Tuesday, September 17, 2013

Reading, Fighting and 'rithmetic... RCT battles

I don't often find myself on the same side of an issue as Jeffrey Sachs, but he has taken on the randomistas, and their use of Randomized Controlled Trials (RCTs) in development. As my bleeps know, I have some issues with RCTs as well. (See "If RCT's Could Kill" and "Is It Right to Have the Poor Pay?"). So while my reasons are different than Sachs's, we agree that RCTs are not necessarily a valid, or useful, way to evaluate development programs.

Round 1: New York Times article by Joe Nocera on Sachs
Round 2: Sachs responds
Round 3: Dean Karlan weighs in on Freakonomics site

While Sachs has been charged with being an "ineffectual utopian" by another development economist, William Easterly, I think the randomistas are dangerous utopians. And I prefer the company of ineffectual utopians over dangerous ones.

The randomistas have taken a tool appropriate to medicine, and applied it to cultural behavior, and appear to believe that it will have similar predictive ability. When one tests a medicine in Detroit, one can be fairly confident that it will also work (or not) in Delhi because people are genetically very similar. Not so with culture.  Can one generalize to rural Brazil from tests of people's willingness to use free bed nets in Kenya, or on gender impacts of microfinance in India? If these programs do not work in these areas, they may be cause for caution, but they are not predictive of failure elsewhere. But the randomistas, and their followers, are quick to proclaim that these interventions don't work. Large scale damnations for petty sins.

Furthermore, it seems utopian to think that if people prefer to get something for free (like bed nets), that manufacturers will oblige by continuing to provide that something for free, forever. One has to consider the system over the long term. As Paul Polak has said well, we cannot "donate people out of poverty." Development needs markets, and markets need price signals.

This issue matters, and is this fight is among smart, experienced, well-intentioned and respected people. While it could seem like an academic debate, it has to do with real issues and real people. It isn't just a "wonk war." Which types of development programs work? Which don't? How does one test the effectiveness of a program?  Can one predict whether a program that is successful in one area (or not) will be successful (or not) in another area?

These are multi-billion dollar questions, with potential effects on millions of people. Poor decisions based on improper analysis by "searchers" using RCTs can be more dangerous than development efforts by "planners" that ignore the needs and desires of the beneficiaries. Neither are optimal, of course, but one is worse. Dean Karlan states a concern for future children, and I do too. The ones that don't have the advantage of  the mosquito nets, financial access, and cook stoves that might have been available to their families, but for the mis-use of RCT results.

Saturday, September 07, 2013

unManifesto on Mattering

My bleeps know I am not big on manifestos.* But after a few days hanging out at the intersection** of meaning and money (aka #SOCAP13) and hearing quite a bit about impact investing and social entrepreneurship, I thought I'd share a few thoughts on building things that matter.

This is not a manifesto. I am not trying to enlist anyone. I am hoping to provoke people into thinking a bit more about this topic. To go deeper than the tweets and sound bites. To think about some design goals (or constraints) for (re)generative ventures.

So, if you want to build something that matters:

It isn’t just about developing and selling innovative goods and services.
It is about developing and selling goods that are good and services that serve.

It isn’t just about being a little greener by conserving a little energy, or recycling paper coffee cups at the office.
It is about radically redesigning your entire supply chain to dramatically reduce waste, or better yet, transform it into an asset. 

It isn’t just about creating jobs.
It is about creating meaningful work; with a fair, livable wage, and preferably, ownership for all co-workers over time.

It isn’t just about giving back to your community.
It is about being embedded in your community, and creating deep, lasting commitments to what makes it special.

It isn’t just about creating returns for investors.
It is about designing a business model that has impact, and if it requires investors, providing them with reasonable returns, subordinated to the company’s mission. Owners own the mission, and it owns them. 

If you've got a bit more time, I was on a panel that discussed some of these issues, and you can watch the video. This isn't easy stuff. It's hard work, and it's worth doing well. Good luck!
* I might feel differently about womanifestos, but that is another post
** and geographically speaking, right next door to a race of $100 million dollar toys, which is, again, another post.