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The Political Economy of Aid Optimism or Pessimism

Bill and Melinda Gates are making a big media presentation today at 7pm of their Living Proof Project, in which they document aid successes in health. They call themselves “Impatient Optimists.” We can comment more after we hear their presentation. However, they invited comment already by posting progress reports on the Living Proof website.

Actually, we have also previously argued that aid has been more successful in health than in other areas.  However, one petty and parochial concern we had about the progress reports is that Bill and Melinda Gates continue to make a case for malaria success stories based on bad or fake data that we have criticized on this blog already twice. The Gateses were aware of our blog because they responded to it at the Chronicle of Philanthropy.

Yet they continue to use the WHO 2008 World Malaria Report as their main source for data on malaria prevalence and deaths from malaria in Africa. As we pointed out in the earlier post, the report establishes such low standards for data reliability that some of the numbers hardly seem worth quoting. From the WHO report: “reliable data on malaria are scarce. In these countries estimates were developed based on local climate conditions, which correlate with malaria risk, and the average rate at which people become ill with the disease in the area.” Where convincing estimates from real reported cases of malaria could not be made, figures were extrapolated “from an empirical relationship between measures of malaria transmission risk and case incidence.”

In Rwanda, which the Gateses say showed a dramatic 45 percent reduction in the number of deaths from 2001 to 2006, a closer look at the WHO data shows that there is an estimate of 3.3 million malaria cases in 2006, with an upper bound of 4.1 million and a lower bound of 2.5 million. And, according to which method is used to estimate cases, the trend can be made to show that malaria incidence is actually on the rise. The Gateses also highlight Zambia as a “remarkable success,” claiming that “overall malaria deaths decreased by 37 percent between 2001 and 2006.” While they provide no citation for this figure it appears to come from the very same WHO report, which concedes that compared to African countries with smaller populations, “nationwide effects of malaria control, as judged from surveillance data” in Zambia are “less clear.”

The downside of all this is that it appears we are having no effect whatsoever on the Gates’ use of fake or bad numbers and thus on the highest profile analysis of malaria in the world. The Gateses ignore our recommendation (and that of others) that they invest MUCH more in better data collection to know when GENUINE progress is happening. (Would Gates have put up with a Microsoft marketing executive who reported Windows sales were somewhere between 2.5 and 4.1 million, which may be either lower or higher than previous periods’ equally unreliable numbers?)  Are we insanely pig-headed for insisting that African malaria data be something a little more reliable than if the Gateses had asked the pre-K class at the Microsoft Day Care Center to give their guess?

Well, this is the third time we are saying this on this blog, so maybe we should give up. When people like the Gateses are so tenacious in the face of well-documented errors, it’s time for us economists to shift from normative recommendations (don’t claim progress based on pseudo-data!) to positive theory (what are the incentives to use bad numbers?)

What is the political economy of “impatient optimism”? Here is a possible political economy story – there are two types of political actors: (1) those who care more about the poor and want to make more effort to help them relative to other public priorities, and (2) those who care less and want to make less effort relative to other priorities.

Empirical studies and data that show that aid programs are having very positive results are very helpful to (1) and not to (2), while of course the reverse is helpful to (2) and not to (1). So each type has an incentive to selectively choose studies and data. Knowing this and knowing the public knows this, the caring type (1) might want to signal they are indeed caring by emphasizing positive studies and data, and may have no incentive to actually evaluate whether the positive data are correct or not. So the Gateses might want to say (as they did): “The money the US spends in developing countries to prevent disease and fight poverty is effective, empowers people, and is appreciated.”

If this purely descriptive theory is true, it could explain why some political actors stubbornly stick to positive data even if some obscure academic argues it is false or unreliable.

It cuts both ways – the anti-aid political actors would also have no incentive to recheck their favorite data or studies. Then the debate over evidence will not really be an intellectual debate at all, but just a political contest between two different political types.

Of course, we HATE this political economy theory when it’s applied to US. We are VERY unhappy when people conclude that because we are skeptical about malaria data quality (and thus whether they show progress), therefore we really don’t care about how many Africans are dying from malaria and wish that all government money went to subsidize fine dining in New York. And, the Gateses would probably not be fond of this political economy explanation of their actions and beliefs either. Both of us would prefer the alternative “academic” theory of belief formation, in which it is all based on evidence and data, not political interests.

How to distinguish which theory explains the behavior of any one actor is determined by the response to evidence AGAINST one’s prior position – do you change your beliefs at all? The Gateses seem to fail this test on malaria numbers. We hope we do better when it comes our time to be tested, as we should be.

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11 Comments

  1. A Nopheles wrote:

    Tachi Yamada of the Gates Foundation also visited an empty ward that was suspiciously empty … http://gateskeepers.civiblog.org/blog/_archives/2009/10/6/4343028.html

    Posted October 27, 2009 at 3:23 pm | Permalink
  2. Sceptical Secondo wrote:

    Sir
    Here’s another third time if i’m not mistaken.

    http://en.wikipedia.org/wiki/Political_economy

    http://en.wikipedia.org/wiki/Public_choice_theory

    Good post, + comments not least, on marriage the other day btw.

    Cheers

    Posted October 27, 2009 at 7:54 pm | Permalink
  3. ft882003 wrote:

    Using fake data to promote optimism is possible if one is a billionaire, and also when most of the public health world is sycophantic.

    Posted October 28, 2009 at 4:11 am | Permalink
  4. Justin Kraus wrote:

    Anyone care to guess the odds, and then wager upon them, the likelihood that the Gateses will reply to this? Microsoft does a pretty good job of ignoring its critics and bulldozing its way through issues and I don’t see why their Foundation should be any different.

    Posted October 28, 2009 at 8:26 am | Permalink
  5. geckonomist wrote:

    I do not care what data Mr. and Mrs. Gates use as a guide to where and how to put their money. Precisely BECAUSE it is their money, they can invest it in any way they want.
    Whether they want to help Goldman Sachs, bail out Medicare, fund the health budget in Zambia or gamble it in a casino in Vegas, it is totally their choice.

    That is in stark contrast to Prof. Easterly in his former World Bank job and all others spending and wasting taxpayers’ funds on aid projects. And I bet, sometimes based on far worse data than the Gates family is using.

    And even today, suppose Prof. Easterly detects a negative effect in some data, and the program is stopped because of that.
    Suppose this was a false negative ( because of mistakes in the data, etc), and therefore in effect he stopped something very good for the poor….
    Will Prof. Easterly be accountable for this?

    Nope. I guess he will continue to receive his university salary.

    Unlike the Gates family, who lose billions of their own dollars if their programs turn out as false positives.

    In case the US government puts taxpayers money in the Gates’ aid accounts, then blame the US government, not Mr. and Mrs. Gates.

    If you have problems with WHO data, tell the WHO that they either stop collecting those useless things, or invest in better data collection.
    Don’t blame others for using them as they are.
    Because:
    Suppose Gates funded better data collection. These new data show a positive effect, but the WHO data a negative effect.
    Wouldn’t Prof. Easterly and many others blame the Gates data collector for being biased in favour of his paymaster?
    Therefore Gates can’t win this argument. Better not to waste energy in his own data collection then.

    I don’t know how the Gates family is spending their money, but I read they tried a few new approaches, let people/institutions compete for the funds, and cut off the money if there are no results at all.
    Sounds far more sensible than whatever the multilateral aid sector ever did, does and will do.

    Posted October 28, 2009 at 9:28 am | Permalink
  6. Nadeem Haque wrote:

    Data seems to be the new god of development wihtout thought or debate. We have seen data being fudged in teh financial crisis to the point that it became meaningless. We have data beign generated by all manner of agency which clearly is motivated by priors. Studies done by donors on aid, growth and poverty are clearly motivated by their funding needs.

    While I agree on the need for rigor, I do think we should retain a certain scepticism even for data.

    The Gates presentation was very slick. Sadly too donor like–some emotion lots of data and anecdotes. But since they remained on safe subjects like vaccines and maternity health, one can hardly quarrel with them.

    It is when donors seek to take over all aspects of economic life with their data and spurious methods, that I have a problem.

    By the way, if we placed the same burden of data on the Founding Fathers as we do on development, what progress would they have made?

    Posted October 28, 2009 at 9:49 am | Permalink
  7. Jeff Barnes wrote:

    I would agree with geckoeconomist if the Gates foundation was spending its money in isolation on their interest. However, in spite of its billions, Gates’ approach and rhetoric has always been that they want to steer the Global Health community in a certain direction. Much of what they spend is not on delivery of health care, but for advocacy for health care so that the wider donor community will follow their lead. Given this stance, I think they do have an obligation to use data in a responsible way and not just pump up the numbers to suit their cause.

    Posted October 28, 2009 at 1:42 pm | Permalink
  8. Ava wrote:

    I agree with Jeff Barnes; I think the view taken by gekonomist is a bit simplistic. The money being spent by the Gates foundation is intrinsically meant to have some positive impact (regardless of whether their data is flawed, I think it is pretty clear that their intentions are relatively sound) – and they should be expected to show transparency in which data has been used. From my experience all data gathered in the field is open to bias and is therefore, intrinsically flawed (the very data that has been gathered will have been a choice about which questions one wants to ask etc.) and I’m sure most people recognise this. In this vein then, whether one likes Easterly or not is immaterial – the main point should be that it is vital that outside observers (Easterly or another) try to ensure the data is used as objectively as possible.

    (re gekonomist) I also think this whole angle of ‘the big bad world bank’ is a non-starter. It’s like that old argument that the entire UN is useless etc., only small NGOs can deliver (in my experience int orgs, small NGOs and INGOs are equally as bad, or as good – depending on area, context, people running it, the objectives etc). Yes, the bank has gone through vast changes (parallel to development in general) – but people like (e.g.) Stiglitz had a good impact and he is currently working with Sarkozy on well-being being an equally valid indicator of growth (as GDP). I’m not a ‘fan’ of any org or person, but I think to view things in black/white is a non-starter.

    Posted October 29, 2009 at 6:58 am | Permalink
  9. David Roodman wrote:

    I just posted a short blog at CGD offering another empirical test of someone’s commitment to pursuit of the truth: whether he critiques with equal vigor the reasoning of those with whom he agrees and those with whom he disagrees. Or maybe it is just another way of stating Bill and Laura’s test. I suggest that Bill has a way to go by this measure, referring to his silence on Dambisa Moyo. Am I off-base here? Link: bit.ly/4tV06B

    Posted October 29, 2009 at 7:22 am | Permalink
  10. Robert Tulip wrote:

    The political economy division into those who care and those who don’t care about the poor is simplistic but useful. However, the ‘carer’ camp is equally divided between those who focus on evidence and results and those who focus on emotion and popularity. The emotional approach touchs heartstrings regarding compassion for the poor, and decries the disloyalty of those who demand evidence. The emotional call for loyalty to the camp (like the monolithic socialism of old?) is self defeating. Eventually the evidence will out, and the deceptions of spin will be exposed as betraying the interests of those they claimed to help.

    Posted October 29, 2009 at 8:35 pm | Permalink
  11. Tracy W wrote:

    geckonomist: I do not care what data Mr. and Mrs. Gates use as a guide to where and how to put their money. Precisely BECAUSE it is their money, they can invest it in any way they want.

    Your conclusion does not follow from your premise. Yes, the Gates can invest their money in any way they want. That however does not logically require us to be indifferent as to how they spend their money. It is entirely possible to simultaneously believe that:
    1. Doing x is a bad idea.
    2. People have a right to do x.
    For example, when I vote for a party or a person in an election I do so because I believe that, as far as I can tell, that person or party is the best available for a job. Consequently I believe that anyone who votes for someone else is wrong. That does not mean I believe that I should be a dictator – the only person with the vote. Other people have a right to have a vote too, even if they disagree with me.

    And even today, suppose Prof. Easterly detects a negative effect in some data, and the program is stopped because of that. Suppose this was a false negative ( because of mistakes in the data, etc), and therefore in effect he stopped something very good for the poor….
    Will Prof. Easterly be accountable for this?

    Nope, not if he made an honest mistake. All we can do is hold people to the best they are capable of doing. It’s daft to expect people to develop omnisicence.

    Unlike the Gates family, who lose billions of their own dollars if their programs turn out as false positives.

    This is wrong. The Gates are giving to charity. This means that they don’t get the money for themselves regardless of the outcomes. If their programmes turn out to be absolutely brillant ideas they will still have spent billions of their own dollars. The most you can run is some long-term effect – people get rich and buy Windows as a result of the Gates’ aid money and thus Bill Gates winds up even better off. But I don’t think that’s why the Gates are giving away their money.

    If you have problems with WHO data, tell the WHO that they either stop collecting those useless things, or invest in better data collection.
    Don’t blame others for using them as they are.

    Again, your premise does not follow from your conclusion. How does the WHO producing bad data justify others in using this bad data in defence of their programmes? Wouldn’t it be better to honestly say “we don’t know”?

    Suppose Gates funded better data collection. These new data show a positive effect, but the WHO data a negative effect.
    Wouldn’t Prof. Easterly and many others blame the Gates data collector for being biased in favour of his paymaster?

    Umm, aren’t you missing out on the important detail that the new data, assuming that it is better, is more honest? It would allow Bill Gates better information to make his charitable decisions on? Isn’t this rather more important than whether Bill Gates is liked or not? He’s already living with ample people who hate him for being Microsoft?

    Therefore Gates can’t win this argument. Better not to waste energy in his own data collection then.

    So you are arguing that Gates shouldn’t care about whether programmes actually work? And shouldn’t care about whether he is being truthful or not?

    And since you take this attitude that Gates shouldn’t care about the truth, why should we believe a single word you say here?

    Posted October 30, 2009 at 7:14 am | Permalink

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