Indonesia | Economics

Thursday, July 27, 2006

Practical academics (Part 2)

I had put this in the update footnote of my previous entry, but found it wanting. I think this discussion on the merits and limitations of (randomized) policy experiments for fighting global poverty deserves its own entry. Here is a snippet of Abhijit Banerjee's essay introducing the issue:
In many ways this episode captures very well one of the core problems with delivering aid: institutional laziness...[No one] could be bothered to put in the time it would have taken to think harder about what they were doing. Aid thinking is lazy thinking.
He then argued for more evidence-based aid interventions, particularly using randomized controlled trials.

Not all of his audience agreed. For instance, Angus Deaton of Princeton pointed out how some aid interventions could be useful even if they were not put to the test of randomization:
For a specific doctor facing a specific patient, the average outcome of a randomized controlled trial will often be unhelpful. The physician usually has some theory of how the drug works and also an understanding of her patient... Therefore the physician will often not prescribe a drug that passed its randomized controlled trial with flying colors and instead prescribe one that did less well but that is a better fit for the patient. Much of medicine is not “evidence-based,” for good reason.
At any rate, most of the discussions presented are interesting and Banerjee ended with a good rejoinder. They are clearly worth a look.

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