With DSK handcuffed in the back, who will take the IMF driver's seat?

According to unwritten agreement, the IMF has always been headed by a European, just as the president of the World Bank has always been American.

Some (mainly Europeans, funnily enough) argue that the IMF needs a European leader now more than ever, because the biggest issues the IMF currently faces are in the eurozone  rather than in the developing world. Possibilities named include French Finance Minister Christine Lagarde, Italian Central Bank head Mario Draghi.

Others, like Felix Salmon, argue it’s time for a change.  After all, when he was chosen in 2007  DSK himself said that his appointment would be the last time a European automatically got the nod.  ”Voice and representation of most countries in a changing world have to be better taken into account by the board, but also by the staff,” he said, “as well as by management.”

Owen Barder calls for the selection to be open, transparent, and merit-based (in contrast to the back-room deals that usually cinch the nomination.) This would open the field to contenders like Turkish former UNDP head Kemal Dervis and South African politician Trevor Manuel.

Meanwhile, the Freakonomics blog attempts to rescue the reputation of economists the world over by reminding us that morality and occupational choice are not highly correlated.

Postscript from Bill 8:30am Tuesday: Did the IMF get it wrong in 2008? Disturbing story in NYT this morning about the previous DSK sex scandal of an affair with a subordinate:

Do more guns cause more violence?

The experiment:

We exploit a natural experiment induced by the 2004 expiration of the U.S. federal assault weapons ban to examine how the subsequent exogenous increase in gun supply affected violence in Mexico. The expiration relaxed the permissiveness of gun sales in border states such as Texas and Arizona, but not California, which retained a pre-existing state-level ban.

The results:

Using data from mortality statistics and criminal prosecutions over 2002-2006, we show that homicides, gun-related homicides and gun-related crimes increased differentially in Mexican municipios located closer to Texas and Arizona ports of entry, relative to those nearer California ports.

Gun-related Homicides in Municipalities Bordering California versus Other Border States

Our estimates suggest that the U.S. policy change caused at least 158 additional deaths each year in the post-2004 period. Gun seizures also increase differentially, and solely for the gun category that includes assault weapons. The results are robust to controls for drug trafficking, policing, unauthorized immigration, and economic conditions in U.S. border ports, as well as drug interdiction efforts, trends by income and education, and military and legal enforcement efforts in Mexican municipios.

The conclusion:

Our findings suggest that U.S. gun laws have exerted an unanticipated spillover on gun supply in Mexico, and this increase in gun supply has contributed to rising violence south of the border.

From a paper presented by Oeindrila Dube at NYU’s Development Seminar, with Arindrajit Dube and Omar Garcia-Ponce.

Today, intellectual life in universities has been reduced to bare-bones classroom activity. Extra-curricular seminars and workshops have migrated to hotels. Workshop attendance goes with transport allowances and per diem. All this is part of a larger process, the NGO-ization of the university. Academic papers have turned into corporate-style power point presentations. Academics read less and less. A chorus of buzz words have taken the place of lively debates…

What’s the difference between academic research and consultancy-driven research? Mamdani, who spent decades teaching at universities in South Africa, Tanzania and Uganda before moving to Columbia University, defines research for a consultant as seeking answers to problems posed and defined by a client. But university research, properly understood, requires formulating the problem itself.

His example of how this works in practice is an interesting one. In 2007, the Bill and Melinda Gates Foundation shifted global health spending priorities towards their research question: How to eradicate malaria? But if malaria can’t be eradicated, as a team of scientists from France and Gabon now believe, then researchers have spent four years and hundreds of millions of dollars answering the wrong question.

The cumulative effect of this model is to “devalue original research or intellectual production in Africa.”

The global market tends to relegate Africa to providing raw material (“data”) to outside academics who process it and then re-export their theories back to Africa. Research proposals are increasingly descriptive accounts of data collection and the methods used to collate data, collaboration is reduced to assistance, and there is a general impoverishment of theory and debate.

In my view, the proliferation of “short courses” on methodology that aim to teach students and academic staff quantitative methods necessary to gathering and processing empirical data are ushering a new generation of native informers.

Mamdani, who is now director of the Makerere Institute of Social Research in addition to his professorship at Columbia, seeks to counter the spread of consultancy culture “through an intellectual environment strong enough to sustain a meaningful intellectual culture.”

“To my knowledge,” he said, “there is no model for this on the African continent today. It is something we will have to create.”

HT Africa is a Country.

Not least among the problems was that construction began before the region was cleared of insurgents. “You are talking about pushing development before there’s security,” said a former American government official who was involved in the project.

“And you have military or politically driven timelines and locations which make no sense, or which force us into alliances with the very malign actors that are powerfully part of the broader battles we are fighting,” the official said. “No one steps back and looks at the whole picture.”

What is the cost of “pushing development” before security?

One answer: Although originally budgeted at $69 million, USAID has spent  $121 million on the project so far, and now says it expects to spend $176 million.

Another answer: Any remaining American credibility as a development actor in Afghanistan.

A better answer:

… Despite all the money spent on security…there have been 364 attacks on the Gardez-Khost Highway, including 108 roadside bombs, resulting in the deaths of 19 people, almost all of them local Afghan workers.

The Good:

The books’ signal achievement is in addressing two disgraceful problems that beset humanitarian aid. The first is that the effectiveness of aid is often not evaluated at all; the second is that even when aid is evaluated, the methods are often dubious, such as before-and-after analysis that doesn’t take into account variables that have nothing to do with the aid itself. Humanitarian aid is usually flying blind. These books take the blinders off—de-worming does work, many other efforts do not.

But things are not as simple as they first appear. The authors are brutally honest about how difficult poverty-alleviation is….

…

In addition to testing out ideas, such field work also has the benefit of letting researchers chat informally with poor people—conversation that can be thoroughly illuminating. What looks like irrationality may just be the failure of outsiders to fully appreciate the problem…

….

“More Than Good Intentions” and “Poor Economics” are marked by their deep appreciation of the precariousness that colors the lives of poor people as they tiptoe along the margin of survival. But I would give an edge to Mr. Banerjee and Ms. Duflo in this area—the sheer detail and warm sympathy on display reflects a true appreciation of the challenges their subjects face. Messrs. Karlan and Appel are at their best in addressing the subtleties of behavior and testing them in the psychology laboratory and in the field. They have produced a remarkably readable and credible analysis of the intertwining of irrationality and poverty.

The Not-so-Good:

Unfortunately, the books also indulge another sort of irrationality: the demand for big, general statements even if you’re discussing limited, context-specific matters. The authors criticize over-generalizing and over-promising in the aid business, but they too often do their own exaggerating when it comes to what their methods can deliver. Both books end with overselling, “five key lessons” (Banerjee and Duflo) or “seven ideas that work” (Karlan and Appel), overriding their own previous cautions about sensitivity to context and the limits to each intervention. Other economists criticize overselling as a common fault of those who do these small experiments.

Read the full review (ungated) here.

There is convincing evidence from a number of countries that cash transfers can reduce inequality and the depth or severity of poverty. For example, in Brazil a combination of cash transfer programmes accounted for 28 percent of the total fall in the Gini index (a summary measure of inequality) between 1995 and 2004….

Well-designed and implemented cash transfers help to strengthen household productivity and capacity for income generation. Small but reliable flows of transfer income have helped poor households to accumulate productive assets; avoid distress sales; obtain access to credit on better terms; and in some cases to diversify into higher risk, higher return activities. These intermediate outcomes help draw poor people into the market economy on terms that allow them to benefit from and contribute to growth.…

There is robust evidence from numerous countries that cash transfers have leveraged sizeable gains in access to health and education services…However, transfers have had less success in improving final outcomes in health or education.  Cash transfers can help the poor overcome demand-side (cost) barriers to schooling or healthcare, but they cannot resolve supply-side problems with service delivery (e.g. teacher performance or the training of public health professionals). Cash transfers therefore need to be complemented by ongoing sectoral strategies to improve service quality.

From a new paper on the evidence for cash transfers from Britain’s aid agency.

I’ve heard people talk about cash transfers as the next silver bullet. They’re frequently mentioned in conversations about what’s “new and innovative” in aid. Studies like this one, that synthesize what we know so far and point out where knowledge is still uneven, can help calibrate those expectations.

It remains to be seen whether Greg Mortenson, author of the best-selling “Three Cups of Tea,” will be able to avert a total reputation meltdown. But last Sunday’s 60 Minutes broadcast and a thorough exposé by Jon Krakauer provide convincing evidence for some serious allegations:

• That some of the most important, inspiring stories in Mortenson’s nonfiction books—stories that provide the foundation for his whole mission—fall somewhere on the spectrum between greatly exaggerated and completely invented.
• That Mortenson’s charity, the Central Asia Institute (CAI) lacks sufficient transparency and oversight.
• That some not insignificant number of schools Mortenson claims to have built in Afghanistan and Pakistan either aren’t being supported by CAI, aren’t being used as schools, or don’t exist at all.

Mortenson refuted the allegations in a letter to his supporters, saying that the story “paints  a distorted picture using inaccurate information, innuendo and a microscopic focus on one  year’s (2009) IRS 990 financial, and a few  points  in  the  book ‘Three  Cups  of  Tea’ that occurred almost 18 years ago.” But the rebuttals he’s provided so far do little to counter the weight of evidence against him.

What surprises me most about the story is not that yet another development demigod turned out to be a human.

What surprises me most is the way Mortenson’s charity—embraced by the US military and admired by President Obama, Oprah and literally millions of Americans—has  managed to avoid scrutiny of its spending priorities for so long. While the charity claims to spend 85 percent on “program activities,” less than half of that is spent where you might think it would go—to Afghanistan and Pakistan. The majority ($4.6 million in 2008) is actually spent on “education and outreach” in the US.

Of the money that does go abroad ($3.9 million in 2008), most goes to building the schools themselves: supplies, materials, labor and transportation ($3 million), rather than to teacher salaries and school supplies ($800,000) or scholarships for students ($40,000).

This allocation of resources might go some way towards explaining why, when 60 Minutes visited 30 of Mortensen’s schools, it said it found major problems with half of them, including new schools that were struggling without any financial support from CAI, and schools with no teachers and no kids. Time Magazine observed:

…Be it a charter school in Queens or an elementary school in Sarhad Broghil (where I first saw a Mortenson school), a school is just a building if it doesn’t have teachers.

In Mortenson’s second book, the construction of a school for Kyrgyz nomads in a remote corner of the Pamir mountains was featured as a major, triumphant success. But according to Krakauer’s account, that school has never been used. The community would have preferred a road or a health clinic to a school, and in any case it’s too far from where the nomadic community camps during the seasons when it’s warm enough for the children to attend school.

The Central Asia Institute’s 2009 IRS filing provides a list of 141 schools that it says are helping tens of thousands of students get a better education and avoid of a future of poverty and terrorism. But with only one audited financial statement in 14 years, and no attempt at any evaluation of CAI’s work, Mortenson is basically asking us to take his word for it. Because of a charismatic leader with a great story, and Americans’ eagerness to believe something good can happen where we’ve waged war in Afghanistan and Pakistan—millions of his supporters did.

But after the disclosures of this week, Mortenson’s word probably won’t be enough.

This morning we learned that the World Bank does not consider bloggers journalists. According to Bank policy, it won’t give press accreditation to bloggers, denying them access to the media briefing center where new reports are released under embargo before they are published for the public.

In this case, the report we won’t be allowed to see an advance copy of is this year’s World Development Report, on Conflict Security and Development. It’s due to be released to the public on Sunday night.

I was shocked, actually, since the World Bank is usually ahead of the curve when it comes to technology and communication. They have dozens of internal blogs which they encourage their staffers to post and comment on. Many of these these blogs don’t shy away from substantive debates about real development issues, including thoughtful self-criticism (a relevant example is this blog post by a World Bank staffer questioning whether anyone even reads the WDR any more, which makes us think they would WANT bloggers to write about it, but that’s another story).  Last year, the Bank opened up a new, user-friendly site with free access to 2,000 development indicators, and is hosting a competition to develop new apps that take advantage of this data.

We’ve given the WHO flak for shutting down debate saying that they “don’t participate in discussions on blogs” and shamed the UN for telling us they “didn’t have a communication policy for blogs.” But the World Bank? I expected so much better.

The White House has been accrediting bloggers since 2005, as do many US cities and states. Even the Millennium Challenge Corporation (a US aid agency) treats print and new media journalists equally.

I’m drafting an email to the Bank’s media department about this and encourage other bloggers to do the same. If we start now, we might just receive accreditation in time for the World Bank’s 2015 “Mainstreaming New Media to Facilitate Progress of Democratizing New Technologies”  report.

From the brilliant xkcd (also the creator of this classic in statistics humor).

We couldn’t resist using this as a way to illustrate some of our early wonky posts complaining about the suspected practice of “data mining” in aid research.

In aid world, research looks for an association of some type between two factors, like economic growth and foreign aid. But since both growth and aid contain some random variation, there is always the possibility that an association appears by pure chance.

“p < .05” is our assurance from the researchers that the probability that their result came about by coincidence is less than 1 in 20, or 5 percent, which is the accepted standard.

But the aid researchers—like the jelly bean scientists—are eager to find a result, so they may run many different tests. The problem, as Bill explained it, is that:

The 1 in 20 safeguard only applies if you only did ONE regression. What if you did 20 regressions? Even if there is no relationship between growth and aid whatsoever, on average you will get one “significant result” out of 20 by design. Suppose you only report the one significant result and don’t mention the other 19 unsuccessful attempts.…In aid research, the aid variable has been tried, among other ways, as aid per capita, logarithm of aid per capita, aid/GDP, logarithm of aid/GDP, aid/GDP squared, [log(aid/GDP) - aid loan repayments], aid/GDP*[average of indexes of budget deficit/GDP, inflation, and free trade], aid/GDP squared *[average of indexes of budget deficit/GDP, inflation, and free trade], aid/GDP*[ quality of institutions], etc. Time periods have varied from averages over 24 years to 12 years to to 8 years to 4 years. The list of possible control variables is endless….So it’s not so hard to run many different aid and growth regressions and report only the one that is “significant.”

And the next thing you know, there’s a worldwide boycott of green jelly beans…

UPDATE by Bill 12 noon: I asked around some journalist contacts of Aid Watch at leading newspapers how much awareness of this problem there is in the media, and got a fairly clear answer of ZERO.

A high-profile charitable foundation set up to build a school for impoverished girls in Malawi, founded by the singer Madonna …has collapsed after spending $3.8 million on a project that never came to fruition…. the plans to build a $15 million school for about 400 girls in the poor southeastern African country of 15 million — which had drawn financial support from Hollywood and society circles…— have been officially abandoned.

- Madonna’s Charity Fails in Bid to Finance School, New York Times, March 24, 2011

Over a year later, [Sean] Penn is still in Haiti and his initial ragtag group of medics and fixers has grown into a team of 15 international workers, 235 Haitians and hundreds of rotating medical volunteers. In addition to coordinating sanitation, lighting, water and security for the Pétionville camp, J/P HRO runs two primary care facilities, a women’s health center, a cholera isolation unit and a 24-hour emergency room. It has pioneered a rubble removal program that has become a model for other N.G.O.’s, and it has developed one of the most effective emergency response systems in the country, using state-of-the-art bio-surveillance techniques and helicopters to reach cholera-stricken communities in remote areas.

- The Accidental Activist, New York Times Style Magazine, March 25, 2011

Why is Sean Penn doing so much better than his ex-wife? Can comparing their stories provide any lessons for aspiring celebrity humanitarians?

Round 1: The initial premise. Spending $15 million on a school for 400 girls in a country where the government education budget is only 10 times that is just a bad idea. And Madonna was slow to heed the advice of the philanthropy consulting group she hired, which, according to the Times

told her that building an expensive school in Malawi was an ineffective form of philanthropy, and suggested instead using resources to finance education programs though existing and proven nongovernmental organizations.

Sean Penn also arrived clueless, speaking neither French nor Creole nor NGOese. However, according to the NYT (Vanity Fair and CNN profiles tell a similar story), Penn at least came without preconceived notions of what to do.

Winner: Sean Penn, by a hair

Round 2: Level of  cluelessness about operations of own charity. While Madonna visited Malawi for some photo ops, she wasn’t involved in the day-to-day operation of the project. From the Times: “She and her aides offered no explanation of why, given her high interest in the project, she had not noticed the problems as they began unfolding.” In contrast, Sean Penn appears totally hands-on, living in Haiti and learning by doing:

“For the first six months, I …was basically pretending I knew what the hell I was doing — yelling a lot and getting things done with blackmail. Now I’ve got a lot of really experienced, great people around me, and they can do the same things, cutting through stuff just as fast, but in slightly more, uh, legitimate ways.”

Winner: Sean Penn (minus points for strong-arming…but bonus for adaptability??)

Round 3: Wasteful spending. A Raising Malawi project audit revealed “outlandish expenditures on salaries, cars, office space and a golf course membership, free housing and a car and driver for the school’s director.” None of those perks for Sean Penn and his staff, who spent 2010 sleeping in tents (like most NGO workers in Haiti, but never mind) and “prides himself on running a lean operation.”

Winner: Sean Penn

So Sean Penn emerges as the clear victor here. But if what Madonna’s charity did wrong was obvious, what Penn has done right is still unproven. It’s admittedly a stretch to derive any serious aid lessons from a 3,000-word New York Times Magazine Style profile, and I am not aware of any serious evaluation of Penn’s project. But if it holds up to greater scrutiny, let the aid battle of the celebrity Exes be a lesson – and a warning – to the next generation of celebrity do-gooders.