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Saturday 19 Aug 2017 | 17:43 | SYDNEY
Saturday 19 Aug 2017 | 17:43 | SYDNEY

Aid and the limits of randomised trials

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26 May 2011 16:37

It was clear from Andrew Leigh MP's Wednesday Lowy Lunch speech on 18 May that, when it comes to measuring the effectiveness of foreign aid, Leigh is a big fan of randomised control trials (the relevant portion of the recording starts at around 24:40). In what was actually a rather cutting criticism, coming from a member of the government, Leigh claimed that AusAID does no randomised trials whatsoever.

But just to note the other side of the argument, here's a blog post that, while not doubting the effectiveness of RCTs, does argue for their limitations:

Even if RCT-proven interventions provide some targets towards which modest amounts of foreign assistance could be directed, they shed no light at all about the aggregate effects of larger scale foreign assistance.

Consider the most pressing current case. What would be the effects of disbursing $1-1.5 billion of foreign aid to Pakistan? RCTs do not, and cannot, have anything to say on the matter—not only because of their narrow focus and applicability, and hence non-generalizability, but also because they cannot speak to macroeconomic effects. The larger developmental effects of aid may be good or bad but RCTs cannot help us distinguish them.  We are still left to rely on other evidence—economic and historic—about the effects of aid in stunting institutional development, in creating aid-dependence, in entrenching the hold of the bad guys, and in making the export sector uncompetitive in a way that is detrimental to long run development. These broader effects remain stubbornly present and need to be addressed head on before any large-scale foreign assistance is contemplated.

(H/t Chris Blattman.)

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