Economics & Marginalia: April 28, 2023

April 28, 2023

Hi all,

Earlier this week, my sister sent a message to the family chat which just read “Harry Belafonte”. At first, it hadn’t occurred to me that he might have passed away (surely, he was immortal?), and I just assumed she was randomly thinking about what a genius and a brilliant man he was, so I responded by posting his performance of the Banana Boat Song on The Muppet Show to the chat—by the way, if you haven’t seen it, do yourself a favour and drop everything to watch it, immediately—and others in the chat responded with other clips of him. Both of his other performances on that episode, a drum battle with Animal and a sing-along of Earth Song could have featured (he sang that at Jim Henson’s funeral, too). My mum selected Jamaica Farewell, and we could have picked any of his best film performances (there were very, very many). For people of my parents generation he was *the* star, certainly the biggest non-white one, and they loved him even more (in fact much more) because of his incredible activism for racial justice—actually against any injustice, which lasted his whole life. I’m really, enduringly, glad they passed on their appreciation of a great person to me. And to my two year old son, obsessed with The Muppets, who watched Belafonte with me a couple of weeks ago, reminding me of my own childhood and appearing every bit as captivated as I was as a kid. What a loss.

  1. Speaking of activism against injustice, Tim Harford wrote this week about the use of ‘ordeal mechanisms’ in public policy, something I’ve had to teach about in the past. The idea is simple: where public policy creates the risk of moral hazard (that is, people doing risky or bad things more than they need to because they know they will be bailed out), making appeal to the policy personally costly can discourage people from using it unless they really need to. So if you think that people are going to slack off from work rather than look for a job if they think the state will give them unemployment insurance or a social safety net, you might want to make it either really very painful to apply for support, or to lean in on the social stigma of requiring help, by making people use special vouchers for the poor rather than simply giving them cash. If they work well, the theory goes, only the truly needy will subject themselves to the ordeal. Ordeal mechanisms are everywhere in public policy, but in the leap from theory to practice, they tend to break down and tip into simple cruelty. First, the ordeals used (social stigma, long waiting times, difficult processes) often disproportionately affect those who most need the help, so you might reduce take-up of the policy, but you do so by simply not helping the people who its in place to support. And secondly, its based on a very dim view of human nature. Most of the time where a moral hazard exists, people aren’t rushing to exploit it; by and large people want to do the right thing. In practice, making it easier to do it, and giving them more help winds up doing more good than the punitive first instinct so common to our political class at the moment. As in UK immigration policy, the cruelty is quite explicitly the point.
  2. US foreign aid is a bit of a mess (yes, yes I know, we can’t really talk from our vantage point in the UK these days, but still); but help may be at hand: the Fostering Innovation in Global Development Act, bipartisan at that, aims to make it more impactful and better-evidenced. It might not fix the biggest problems in USAID, as Amanda Glassman says in this Vox piece, but it seems like a step in the right direction, when so many other donors are going the other way.
  3. Shout this one from the rooftops: “While better governance and elite-level austerity may improve service delivery at the margins, the harsh reality is that there is no money to fund operations in Liberian hospitals because there is no money.” You cannot ‘good governance’ your way to prosperity and a state that meets the needs of its citizens if the economic base from which that state draws resources from is too weak to sustain it. Ken Opalo on the money, in both senses of the phrase.
  4. One for the econometricians in the audience: I had to run some difference-in-difference regressions last week. It was a bruising experience: nothing works simply, and almost everything can go wrong. Fortunately help is available: Nick Huntington-Klein has a great blog about how (not to) use covariates in a diff-in-diff; and for everything else this wonderful paper by Jonathan Roth and co-authors covers almost everything you need to know, including what R and Stata packages you can use. I was incredibly grateful to discover this paper. It really is excellent.
  5. One of the best things about CGD is that our remit is to consider the full set of policies that rich countries use in working out how they can have the most positive impact on the developing world; it’s not just about aid and international development policy. That matters, because very often, domestic policy is much more influential that foreign policy in affecting foreign countries. I’ve made this point in a general and specific way in the past, and here’s another manifestation of the same phenomenon: Hans Christiansen and co-authors find that the adoption of anti-corruption measures in rich countries has a material impact on the quality of their investments in poor countries. The findings aren’t a total slam dunk but the point is clear: what we do at home can matter much more for poor countries than what we do there, even when it isn’t the main objective of our action.
  6. This isn’t usual links fodder, but it’s important: one of my absolute favourite news sites was decimated by layoffs this week, as Disney got rid of many of the best reporters at FiveThirtyEight. In a few months time, Nate Silver’s contract will run out, too, and with it the license for the polling and sports models he and his team have developed. There is so much bad political and sports punditry out there, the gutting of one of the few readable news outlets that took data seriously is a huge loss. I’m sure it will show up again somewhere, but this is a bad thing for the US news landscape.
  7. I opened the links with an absolute barrage of pop culture, albeit largely Harry Belafonte and Muppets-themed, so I don’t feel too bad about ending on the cricket. Sri Lankan cricket has been in the doldrums for so long I’m going to take any good news we get, and an innings of 704 for 3 wickets, in which each of the top four scored a century (with two double centuries!) had me bhangra dancing in my office, even if it was against Ireland. Between this and Jimmy Buckets turning into The Human Torch this week, it’s been a superb week for sports—and there’s more playoffs to come. God, I love the Summer.

Have a great weekend, everyone!



CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.