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by Viliam2 min read5th Jan 20192 answers14 comments

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Effective AltruismEconomics
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The usual argument against foreign aid to Africa is that randomly giving tons of free goods (such as food) ruins local producers; and when at some later moment the charity goes out of fashion (or decides to target a different part of Africa), the local situation becomes even worse than before, because the local producers have gone out of business. In addition, it hurts the local people psychologically to know that any local business, no matter how successful it could otherwise have been, can at any moment be destroyed by a well-meaning foreign charity.

Recently I heard the same argument made about anti-malaria nets recommended by GiveWell. If I understand it correctly, the donated nets put local net producers out of business (increasing local poverty and dependence on foreign aid), and the estimated number of lives saved is misleading (because in the alternative scenario, the same people could have been saved by locally produced nets).

I have one specific question, and one more general concern.

The specific question... well, I know nothing about the anti-malaria industry in Africa. It exists, I assume. But quantitatively -- how many nets it produces, how many nets it stops producing because it is pushed out of the market by GiveWell, whether the nets are of comparable quality, what is the best estimate of the scenario with no foreign aid compared to the scenario with foreign aid -- I have no idea. I supposed some of this was already discussed by some effective altruists, so I would love to hear the summary.

The meta concern is the following: I find the argument of foreign goods disrupting local market plausible. But seems to me that the problem is with high variance (one year a ton of goods, the very next year nothing), not with foreign goods per se. Because, anytime a country participates in foreign trade, the local producers of the stuff that is being imported, are pushed out of business. But we have the law of comparative advantages saying that in global, this is a good thing, for both countries. (Or to put it differently, trade sanctions are typically used as a punishment, not as a reward.) I worry that at some moment, the "stop destroying African economy by your disruptive aid" argument becomes effectively "stop trading with Africa", and I am not sure where exactly to draw that line.

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Lanrian

Jan 06, 2019

25

While not comprehensively covered, GiveWell mentions this in a few places. The second point here links to a report with this section discussing whether people are willing to pay for nets, as well as a link to this old blog post which briefly makes the argument that people won't buy their own nets, since previous hand-outs (from other charities) have resulted in a lack of local producers and an expectation of free nets. They also mention that nets have some positive externalities, and mostly benefits children, who aren't the ones paying, which gives some reason to subsidize them.

[-]Viliam4y 7

After brief reading, seems like the conclusion is: "At market prices, most people would not use the anti-malaria nets; this is empirically verified. Therefore, we provide the nets for free, and we give the nets instead of cash to buy the nets."

The obvious question is why are people unwilling to buy the nets?

Is there a rational reason, such as "the money is needed to prevent more immediate dangers, such as starvation"? Or is it an irrational one, such as underestimating the danger of malaria, not understanding how malaria spreads, or fatalism about diseases?

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[-]Douglas_Knight4y 11

Between rational and irrational is PD: individually rational, collectively irrational. Lanrian gave two reasons that nets benefit people other than they person paying. One is that they are most valuable for children. The other is that they protect people not using the nets. Probably the most valuable nets are those deployed on people who already have malaria, to prevent it from spreading to mosquitoes, and thus to more people. (See also Paul Ewald.)

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3rk4y
I hadn't thought about this! I'd be interested in learning more about this. Do you have a suggested place to start reading or more search term suggestions (on top of Ewald)? Also, can animals harbour malaria pathogens that harm humans? This section of the wiki page on malaria [https://en.wikipedia.org/wiki/Malaria#Other_animals] makes me think not, but it's not explicitly stated
[-]Douglas_Knight4y 12

Parasites in general and malaria in particular are pretty specific. For example, humans developed immunity shortly after speciation from chimps and malaria only jumped back 30kya (but probably did so multiple times to produce the several species of malaria). It's pretty clear that it doesn't have other hosts in the New World because the strategy of treating all humans in an area for 3 weeks wipes it out. But it's hard to rule out the possibility that it has other hosts in Africa.

Ewald has written lots of great papers. Here is a paper summarizing his career. Mostly it's about explaining the past, but he goes on to say that we should design interventions to shape the evolution of infectious agents. His main claim about the past is that malaria is debilitating because it can be passed on from someone who can't move. Thus if we keep the mosquitoes out of beds or out of homes, then malaria will evolve to be less debilitating. But I'm not sure where he says this. Scientific American? TED?

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1rk4y
Thanks! The info on parasite specificity/history of malaria is really useful. I wonder if you know of anything specifically about the relative cost-effectiveness of nets for infected people vs uninfected people? No worries if not
3Douglas_Knight4y
I don't know. My claim was based on reasoning from first principles. It was intended as an illustrative example that there could be positive externalities, not to measure them. If you have to triage nets, it's probably the way to go, but if you're triaging nets, you've probably made a bad decision. I can think of so many reasons to concentrate nets in one village, rather than spreading them out and micro-managing the deployments in the villages. One reason is habit formation. Another is the cost of distribution, which is probably low for marginal nets and high for a new village. A third is that there positive externalities compound, at least if you cross over the threshold of locally wiping out malaria. (Under that threshold, I'm not sure.)

paulfchristiano

Jan 05, 2019

16

I don't know anything about the particular case of net production. I think that the general argument against aid is similar to the typical argument for protectionism, which I think is something like:

  • Local production creates local infrastructure, know-how, human capital, etc.
  • Over the long run this benefits the region much more than it benefits the producers or consumers themselves.
  • So the state has reason to subsidize local production / tax imports.

If you have usual econ 101 models (including rational expectations), then variability itself doesn't cause any trouble, the only problem is from these positive externalities. These externalities could be pretty big, it's plausible to me that they are much larger than the direct benefits to producers and consumers.

[-]Viliam4y 6

I am skeptical about armchair Econ-101 reasoning unless it is also supported by empirical data. Many things can go wrong. (Also, it has a flavor of "map over territory".) For example:

  • The models are based on some assumptions, which is necessary to create models, but in real life the assumptions may be wrong so much that it changes the outcome. The players are supposed to be 100% rational and all-knowing; the transactions are supposed to be completely friction-less; it is assumed that the market is the only game in town. So when this perfect market
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[-]jacobjacob4y 3

I'm confused: why doesn't variability cause any trouble in the standard models? It seems that if producers are risk-averse, it results in less production than otherwise.

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9paulfchristiano4y
Uncertainty about future aid introduces a cost, and certainly recipients will be better off if aid is predictable. But if there were no externalities from production, then I think the presence of variable aid still always makes you better off on average than no aid. Worst case, you need to invest in net-producing capacity anyway (in case aid disappears), which you can finance by charging higher prices if free nets disappear. The main problem with that is that if aid disappears, there will be a wealth transfer from net consumers to net producers. Given risk aversion, that stochastic transfer is bad for everyone. So you'd either want to insure against aid variability, or purchase an option on nets in advance. If you can't do either of those things but nets can be stored, then you can literally manufacture the nets in advance and sell them to people who are concerned that net prices may go up, and that's still a Pareto improvement. If you can't do that either, then you could lose, but realistically I think rational expectations is the weaker link here :)
[-]Chris_Leong4y 2

Seems possible, though malaria nets seems like such a niche industry that it wouldn't result in much additional human or infrastructural capital

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[-]rossry4y 1

Does the "typical argument for protectionism" you cite claim that protectionist policy increases the total amount of local production (creating a steady-state trade surplus)? Or does it merely shift local production from comparatively-advantaged-to-produce-locally goods to comparatively-advantaged-to-import ones (hopefully ones with greater externalities to local production)?

There's a relevance to the anti-aid argument: The first-order effect of steady-state aid is to create the effect of a steady-state trade deficit on production without an effect on the

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[-]Raemon4y 4

Subquestions I'd probably want to answer if I were trying to figure this out from scratch (not sure how much Givewell has covered already, haven't read much of Lanrian's links), include:

  • A. What countries have significant malaria problems?
  • B. What countries have had significant anti-malaria aid?
  • In countries listed in A, what locally-founded organizations (for-profit, non-profit, or government-sponsored) have existed to address malaria?
  • Can we get data on how those companies/orgs have grown or shrunk in spending as foreign aid has grown.

One reason this might not be a correct track is that general ecosystem of aid may have already distorted things by the time you got to malaria programs. So it might also be useful to look into local orgs treating similar health issues that also received foreign aid in the past century.

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[-]Raemon4y 2

I assume (or, hope?) that GiveDirectly has investigated this a bit. Or at least that it should be possible to compare, say, death rates of people being given GiveDirectly cash transfers vs receiving malaria nets.

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[-]cumbong4204y 1

I'm inclined to believe it's a rational reason. In one of the links, it's mentioned that the same effect found with the nets being sold at market price was seen when trying a similar technique with anti-worm medication. Worms are a much more tangible and wrenching threat than mosquitoes, so if people were neglecting to buy these nets out of an irrational understanding of their effectiveness, we might not see the same results with a product that's much easier to see work. Since we do, it looks plausible to me that people just can't afford these things at market price.

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