The Effectiveness of Developing World Aid

by multifoliaterose 9y12th Sep 201051 comments


Several Less Wrong posters [1], [2], [3] have cited the interview with James Shikwati titled "For God's Sake, Please Stop the Aid!" as evidence that Western aid to Africa is actively destructive to Africa. According to the wikipedia page on James Shikwati:

Jeffrey D. Sachs, a Columbia University professor who is a leading aid advocate, calls Mr. Shikwati’s criticisms of foreign assistance “shockingly misguided” and “amazingly wrong.” “This happens to be a matter of life and death for millions of people, so getting it wrong has huge consequences,” Mr. Sachs said.

I think it's important for those interested in the question of whether developing world aid is effective to look to those who can point to formal studies about the effectiveness of African aid rather than basing their judgments on quotes from individuals whose opinions may very well have been heavily skewed by selection bias and/or driven by ideological considerations which have nothing to do with the available evidence.

Engaging with the evidence in detail is a very time-consuming task and one beyond the scope of this blog entry. I will however quote various experts with links to useful references.

Divided Views On Overall Impact of Developing World Aid:

I've found Paul Collier to be apparently even-handed. Readers interested in studying the the effectiveness of developing world aid may like to study Paul Collier's papers on the subject. Paul Collier summarizes his views in his recent book titled The Bottom Billion.

The left seems to want to regard aid as some sort of reparations for colonialism. In other words, it's a statement about the guilt of Western society, not about development. In this view, the only role for the bottom billion is as victims: they all suffer from our sins. The right seems to want to equate aid with welfare scrounging. In other words, it is rewarding the feckless and so accentuating the problem. Between these two there is a thin sliver of sanity called aid for development. It runs something like this. We used to be that poor once. It took us two hundred years to get where we are. Let's try to speed things up for these countries.

Aid does tend to speed up the growth process. A reasonable estimate is that over the last thirty years it has added around one percentage point to the annual growth rate of the bottom billion. This does not sound like a whole lot, but then the growth rate of the bottom billion over this period has been much less than 1 percent per year - in fact it has been zero. So adding 1 percent has made the difference between stagnation and severe cumulative decline. Without aid, cumulatively the countries of the bottom billion would have become much poorer than they are today. Aid has been a holding operation to prevent things from falling apart.


...unlikely as it seems, what aid agencies have been doing has added a whole lot of value to the financial transfer. Given the bad public image of aid agencies and horror stories such as the hospital project I described above, this is hard to believe, but there it is.


Aid, however, is not the only answer to the problems of the bottom billion. In recent years it has probably been overemphasized, partly because it is the easiest thing for the Western world to do and partly because it fits so comfortably into a moral universe organized around the principles of sin and expiation. That overemphasis, which comes from the left, has produced a predicable backlash from the right. Aid does have serious problems, and more especially serious limitations. Alone it will not be sufficient to turn the societies of the bottom billion around. But it is part of the solution rather than part of the problem. The challenge is to complement it with other actions.

An economist who is skeptical of Collier's analysis William Easterly, the author of The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good. For those who are interested in the topic of the effectiveness of developing world aid, Easterly's papers are also worth taking a look at. In an article for Boston Review, Easterly writes:

Collier’s work is built on deeply problematic statistical analysis. Valid statistical results must meet stringent conditions. The usual standard for labeling a result “significant” is that it could have occurred by chance only one out of twenty times, assuming a statistical exercise is run only once. An unfortunately all-too-common practice called “data mining” involves running twenty statistical exercises and then reporting only the one that produces a “significant” result (which will have happened by chance). Collier comes close to admitting that he does exactly that.


Remarkably enough, Collier puts the burden of proof on non-intervention. “At some point,” he writes, “doubt becomes an excuse for inaction, while the problems of insecurity remain real enough.” Elsewhere Collier alludes to his doubters as “professional skeptics.” Actually, doubt is a superb reason for inaction. If being a professional skeptic entails scrutinizing the logic, the assumptions, and the evidence base and finding them all invalid when they do not meet normal academic standards, I plead guilty.

My overall impression is that there's a fair amount of controversy as to whether African aid has increased economic growth in Africa. Different economists have different views and the evidence available does not seem sufficiently robust to support a confident belief that the net effect of aid has been positive or negative.

Much less controversial is the view that the best health Western interventions can and do systematically improve health in Africa.

The Case of Health:

In his article titled Can The West Save Africa? Easterly writes

Health is an even more clear success story than education in Africa, as child mortality has improved dramatically over time ... There are well known and striking donor success stories, like the elimination of smallpox, the near-eradication of river blindness and Guinea worm, the spread of oral rehydration therapy for treating infant diarrheal diseases, DDT campaigns against malarial mosquitoes (although later halted for environmental reasons), and the success of WHO vaccination programs against measles and other childhood diseases. The aid campaign against diseases in Africa (known as vertical health programs, see discussion below) is likely the single biggest success story in the history of aid to Africa.

In this case, the clear verdict of the case studies is probably a lot more helpful than the aggregate stylized facts, aggregate econometrics, or REs. Under-five mortality fell dramatically in Africa, but it fell by somewhat less than in other developing countries. We ideally need to parcel out factors such as Africa’s lower growth (although the effect of growth on health is controversial), different disease ecology (for example, malaria is much more of a problem in Africa than any other region), other factors, and aid, not to mention finding an identification strategy to assess causal effects of aid; no such aggregate econometric efforts have been notably successful. Even with econometric support unavailable, perhaps Africa’s health performance is impressive after all given its lower growth and its more difficult disease ecology, which is consistent with the important role for aid shown by the case studies.

According to the GiveWell page titled Why do we look for charities implementing proven programs:

The most successful projects have been in the area of health and include such large-scale successes as the eradication of smallpox and the dramatic reduction of infant mortality in Africa (see our developing-world health overview). For a full list of health programs that have been rigorously shown to save lives and reduce suffering, see our summary of proven health programs.

There are a number of examples of ways in which well-intentioned projects have failed to achieve desired results. Building wells has often failed to reduce water-related illness (detailed analysis here); agriculture programs in Africa have failed to increase crop yields; programs providing textbooks and other supplies have not raised students' test scores, and many other developing-world education programs have weak, if any, evidence of success.

Charities working on improving health in the developing world have variable effectiveness. It's plausible that by donating to one of GiveWell's top-rated charities one can have a substantially stronger positive effect than the one associated to a random such charity. In Charity Isn't About Helping? Holden says:

One person who’s more critical of charity than we are or than David Hunter is is the economist Robin Hanson. He has stated that “charity isn’t about helping”.


What response can the nonprofit sector marshal to arguments like this? I must say that, in fact, much of the nonprofit sector fits incredibly better into Prof. Hanson’s view of charity as “wasteful signaling” than into the traditional view of charity as helping.


Perhaps ironically, if you want a good response to Prof. Hanson’s view, I can’t think of a better place to turn than GiveWell’s top-rated charities. We have done the legwork to identify charities that can convincingly demonstrate positive impact. No matter what one thinks of the sector as a whole, they can’t argue that there are no good charitable options - charities that really will use your money to help people - except by engaging with the specifics of these charities’ strong evidence.

Valid observations that the sector is broken - or not designed around helping people - are no longer an excuse not to give.

Because our Bayesian prior is so skeptical, we end up with charities that you can be confident in, almost no matter where you’re coming from.

A Note on Malthusian Problems:

Those who are concerned about possible future Malthusian problems attached to saving lives should see Holden's email to the GiveWell research mailing list titled Population growth & health, the video linked therein, and papers by the speaker Hans Rosling. I presently believe that while it's possible that saving lives in the developing world does more harm than good on account of Malthusian problem, this is fairly unlikely and the expected value of saving lives in the developing world is strongly positive. Of course, my belief is subject to change with incoming evidence.

The Giving What We Can (GWWC) Myths About Aid page provides a suggestion for donors who are concerned about future Malthusian problems:

...there are many ways that you can greatly improve the lives of thousands of people who live in extreme poverty without significantly extending these lives. For example, you could cure people of blindness, or of neglected tropical diseases, which cause significant hardship but have only a small effect on mortality. Alternatively, you could donate to groups who promote family planning in developing countries, directly fighting population growth. Those who think that overpopulation is so bad that we should let people suffer and die rather than risk saving their lives, must also think it is important enough that they should donate money to groups that directly fight it.

GWWC and GiveWell differ in that GWWC's top recommended charities are Schistosomiasis Control Initiative and Deworm the World which focus on neglected tropical diesease whereas GiveWell does not recommend these organizations. Holden explains GiveWell's position in Neglected Tropical Disease charities: Schistosomiasis Control Initiative, Deworm The World.

A Note on Overcorrecting Bias:

Many people's initial naive reaction to developing world aid is that it's a very good idea. This was certainly my own reaction as a child when I learned of Unicef. As Eliezer suggests in Can't Say No To Spending, there's a natural bias in favor of saying "yes" when asked to donate money help poor people - saying 'no' feels cold-hearted. Reading an author like Shikwati can dispel this bias by making possible unintended negative consequences salient, but often at the cost of giving rise to a new bias against developing world aid. Reading Sachs' remarks on Shikwati quoted in the introduction of this article can dispel this bias at the cost of introducing a new bias in favor of developing world aid. But Sachs' own position has garnered seemingly valid criticism from William Easterly and others - learning of this introduces a bias against Sachs and his views and in favor of Easterly and his views. There's the usual issue of there being a halo effect as described in Yvain's excellent article titled The Trouble with "Good" - when person X debunks person Y's apparently erroneous claim, this makes person X look unwarrentedly superior to person Y overall.

It's difficult to know who to trust when ostensible experts disagree, any of whom may be exhibiting motivated cognition or even engaging in outright conscious self-serving deception. Nevertheless, one can reasonably can hope to arrive at a fairly good epistemological state by:

  1. Reading representatives of a wide variety of perspectives
  2. Paying special attention to those experts who are willing to engage with differing perspectives in detail
  3. Being careful to keep in mind that somebody may have valid points which are worthy of consideration independently of whether their general thesis is correct
  4. Paying special attention to points of common agreement among experts

Habits (1)-(4) are conducive to converging on a relatively accurate epistemological position on a given matter.

Acknowledgment: Thanks to Carl Shulman for useful references and discussion about the subject of this article.