Thursday, August 9, 2007

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Is Nick Kristof insane?

A popular definition of insanity is doing the same thing over and over and expecting different results (intriguingly, the same website attributes this definition to both Benjamin Franklin and Albert Einstein).

That definition came back to me after reading the opening of Nick Kristof's NYT ($$) column today:

Almost nobody has campaigned so energetically for the poor in Africa as Bono, but when Bono spoke at a conference in Africa recently, he was heckled. Several Africans scolded him for demanding more foreign aid, saying that’s not what Africa needs.

A handful of recent books and studies suggest that aid is sometimes oversold, including the superb new work called “The Bottom Billion,” by Paul Collier, the World Bank’s former research economist (it’s the best nonfiction book so far this year). A forthcoming book, “Farewell to Alms,” by Gregory Clark, a University of California economist, even argues that conventional aid can leave African countries worse off than ever.

And a study by two economists formerly of the I.M.F., Raghuram Rajan and Arvind Subramanian, forthcoming in The Review of Economics and Statistics, concludes:

“We find little robust evidence of a positive (or negative) relationship between aid inflows into a country and its economic growth. We also find no evidence that aid works better in better policy or geographical environments, or that certain forms of aid work better than others. Our findings suggest that for aid to be effective in the future, the aid apparatus will have to be rethought.”

So does this mean we should give up on foreign aid?

No, not at all. On the contrary, I believe there is an urgent need for more aid.

You can see why I would question Kristof's mental status.

To be fair, however, Kristof would argue that he's not proposing doing the same thing again. The rest of his essay basically argues that while the macro picture suggests aid does not work, the concentration of aid into certain sectors (health and education) and focused programs (the Millennium Challenge Account) has yielded greater gains (eradication of smallpox, etc.).

He has a point, but it's not as big a point as he thinks. Yes, health initiatives have yielded some impressive results, but they're often subject to similar screw-ups. As William Easterly pointed out in The White Man's Burden, foreign aid has distorted efforts to combat the spread of AIDS. By focusing on treatment of those already suffering from HIV, there has been underinvestment in public goods that would get a bigger bang for the buck -- like efforts to prevent the spread of AIDS or to encourage vaccination for other diseases.

So Kristof is not insane... but he might be a little funny in the head.

posted by Dan on 08.09.07 at 02:01 PM


I don't think it's just an issue of concentration. Kristoff is using metrics other than economic growth, e.g. health. Such an assertion is still falsifiable.

William Easterly's argument is on point but isn't doesn't have the same level of support that arguments against an aid-growth connection do.

posted by: Greg Sanders on 08.09.07 at 02:01 PM [permalink]

It's Kristof - one f.

posted by: Neil on 08.09.07 at 02:01 PM [permalink]

Neil: Oops. Thanks. Consider the extra F redacted.

posted by: Greg Sanders on 08.09.07 at 02:01 PM [permalink]

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