that were posed at the conference by the Chief Minister of Punjab, Pakistan (a state of more than 100 million people). He wanted to know about how to allocate resources across sectors (which requires value for money and cost-benefit analysis, not just impact evaluation), and how to raise more revenues. What he got was precisely identified studies on the impact of policy tweaks, without any costing. 

"The Chief Minister posed serious questions that have traditionally been the bread and butter of the economics profession. Unfortunately, we are not even trying to answer them any more. The specific question was “Should I put more money into transport? Infrastructure (power, roads, water)? Law and order? Social services? Or what? And where am I going to get the money?” What questions could be more solidly part of the core of economics than these? Unfortunately none of these were even remotely the focus of the “evidence-based” policy making discussed. 

Almost all of the cases analyzed were single, simple policy “tweaks” that were, first of all, isolated from the broader market context in which they occurred and, second, had no conception of opportunity cost - what we would have to give up to pursue these things?"

What do development economists do?

A series of youtube interviews profiling the careers of 6 development economists; Angela Ambroz (IGC, former ODI fellow & JPAL), Luca Pellerano (OPM and IFS), Peter D'Souza (DFID), Sarah Lilley (Save the Children), Henry Mphwanthe (ODI fellow), and Aarushi Bhatnagar (Phd student and World Bank consultant).

Why are there so few blogs by British academic economists?

In the US, to name just a few, you have

Mankiw
Krugman
DeLong
Acemoglu/Robinson
Becker
Thoma
Cowen/Tabarrok
Easterly
Blattman
Rodrik
Landsburg
McKenzie/Ozler et al
Caplan

In the UK I count

Simon Wren-Lewis
Henry Overman
Danny Quah
Matt Collin

Hypotheses:

1. The bandwagon effect - Mankiw and Krugman are really high profile and have been blogging for years - when the leading textbook author and a Nobel prize winner are blogging then its probably ok (although this bandwagon effect could also effect UK academics)

2. Differences in administrative/teaching burdens?

3. A selection effect - in the UK terminal masters programmes are more common, so natural writers quit before then complete a phd and get sucked into academia

4. A simple quantity effect - some fixed % of academics are likely to be interested in blogging, and there are just many more top economists in the US than the UK (about 6 times more according to this list).

What am I missing?

All economists care about is money

"The love of money as a possession -as distinguished from the love of money as a means to the enjoyments and realities of life -will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. ... the love of money is detestable"

JM Keynes, writing in 1930 about what the world might be like in 2030.

Advice for new ODI fellows

Some assorted advice for this year's crop of ODI fellows who will be heading out soon (former fellows - what else should they know?).

1. Your main job (should) be translating economic theory and evidence into English. (see for example, Portes or Coats)

2. Your main job will actually be poring over spreadsheets.

3. Be nice and focus on building good relationships with your colleagues. 

4. You can probably give up on the idea of building much capacity.

5. But that's ok. The ODI fellowship is as much about gap-filling as capacity building. (As an aside, even with stratospheric levels of growth, poor countries will remain poor for a while. If you have 10% annual income growth but only start with $500, it takes 32 years to get to $10,000, the "rich country poverty line". Poor countries will need external assistance for a while. Worrying too much about the short-term sustainability of projects is over-rated. African success stories such as Botswana and Rwanda have relied heavily on external assistance over long periods).

6. Don't wear flip-flops to the office.

7. Don't take any crap about the fellowship. A 2009 review concluded that:

"it has spawned hundreds of careers in economic development as well as launched prominent scholars and distinguished civil servants. It had done so with very modest resources and a management that has stretched itself to fit and to cover, earning the praise of its Fellows, current and former, and the grateful recognition of its delivery of quality service by host governments. There is very little that needs to be done to maintain and sustain this successful partnership. What has been recommended in this review are simply steps to ensure its continuity and survival. There is no need to provide extended encomiums—the alumni, DFID and the satisfied client countries already said what needs to be said. The ODI Fellowship Scheme is a success."

Shameless self-promotion

More from the UK Parliament International Development Committee report on DFID support to South Sudan:

DFID also helps to fund the secondment of ODI Fellows to key ministries such as the Ministry of Finance and Economic Planning—which is generally regarded to be one of the better ministries in Juba. It was clear that the ministers we spoke to highly valued this technical expertise.

Face it, economist, you are a nerd

Face it economists: you do math, stats, and coding for a living. It's too late; you are a nerd. You are not a backslapping deal-making executive or a trash-talking caffeine-guzzling Goldman Sachs trader. You are a scientist of some sort, or at least you should be. Embrace it! Watch Fringe. Grow your hair out. Learn to juggle.

Noahpinion (new to me, but apparently blogging since 2005, respect for that!)

Economical Writing

The main cause of bad writing in economics is that economists don't read good writing. If economists would read Jane Austen or George Orwell, or even Adam Smith or Thomas Schelling, in bulk, daily, habitually, they would improve. 

Deirdre McCloskey (HT: Abhijeet Singh)

A consultant's love life

An oldie but a goodie, if you haven't seen this yet, I think it is probably better than most of the other economist-chart valentine's jokes doing the rounds.

Romance: A BCG Analysis

HT: Steve

How to think

via Tyler, a great quote from an essay on the culture of economics by Raquel Fernandez.

Economists essentially have a sophisticated lack of understanding of economics, especially macroeconomics. I know it sounds ridiculous. But the reason why I tell people they should study economics is not so they’ll know something at the end—because I don’t think we know much—but because we’re good at thinking. Economics teaches you to think things through. What you see a lot of times in economics is disdain for other’s lack of thinking. You have to think about the ramifications of policies in the short run, the medium run, and the long run. Economists think they’re good at doing that, but they’re good at doing that in the sense that they can write down a model that will help them think about it—not in terms of empirically knowing what the answers are.

This is why I so instinctively trust economists. Even if I disagree with them or think they are too right-wing, they can usually be relied upon to have thought things through.

Why do economists have kids?

Empirical research tells us that on average having kids does not make people happier. If anything, people who have kids are slightly less happy than people who don't but are similar in other respects. So why do we do it? In particular, why do the economists who are familiar with this research do it?

The recent Freakonomics Radio show the "Economists' Guide to Parenting" posed this question to three economists.

I would like to believe Bruce Sacerdote when he gives the very rational explanation

"I realised - this is the greatest adventure ever... Its so interesting..."

but I think that if I'm honest with myself I probably actually believe Bryan Caplan who says

"I started getting what psychologists call baby fever", 

and Steve Levitt:

"Just because I'm an economist, doesn't mean I cant be fooled by evolution like everyone else."

Blattman's 7 top tips on Southern Sudan

I hate linking to Chris Blattman's blog because you all read it anyway, or if you don't you should, but when it comes to Southern Sudan.... here are his ideas in response to Duflo/Banerjee's suggestions. 

I know too little about Sudanese politics to give specific recommendations, but here’s a sample of suggestions based on what I think I know: 

1. Build compacts, possibly unequal and unsavory ones, with warlords and other big men, giving them a stake in continued peace, even if it means they control crucial ministries or development organs. 

2. But for goodness sake try not to give up the ministries or development organs. There are non-pecuniary ways to buy people off. And spread it out so you get petty barons rather than oligarchs. They’ll be easier to deal with in 20 years when you have the strength. 

3. Next, give every incentive for elites, especially the ones apt to war, to invest in fixed assets whose value depends on stability and growth. Make them entrepreneurs. Oil rigs don’t count. Property in Juba does. So do plantations and small factories, even if they need subsidies to operate at first. This is hard, and will require attention and dedication. 

4. Aim for minimal corruption in twenty years, not two. 

5. Create a minimally competent police force, one that is less criminal than the criminals. And a court system, with particular attention to the places where ethnic groups repeatedly clash over land or rights or respect. Target programs to these hotspots to buy some measure of content. 

6. Train and educate the military like the bejeezus, and at all costs do not let it slip into factions. 

7. Roads, roads, roads. Not only are they good for growth, they are good for exerting state control and building a sense of nation.

I think the third point is a really good one. The rest, particularly 1 and 6, are things that are probably high priorities for the leadership already. You would have a hard time persuading them after 21 years of war that peace and stability is not the top priority. And they know plenty about balancing different armed factions in the pursuit of peace, having already brought different independent militias into the SPLM.

So: a big chunk of the budget is effectively already ring-fenced for salaries, the army, and road construction.

The question then is what to do with the small amount that that is discretionary and remaining, and I do think that there is space to deliver some social services in the simplest and most effective way possible, which might just be cash and/or health services. I do have a hard time with the poverty alleviation vs growth policy trade-off, and don’t know what the answer is. Its interesting that Duflo/Banerjee make no mention of macro/growth policy, contrasted with Lant Pritchett’s advice which is all macro/growth and no mention of social policy.

Advice from Esther Duflo and Abhijit Banerjee for Southern Sudan

In the New York Times. Banerjee goes with universal cash transfers and health insurance. Sounds good to me.

Q [David Leonhardt]. Let’s broaden the discussion from education. If you each could have a few minutes with the new leaders of South Sudan — the world’s newest country and a very poor one — and they asked you how they could best improve the lives of their citizens, what would you tell them? 

Ms. Duflo: In just a few minutes, we could not cover very detailed ground. So we’ll have to focus on the basics. First of all, I would try to convince them that a key priority would be to invest enough money and talent in running good quality social services for the poor, including free access to good schools, preventive medical care, and hospitals. This may not seem like rocket science: but these are basic human priorities, and these are also domains where some things are known about what may work. 

Second, I think I would try to convince them to run anti-poverty policy in a more intelligent way than what we see in most countries. In particular, I may try to encourage them not to listen too much to the elevator pitches of all the other experts, and stake their entire policy course on the basis of those… Of course they’ll have to start somewhere, and there is a body of knowledge available to choose policies that are likely to work. But they will still have a lot more to learn about the best ways to achieve their objectives. So I would like to advise them to always keep some margin to experiment, in order to find the best programs to reach those goals. 

Mr. Banerjee: Since they will no doubt want more specific suggestions, here are two policies that I think every poor country should implement. A small universal cash grant to everyone over 12, based on biometric identification. This guarantees that no one has to face the humiliation of being totally indigent, and from our evidence, makes people more productive as well. Making it universal is important, so that they do not attempt to identify the poor (which is very difficult to do effectively in poor countries). 

Second, a free universal health insurance policy that covers catastrophic health events, which allows people to go to private or public hospitals. Catastrophic health shocks do enormous damage to families both economically and otherwise, and are easy to insure, because nobody gets them on purpose. On the other hand, insurance policies that only treat certain catastrophic illnesses are hard to comprehend, especially of you are illiterate and unused to the legalistic nature of exclusions etc. Therefore people do not value them as much as they should which makes it hard for markets to supply them. This is an obvious thing for governments to take on.

Closely following the release of More Than Good Intentions, Duflo and Banerjee also have a new book out "Poor Economics." I'm about 2 chapters in and so far it is fantastic.

What do economists do?

Stefan Dercon investigates….

Economists study the most important problems facing the world. At least that is what I thought.

Using data put together by Jishnu Das and Quy-Toan Do (at the World Bank), Stefan created this Wordle showing the countries which articles in the top 5 economics journals focus on.

There are actually 54 countries there but you can probably only read United States and United Kingdom.

Of course, this does not mean that there is a bias in the editorial policy of the top economics  journals. It is perfectly possible that those countries are not very interesting, or that those economists writing papers on these other economies are not very good or that they just don't submit to these journals. And I just saw a pretty pig flying outside my window.
…

Fortunately, development economics has plenty of good journals, such as the Journal of Development Economics.

This is the Wordle for JDE articles which are focused on one country:

Latin America is somewhat overrepresented with 30%, India gets 12%, China 11% and Africa 18%.

For more details about the data see here.

The 2010 Economics Nobel Prize

What’s that, you want a tenuous development-link and a prize-winner-anecdote from your nobel prize coverage? Happy to oblige.

So the winners are Diamond, Mortensen and Pissarides for their models of “frictional” unemployment, or why job vacancies and unemployment can easily coexist.

In a closed economy that is. And when we speak about labour markets, we generally speak about closed economies. One might also want to ask how incredibly low wages can be so persistent on some parts of a planet, when there is such incredible wealth (and thus demand for cheap labour) on other parts of it. Well, there are some frictions. They would be the armed guards at our borders stopping those poor people from coming and helping us.

For your anecdote; I went to a Summer School taught by Pissarides in Birmingham a couple of years ago. Turns out he is a big Chelsea fan, to the extent that he took a cab for a 200 mile round-trip to make it to a mid-week Chelsea home Champions League match in West London. You have to admire his dedication to his team (,if not perhaps, his particular choice of team).

Check Marginal Revolution for some real coverage.

Angus Maddison 1926-2010, and long-run historical economic development

Angus Maddison was the first guy to create historical GDP estimates.

Adrian Wood gave my class this chart in university and told us all to stick it on our walls and spend some time staring at it.



You can play with the Gapminder version here or buy the book here.

Update: Here is the Economist

I have some competition…

For this week at least, possibly the best economics blog in Southern Sudan could be Whirled Citizen. He’s probably too busy doing some actual economics work to blog, but I’m looking forward to more reflections on Juba.

In case you missed it - this is also the best summary I’ve read of the new Pinkovskiy and Sala-i-Martin “African Poverty is Falling” paper.

Economists in International Agencies

Great quote from a lifer OECD economist (Stephen Morris) from 1986.

"Working for a long time at two or three removes from actual decision making, people working in international organizations can easily get out of touch with political reality and become over impressed by their own supposed omniscience. At the same time, because they do not have the power of a national government behind them, and can never be sure what real influence they have, they can become overly sensitive, defensive, or defensively aggressive."

Sounds kind of familiar.

Coats, A.W., The Role of Economists in Government and International Agencies: A Fresh Look at the Field, History of Economics Review

Obligatory Dead Aid Post

So there's been loads of chat about Dambisa Moyo's new book by much smarter people than me (here, here, here and here), but I think I can answer David Roodman's question - "why is anyone paying attention to this book?"

Because she's a hot economist, and hot female famous economists are in pretty short supply. I noticed this a while ago when some friends were telling me about which male economists they had crushes on, and I couldn't think of anyone. Simple.