Like a growing number of development economists, I am now convinced of a simple truth about our understanding of economic development: hope is underrated. Indeed the importance of hope and aspirations among the poor are the subject of a growing literature, where work by researchers such as Debraj Ray and
An interesting new paper by Ben Olken, Junko Onishi, and Susan Wong gives us some evidence on how incentives can make aid more effective. They look at a community block grant program in Indonesia and compare the effects of these grants with and without incentives. Incentives make a difference.