Shamans and Development Experts

Robert Wright writes in his fascinating book, The Evolution of God:

There is in the world today a great and mysterious force that shapes the fortunes of millions of people…There are people who claim to have special insights into this force…Most of them have often been wrong about the future, and many of them have been wrong most of the time. In fact, it’s not clear their advice is worth anything at all…Nonetheless, {they} have a profitable line of work… Why? Because whenever people sense the presence of a puzzling and momentous force, they want to believe there is a way to comprehend it. If you can convince them that you’re the key to comprehension, you can reach great stature.

 Wright is not  talking about religion, but about stockbrokers and the stock market. Wright correctly points out that much research demonstrates that stockbrokers do NO better than you and me at beating the stock market. Yet we pay stockbrokers.

Wright then discusses shamans in hunter-gatherer societies, which meet a similar demand – somebody who claims to be able to influence the vast uncertainties of hunting failures, weather, and disease, which makes hunter-gatherers feel better. To Wright, stockbrokers meet the same religious need as shamans.

 With both shamans and stockbrokers, it helps a lot that we humans are really bad at distinguishing pure randomness from real accomplishment (as this blog is fond of pointing out).

 There is always one shaman/stockbroker who is performing above average due to sheer luck. We refuse to accept that it’s pure luck and we are drawn to this shaman/stockbroker. Then he (it’s usually a he) reverts to average. Again, we refuse to believe this is random, we say that he has now lost his touch and we switch to following the new above-average champion. So our general faith in the power of shamans/stockbrokers remains intact.

Some of you have guessed where I am going with this. Development experts are a lot like stockbrokers. To get specific, development experts offer the hope that their expertise will raise a country’s growth rate, despite the lack of ANY clear empirical evidence that they know how to raise a country’s growth rate.

 Few can accept the current consensus of the empirical growth and development literature — that we know something about what works in the long run for development (institutions, human capital, etc.) but virtually nothing about how to raise growth in the short to medium run. As Abhijit Banerjee puts it:

it is not clear that the best way to get growth is to do growth policy of any form. Perhaps making growth happen is ultimately beyond our control. Maybe all that happens is that something goes right for once (privatized agriculture raises incomes in rural China) and then that sparks growth somewhere else in the economy, and so on. Perhaps we will never learn where it will start or what will make it continue. (In new book edited by Jessica Cohen and I, “What works in development: thinking big and thinking small”)

 Yet the demand for development experts is as intense as ever. For example, the World Bank spent $4 million on an expert-laden Growth Commission to raise growth, issuing a report in 2008, with this finding:

It is hard to know how the economy will respond to a policy, and the right answer in the present moment may not apply in the future.

Despite the possibly limited utility of this breakthrough,  the World Bank Growth Commission is now being emulated elsewhere.  The UK Department for International Development just spent £37 million on assembling academic experts into a new International Growth Centre (IGC) that will promote “sustainable growth in developing countries by providing demand-led policy advice based on frontier research.”

Relentless demand for growth experts despite lack of evidence for growth expertise may have a faith-based component, just like the demand for shamans and stockbrokers.

 Maybe I shouldn’t spend so much time mocking the “growth experts” who claim to know something they don’t (especially the day after being named one of the Top 100 Global Thinkers for being a “growth expert”).  Maybe I should just accept that people are going to keep listening to shamans on growth and development, and maybe shamans could even play a useful role. How to make sure that those shamans at the very least, do no harm, and maybe even recommend sensible things?

 First, select the shamans on academic merit. Second, such quality academics should stick to their guns that nobody should waste time on experts directing growth from the top based on expert knowledge that does not exist. Such a top-down expert approach would actually do harm in unintentionally strengthening authoritarian and excessively statist approaches. The development shamans could still perform inspirational religious rituals as long as they don’t actually affect anything.  Third, there are still plenty of useful things that academics can say about more specialized areas, such as health, financial regulation, macroeconomic management, education, clean water, and agriculture.

Indeed, the DFID International Growth Centre assembled a jaw-dropping list of stellar academic economists, fulfilling requirement (1). On (2) and (3), what seems to be going on at IGC is “bait and switch.” A few at the top spuriously promise the ability to raise growth, while the quality academics just get on with applying their specialized knowledge to specialized problems. At least there are good economists saying good things at the bottom.

Let’s hope that the power is shifting from the development shamans, who should be reassuring but powerless, to useful economists with useful knowledge.