Published on Development Impact

Evaluating The Best Ways to Give to the Poor: Guest post by Bruce Wydick

This page in:

What are the best things ordinary people living in rich countries can do to help poor people living in developing countries? This is the question the editors of Christianity Today assigned to me for a special issue this month on world poverty. It is a question many people like my parents worry about, people who would like to give money to causes that help poor people overseas, but to put it simply, have little clue about what actually works. (Except for the fact that their son strives to keep them painfully abreast of such matters.) 

A plethora of options exist today for ordinary people with a little bit of extra means to help the poor: donating a yak to a Nepalese family in the name of the “rich uncle who has everything,” making a microfinance loan to a Nigerian cobbler through Kiva, sponsoring a child in virtually any developing country in the world. Courtesy of the web, today it is not just big governments and multinational organizations that do all of the heavy giving. Ordinary people give to the overseas poor now more than ever.

So among the popular means through which ordinary people try to help the poor overseas, which are the most effective? I decided to take a poll of our peers and have each rate, on a scale of 0-10, some popular interventions.   Specifically, if someone wanted to donate $X to alleviating poverty in developing countries, which of these approaches would be the most (10) and least effective (0) means of increasing the welfare of the poor in developing countries?  

Survey participants included Chris Barrett (Cornell), Alexander Tarozzi (Duke), Dean Karlan (Yale), Ken Leonard and Pamela Jakiela (Maryland), Betty Sadoulet, Alain de Janvry, and David Levine (Berkeley), Pascaline Dupas (Stanford), Jon Robinson (U.C. Santa Cruz), Sarah Baird (George Washington University), Paul Glewwe (University of Minnesota), Judith Dean (Brandeis and World Relief), Chris Ahlin (Michigan State), Julie Schafner (Tufts), and David McKenzie (the World Bank ). 

The results of the poll appeared in the cover story article for the magazine this month.  A couple of the lesser-used interventions were omitted for space considerations in the main article, but I include them here with an abbreviated synopsis of the commentary. 

Here are the rankings:

1. Providing Clean Water to Rural Villages.  (Average Rating: 8.31) A colleague of mine at USF had his large undergraduate global economics class take the poll as well. Even the undergrads came up with the same answer for the #1 ranking, so it seems you don’t have to be a development economist to get this one.  A million children die from drinking unclean water each year. One famous WHO study found clean water in a rural village reduces infant mortality by 35% to 50% at a cost of roughly $10 per person per year. Bang for the buck, clean water is hard to beat.

2. De-worming Treatments for Children.  (Average Rating: 7.81) This one was probably ranked high for three reasons. First, because de-worming is so effective at a medical level, it’s cheap, and also because this early intervention was the subject of one of the most famous early randomized trials. Miguel and Kremer’s celebrated study found that regular de-worming treatment in worm-infested areas of the developing world could reduce school absenteeism by 25% at a cost of $0.50 per year. While impacts of this magnitude are not likely to have external validity in areas with lower worm infestation, there are plenty of places left where deworming impacts would likely be huge.

3. Donation of Insecticide-treated Bed Nets. (Average Rating: 7.31) The Sachs / Millennium Challenge Corporation efforts along with Pascaline Dupas’ excellent work in this area have created quite a buzz around insecticide-treated bed nets in the last few years. Malaria is a leading killer of children in developing countries, accounting for nearly one in five deaths of children under five in sub-Saharan Africa. The new nets last for several years without needing to be re-treated, and reduce instances of malaria by 50% and malaria mortality by 20%. Bed nets are also incredibly cheap—only $5-10 dollars. Another big bang for the buck.

4. Child Sponsorship.  (Average Rating: 6.86) Paul Glewwe, Laine Rutledge, and I did a BASIS-sponsored study on the long-term impacts of Compassion International’s child sponsorship program.   We used a regression discontinuity/IV framework based on age eligibility at program rollout that examined adult life outcomes for children who were sponsored in six countries through Compassion’s program during the 1980s and 1990s. The adults who as children providentially lay on the right side of the age-eligibility cutoff were more likely to complete secondary school, have a white-collar job, marry and have children later, and have a house with electricity. Evans and Kremer’s (2008) shorter-term study in Kenya also finds big impacts.   Expensive, but effective. 

5. Efficient Wood-Burning Stoves. (Average Rating: 6.00)   Indoor air pollution is worse than many people previously thought: about 1.6 million people are believed to die prematurely each year from it.   Poor stoves also lead to more rapid deforestation, where 5.8 million hectares of tropical rainforest are being lost annually. Improved wood-burning stoves deal with both of these issues in one go, with big impacts on both. Some improved stoves are super-cheap. For example for $15 you can buy one of the new high-tech rocket stoves.

6. Microfinance.  (Average Rating: 4.19)  Development economists now are nearly all aware of one major fact about microfinance: it’s astounding growth over the years is significantly larger than its impact.  Most of the recent studies of microfinance using RCTs, including the relatively recent 2011 papers by Duflo et al. study in Morocco, and the new Attanasio et al. study in Mongolia  find modest impacts: increases in entrepreneurialism and business investment, but little or no increase in income. Microfinance clearly exhibits some modest positive impacts, but it isn’t the silver bullet in the heart of poverty some had hoped it might be. At least by some measure, development economics and microfinance have lost that lovin’ feeling.

7. Cleft Palate and other Reparative Surgeries.  (Average Rating: 3.87) There is little doubt that disabilities such as cleft palates and cataracts create huge obstacles to leading a normal life for kids in developing countries. We have all seen the shocking pictures of disfigured children in magazines that ask for a donation for organizations such as Smile Train, which does corrective surgeries for a $250 donation. Little research has been done by economists to evaluate the impacts of these surgeries in developing countries, but medical research shows excellent long-term results. Intervention is expensive, but respondents had little doubt about impacts.

8. Farm Animal Donation.  (Average Rating: 3.81) The marketing of organizations like the Heifer Project are second to none. Who can resist the picture of the happy Bolivian girl hugging the alpaca? Chris Barrett and I have been working on an evaluation project with Heifer based on non-experimental data. Our results are just preliminary but indicate positive impacts on dairy consumption from donated dairy cows, but little measurable impact from the smaller animals. Organizations like Heifer face difficult issues related to targeting. They would like to target the poorest of the poor with farm animals, but in many cases these households lack the resources to properly care for one of the major farm animals. We’ve noticed this in the field.

9. Libraries and Literacy.  (Average Rating: 3.44) Literacy and a love of reading and ideas are key to economic development and escaping poverty. Many development practitioners feel that small libraries in rural villages strongly promote literacy, learning, and development.  There is some evidence that libraries may be a cost effective alternative or supplement to investments in schools, where the cost of a child reading an extra book a year is estimated to be between $0.74-$1.30. Smaller donations of a few dollars buy books, larger ones of hundreds of dollars establish the village libraries themselves. I thought this one might be rated higher.

10. Fair-Trade Coffee. (Average Rating: 1.94) How can fair-trade coffee, as it is commonly practiced, continue to thrive when the most rigorous evidence shows that it doesn’t work?  (and even clearly explains why). In a paper certain to amplify the caffeine jitters in the fair-trade coffee industry, De Janvry, McIntosh, and Sadoulet (2011) find zero average impact on coffee grower incomes over 13 years of participation in a fair-trade coffee network. Low impact is due to extremely poor institutional design: growers have to pay for fair-trade “certification,” recouping these costs only in years when the coffee price falls below the $1.41 price floor. (The New York Coffee price is about $2.55 right now.) Moreover, here is a program that promotes the cultivation of coffee, when it is obvious that coffee growers would be collectively better off if everyone grew less. Clearly a case where development economists are aware of the deficiencies of a program, but word hasn’t “filtered down to the average Joe.”

11. Laptops for Kids. (Average Rating: 1.80) The One Laptop per Child program gives away laptops to kids in developing countries who have at least a thousand more pressing needs. The bang for the buck on this one is at best a whimper, at worst inaudible. A recent study presented at the NEUDC by Cristia et al. at the Inter-American Development Bank evaluated the impact of the One Laptop per Child program in Peru, finding zero impact on learning or on expectations about future education.

12. Menstrual Pads for Young Girls. (Average Rating 1.60) Lack of access to sanitary pads can result in lost days of schooling and work, and are thought to reduce education in girls and have numerous other negative consequences. SHE (Sustainable Health Enterprises) asks donors to provide $28 every 28 days to promote small businesses that make locally produced menstrual pads available to girls and women in developing countries.   Many in the pool had read the current research: In a recent study, Oster and Thornton find no detectable impact on girl’s school attendance. 

What does this all add up to? I see three lessons here for development researchers doing impact work. First, there is considerably more awareness and consensus within our own circles about the effectiveness of different types of development programs than there is within the general population. We need to do a better job of getting the word out about what works and what doesn’t. Sacrificing a research project here and there to spend more time doing public writing and speaking would probably constitute a public-welfare-improving reorganization of time for many of us.

Second, there appears to be almost an inverse relationship between marketing hype and rigorously measured impacts. Over the decades there have been movements to bring greater levels of transparency into the consumer product industries, the medical industry, and now the financial industry. The aid industry needs to be next. As a profession we should be insisting that these consumer-oriented aid organizations gain third-party certification of impacts for the interventions they market to the public. 

Third, we need to diversify our collective research portfolio. While many of us continue to work on issues like microfinance, water, and education, there are a number of interventions that have had very little research carried out on them, some included here. The work done by McIntosh et al. on fair-trade coffee and by Cristia et al. on One Laptop Per Child should serve as examples of rigorous empirical work that out to help staunch the flow of funds to ineffective programs before more money is wasted. The opportunity costs are too high.

Join the Conversation

The content of this field is kept private and will not be shown publicly
Remaining characters: 1000