Public officials might occasionally have other motives besides the altruistic pursuit of the public interest. In recent years, one of the boom fields in economics has been political economy (building upon a prior and related field called public choice). Both fields suggest that if we have a fuller picture of what drives public officials, which might include the desire to stay in power or personal gain, we would have a more realistic view of political outcomes.
Of course, public officials also care about the public interest, and may be self-selected to be more altruistic than most. It’s too cynical to say they ONLY care about personal gain and power, and it’s too naïve to say they ONLY care about the public welfare. And, in recent years, we have started to view managers of official aid agencies with the same realism.
So why are we so reluctant to have the same realism about NGO officials? Many condemn any discussion of their motives being anything besides selfless devotion to the poor as hopeless cynicism. But why can’t we do political economy on NGOs?
One example is the way that aid has been increasingly fragmented into tiny pieces in recent years because there are increasingly many NGOs advocating different causes. Most of these causes are good ones, but the NGOs don’t take into account the negative effect of promoting THEIR cause on the OTHER causes. The political economy result is that, after feeling all the pressure, many aid agencies are trying to do many things at once to be effective.
I saw one recent example of shameless lobbying for one cause. A group known as Children’s Rights Information Network (CRIN) has a mission to put “children’s rights at the top of the global agenda.” CRIN began a campaign recently to lobby for appointments over 2010-2012 to more than 11 positions in international organizations (including the UN Secretary General) to be limited to those who have “the appropriate commitment, skills and experience to work effectively for children’s rights.”
Well, the World Bank lists “children and youth” as just one of 34 “major topic areas.” Moreover, the interpretation and practical value of “Children’s Rights” is still controversial – the World Bank did not even mention the concept in its exhaustive 2007 World Development Report on “Development and the Next Generation.”
Who is CRIN? It started as an alliance between Save the Children (particularly UK and Sweden branches) and UNICEF in 1991, and that’s pretty much what it remains today. Were the leaders of Save the Children completely indifferent to the large expansion that Save the Children would enjoy if Children’s Rights moved to the “top of the global agenda,” thanks to choosing the right people for 11 major positions? I think Save the Children really does care about poor children, but they could conceivably have less pristine motives. That’s not cynicism, that’s political economy.
31 Comments
One of the major points of public choice economics is to identify when and how government decision makers might deviate from the ‘benevolent social planner’ behavior utilized in simpler models. In the example you’re describing, it sounds like Save the Children would behave in the same manner (support CRIN) whether they have purely altruistic or own-utility maximizing preferences. The problem as you’ve described it is one of an externality, not one of public choice.
While it is perfectly reasonable to posit alternative motives for NGOs, it’s not obvious from this post what advantage this more complex analysis might provide. Where / how do you see political economy analysis of NGOs bearing fruit?
That’s certainly a political example because they formed an organization with political ends. (Arguably there is some merit to having a separate organization to do political tasks, to keep the mission of the original organization clear.) Advocacy is necessary because funding is a scare resource, and to do anything, NGOs need funding. Just like advertising, it can be done more honestly or more deceptively. What would the alternative system be for allocating resources?
Speaking of this, from an article in Time recently I think we should conclude that people who work against diarrhea are either the most altruistic of us all, or incompetent advocates for their issue.
LoL…can’t wait for CRIN(GE?) to reply you! :p
In response to Norman -
I think it’s plainly obvious what the political economy approach brings to the table. When we treat NGO officials as completely altruistic, we assume that their advocacy is based, at least somewhat, on the true state of the world. When “Save the Children” says “we believe that children’s rights are the #1 factor in development” we suddenly have to take that information into account.
Switching to a more robust model where NGO officials are either A) Completely self-interested and are trying to just expand their budgets B) Altruistic, but have an altruism bias towards their given area (which actually isn’t much different from self-interest) – we can start to take the information they give with a grain of salt.
Bill is right. The potential negative impact of the predominance of one subject-matter over the others should be taken seriously.
Perhaps we need an agency to sort out which NGOs should be listened to seriously?
Maybe we should do background checks on NGO directors, to verify what level of altruism they really have, and act accordingly?
I can barely believe what I’m reading.
For one thing, the text suggests that ‘we’ — whoever that is — are (currently) not allowed to scrutinize the motives of NGO officials. I don’t know where you get that idea: in most countries NGOs struggle to stay afloat, and their credibility is regularly challenged by both the government and the private sector. That’s as it should be. In the process, all sorts of twisted motives are attributed to them: they are considered agents of foreign imperial powers, they are considered to not care about the population at large, but only a subgroup, etc. Perhaps this is not the case for very large, western-based NGOs, but even there, the relationship with government officials (in the global north and in the south) and aid donors is far from cozy.
I also can’t understand Bill’s discomfiture with the existence of ‘increasingly many NGOs advocating different causes’. Really, I thought you believed in ’searchers’, experimentation, and the free market…
And here you seem upset because there are too many NGOs, pushing for far too many causes. The existence of all these NGOs is evidence of the complexity of life in a democratic, representative society: interests abound, but power and resources are greatly concentrated. Should we set an arbitrary limit to how many NGOs there should be, or how many causes they should espouse?
Lobbying government and persuading corporations to pay attention to certain issues is required by the nature of the system. It is to be lauded that so many interests are currently represented.
As for children rights, there is as much controversy over them as there is around the prohibition of torture: the US and Somalia have been flirting with the idea that these rights shouldn’t be taken seriously. But the rest of the world does seem to agree that they are relevant. The CRC is the most widely ratified HR treaty there is. As with all internationally recognized rights, implementation is far from perfect, very irregular and is a permanently incomplete process. All rights are indeterminate to a certain extent, and all countries violate them, to a certain extent. That isn’t an argument against rights, but for them.
Agree very much with the post. Isnt there a strong element of prisoners dilemma here though?
Where do the incentives point at?
Suppose tomorrow all poverty is gone and all people in developing countries enjoy high living standards.
What are those 500.000 white development aid sector workers going to do, except become long term unemployed in their home countries?
Our NGO official would have the choice between:
- living on the dole in rainy UK.
- Being a big Sir, enjoying loads of (undeserved) respect and cash, living in a mansion with servants, NGO paid landrovers, best private health insurance and school fees paid in a great private school, and all you have to do is writing proposals, dish out money and travel to regional meetings and conferences. And write another proposal when the “project stops”.
So where is the incentive to make poor people richer?
Why is it that no country in history ever prospered because of “altruistic” NGO’s policies?
It couldn’t be because the incentives point the other way, could it.
It might be a worthwhile exercise to think about whether there is a gap between senior NGO officials and the constituencies/interests they serve, much as it should be looked at in the financial sector.
In the financial sector, as has become evident in the last 18 months, traders and managers in the investment banks were/are given astonishing rewards for inventing shonky “innovative” products, taking massive risks with other peoples’ money, but suffering comparatively minimal consequences for failure. The gap in incentives and outcomes between managers and their constituents (investors) is very high.
In the INGO world I think something like the opposite is true. It is still other people’s money at stake, but senior managers are rewarded (and promoted) for being risk averse, and succeeding minimally as long as they don’t fail catastrophically, and thereby
protecting the enduring public brand and reputation of the organisation. They should be more innovative and risk-taking in the name of / interests of their constituents (ie, poor people, not donors, and not organisational continuity). Compared to the financial sector though, the gap between incentives and outcomes I think is also there, but much smaller.
Great point Bill. I think the tendency to think NGO incentives are beyond reproach or examination has a negative effect – both in discouraging research on their incentives, and in constraining examination (and redress) of situations where they are clearly operating with a conflict of interest.
A commenter (Loraine) on a blog entry I wrote about the Global Fund for AIDS, TB and Malaria noted that NGOs are frequently operating with clear conflict of interest in preparing grant application for the Global Fund, and then acting as the “principal recipient” or PR – where they administer all the funds received – by a sole source contract. See the comment on my blog below.
This is clearly a conflict of interest, but it persists at least in part because people think that NGOs are beyond suspicion. If this were a for-profit, it would have been stopped very quickly.
http://blogs.cgdev.org/globalhealth/2009/06/give-the-global-fund-a-gold-star-for-their-hard-hitting-evaluationnow-comes-the-hard-part.php
Great post. When discussing NGOs, as April points out, we much too often treat them as if their motives and behavior was somehow different from that of other donors. Yet, Axel Dreher, Florian Mölders and Peter Nunnenkamp recently reviewed Swedish NGO behavior, and Nunnenkamp with other coauthors did similar analysis on Swiss NGOs. They find that, in general, NGOs behave very much in the same way as national and multilateral donors. In other words, there’s no reason to treat them as if they were different.
As for me, I’m not offended when I see an institution wants to be louder than another. It sounds like a nonprofit market, where a need asks an offer. By the market law, the agency fitting the most with the rest’s needs will be survive.
Of course it has to lead to concrete results and impacts.
This post is spot on, and perhaps doesn’t go far enough. When I worked for a large NGO in Latin America and Africa, I heard people talking about how they would hate to move back to the US because they would have to leave their big house and nanny. I also have been called upon to write proposals for programs destined to fail because “we can’t leave Country X”, or because “we are going to run out of money in Country X”, neither of which implies any sort of concern with getting results for the poor.
The most egregious example, though, was the time I edited an in-house study on the effectiveness of food aid as implemented by my employer, which demonstrated by that in the three countries studied, the effects were either negative or neutral. I passed on my edit to the person in charge of that effort, and it was quickly suppressed because it didn’t jive with official messages. They then ran (and paid for) another study that conveniently found positive benefits of food aid. God forbid they publish a study that would threaten their well-being!
I agree with Matthias. I think that NGOs have their credibility and motives questioned all the time. That being said, I also agree that recognizing that no one is totally altruistic and without other motives is good for development. (and I blogged about it once: http://bloodandmilk.org/?p=1364)
Interesting take on this issue. I think I’d agree that political economy (or psychology) applies to understanding the motives of people in any profession including NGOs and even economics academics who run blogs
we’re all human and so none of us is above confusing personal and public good. Political economy probably matters most though for those with most power amd influence since the effects of their personal aspirations will be most widely felt.
That said, in this case I’m not sure if this is an example of political economy or not. It’s plausible that Save the Children and others believe that advancing child rights is the most effective way of promoting development, and that having people with certain characteristics/qualifications in influental positions is therefore necessary. Others might disagree with the focus on child rights – but those who support it could really be pursuing it for the public interest.
Even the term “Non-Governmental Organization” is inadequate, when many survive on hand outs from the state or government funded organizations like the UN.
“Not for profit” might be better, but then again that could be a gimmick: the would-be profits can always be accounted for as salary by the NGO owners.
So, suppose I live in a nice place in the tropics. I need a job. No local job matches my skill set and pay demand, so I set up an NGO, get foreign grants, help some, and make a decent living.
Is this good? Bad?
One way to see it is as a (semi-)decentralized market solution, much like the ones Prof Easterly advocates.
Another, less benign one, is as a product of a rent-seeking society seeking out aid dollars whatever the means.
The truth is likely somewhere in the middle.
NGOs are not holier than thou.
Aid is an industry. Few institutions/individuals would seriously want to discontinue their own existence/job respectively.
In most market interactions, the market provides a corrective – simplistically put, if people don’t buy your product or services, there’s something wrong, and you need to change it. This isn’t the case in the aid industry. There are practically no truly independent evaluations, and evaluation criteria are often very imprecise.
Also yes, because people mean well, it’s difficult to criticise them – I do think that enables them to get away with loads. Few people who donate to NGOs really understand the complexities of just one country that these NGOs are supporting. On what basis to you tell them to stop what they are doing if it is well intended, but doesn’t make sense – if it doesn’t do harm?
For a laugh – things at the wilder fringe of Doing Something:
Not strictly speaking an NGO, but an interesting combination of undoubted good will and OMG-surely-not!:
http://www.yourrenfrew.com/RenfrewMercury/article/15214
I must have overlooked that UG has a teddy bear shortage.
Why doesn’t it occur to them that, if indeed there is a toy shortage, these toys could be bought in UG from a Ugandan shop? (and use the money saved for freight, too).
Or this one:
http://www.delmarvanow.com/article/20090808/LIFESTYLE/908080366/1024/Soles4Souls-gives-comfort-to-weary-feet
UG has perfectly good shoe shops.
I worry about this line of argument being taken too far, because I’ve seen it taken too far.
When I worked in refugee resettlement, I remember that the anti-immigration crowd criticised the resettlement organizations by saying that we only wanted the US to resettle more refugees because it would make us resettlement workers extravagantly wealthy and create more jobs for our friends.
A point that is relevant, but nobody talks about it:
Stealing.
I have seen over the years hundreds of thousands of dollars, pounds and euros being looted from their budget by NGO people & in other aid agencies & government aid officials.
Audits & accountancy standards in the NGO sector in poor countries are virtually non-existent, that helps the thieves quite a lot.
But who cares? the poor have never known the money was there in the first place.
Seeing the link to the CRIN campaign mentioned here – surprised no-one mentioned the fact that part of the aims of the campaign are for transparent selection criteria and processes to select the occupants of key UN jobs.
Presumably part of the self-interest in this is on the part of qualified individuals who currently don’t get a chance becuase of not having thwe right nationality of political connections. How dare those self-rightous well qualified candidates be seeking selection based on merit to the detriment of the well connected!
Add my voice to those of Matthias, Alanna and Transitionaland. Anyone who worries that NGOs suffer from being somehow inadequately scrutinized on ANY front, really, has clearly never worked for one.
I assume that everyone in aid has multiple, perhaps even internally conflicting motives for being in aid. (Even Profs. at NYU
) It’s fun; it’s interesting; it beats flipping burgers. Oh yes, and maybe we’d like to help the poor as well… The more important question now is where do we go from here?
I’ll second J. above + Matthias etc.
Why this paranoia?
Secondly, Public Choice is a sub-sub-group of Political Economy.
Great topic, Bill, but one that would take more than a blog to adequately address. I have worked for NGO’s and for profits and both the organizations and the people staffing them have some mix of motivation that is altruistic and self interested. From a policy standpoint, NGO’s should not be given a free ride. What is important to understand is not motivation, but the business models and how the incentives line up. One of the real drawbacks to NGO’s is that their business model typically relies on an in country presence that must be maintained. As a result, NGO’s can and do build up social empires which displace indigenous companies and local non profits. For profits may charge more, but they are accustomed to doing a job and leaving when the job is done.
Going back to April’s comment reflecting on Loraine’s response to the GFATM blog posting, it bears noting that even in much-maligned institutions such as the World Bank, we do not allow consultants who prepare project proposals/feasibility studies or inputs to the PAD (Project Appraisal Document, which then has to be approved by our Board) to subsequently work on that project. That’s just conflict-of-interest 101. That GFATM allows same NGOs writing the grants to then be the grant recipients is kind of mind-blowing. However, within the rarefied world of NGOs, I can see this standard slipping at the Bank too, as in some countries where NGOs are selected to be the implementing agencies/contractors, they get to review and approve the evaluators of their work. This may seem like a small quibble, after all, those who have most experience in the country know the best local institutions for evaluation, right? and we want to build up local capacity in M&E, right? but I would prefer a more objective third-party selection of auditors/evaluators.
Mancur Olson’s The Logic of Collective Action remains the best starting point for an economics of NGOs. Without denying that NGOs are pursuing the achievement of goods and services which their members would provide, he shows both how the NGO pursues its public objectives and how the internal incentives work. The real benefit of his work is that it points to both public policy and internal organizational policy solutions to the dilemmas of NGOs.
And here are a few comments on this post from the Twittersphere:
alanna_shaikh @bill_easterly My argument with that post – Save the Children is an all purpose NGO now, not especially kids, despite the name
alanna_shaikh @bill_easterly Also, I think people question NGO motives all the time…
Transitionland So, when I advocate the US resettle more refugees, I do so because I want more jobs for my friends? @bill_easterly
Transitionland By yr reasoning, anytime an NGO advocates 4 its cause be taken more seriously, that’s probably a ploy for more $ 4 employees @bill_easterly
Transitionland I get the sense @bill_easterly doesn’t trust anything or anyone not explicitly out to make as much money as possible.
IdealistNYC Super cynic: @bill_easterly says that no one is straightforward about their motives, so I wonder what his truly are.http://bit.ly/13Uzp9
(You can follow @bill_easterly and @aidwatch on Twitter.)
I’d just like to add to Matt’s comment:
Switching to a more robust model where NGO officials are either A) Completely self-interested and are trying to just expand their budgets B) Altruistic, but have an altruism bias towards their given area (which actually isn’t much different from self-interest) – we can start to take the information they give with a grain of salt.
There’s a (C) which is some combination of the two.
Perhaps it’s my training, or perhaps it’s the time I’ve spent in Tanzania and Malawi interviewing folks who work at NGOs (in the national offices, district offices, and in the field), but in using a political economy approach, I think NGO workers are akin to bureaucrats. They tend to be higher skilled and sometimes more altruistic, but yes, they have preferences for maintaining their position and for increasing their organization’s budget. Though they are subject to oversight (mountains of paperwork, usually), they are rarely beholden to the intended beneficiaries of their efforts.
They give one with hand and take away with two hands-All aid givers that is!
Here is a personal story somehow related to this post:
We are evaluating the impact of a DFID funded program in education (In an African country). While designing the instruments, we defined the outcome variables as being the students performance, students attendance, teacher attendance, drop outs, and the like.
But that NGO officials wouldn’t let me go ahead with this, they don’t like those indicators. They wanted to include a lot of indicators (not outcome to my view) that will make the “effect” a slam dunk. Indicators like: Have you received the training? Have you developed a school development plan?, Have you elected the PTA committee, etc. These are things that treatment schools had to do in order to get a grant! So, obviously they did it more than the control schools where nothing is require. And we know that from the records. But apparently, indicators like that maybe enough for the DFID to justify further funding of the same program.
It this about money, or is it about real outcomes in term of pupils’ learning?
“One example is the way that aid has been increasingly fragmented into tiny pieces in recent years because there are increasingly many NGOs advocating different causes. Most of these causes are good ones, but the NGOs don’t take into account the negative effect of promoting THEIR cause on the OTHER causes. The political economy result is that, after feeling all the pressure, many aid agencies are trying to do many things at once to be effective.”
You are so absolutely right about this and you have found just the right words to describe the situation. Working with an NGO in Goma, DRC, I witness this on a daily basis: Hundreds of NGOs and GOs all competing for attention and funds, while the actual work lacks coordination, there is not enough communication, too much rivalry, and the cause suffers from it. And yes everybody is now trying to do everything in order to open their net as far as possible to catch a grant – in aid and development work,’less is more’ is not just a saying, it is a crucial rule. We are overstretching ourselves!
Plus, we are trying so hard to ’sell our cause’(in the case of my NGO, it is first and foremost the fight against sexual violence) that we end up also selling the people we try to support – by turning them into mere digits in a project report, by allowing sensation-hungry journalist to take pictures of their suffering, by claiming we know what is right for them, and speaking FOR them rather than WITH them.
We are aware of these issues, we discuss them we try to make a difference – but we also know we are part of a system and in order to survive as an NGO, we need to play by its rules.
I have heard plenty of people complain that it would be great working for the State Department if only they didn’t keep calling you back to Washington every few years.
I agree that we need to better study and analyze the role of NGOs or “civil society” in development, given that in many places, NGOs have replaced government and are the primary recipients of aid. James Ferguson explores this in “Global Shadows: Africa in the Neoliberal World Order.”
However, I disagree with Bill’s logic that ” Well, the World Bank lists “children and youth” as just one of 34 “major topic areas.” Moreover, the interpretation and practical value of “Children’s Rights” is still controversial – the World Bank did not even mention the concept in its exhaustive 2007 World Development Report on “Development and the Next Generation.”
Since when was the World Bank’s “lists” a reliable indicator of development priorities? The “exhaustive” 2007 report referred to was also about “youth” — not children. In the report, youth are described as aged 15 – 24. (In addition, the report is despicable in some of the ways it represents the needs of “youth” — but perhaps that’s another story.)