On the second day of the Microfinance Impact and Innovation Conference (#MFImpact), Abhijit Banerjee discussed the idea of the ‘missing middle’ in the opening panel hosted by David Roodman titled “What Don’t We Know That We Ought to?” Banerjee highlighted a business growth phenomenon that has yet to be explained. In short, there is an inability for small businesses to continue growing into reasonably larger businesses. The small ones will see some growth (measured by employees) when they have access to capital and fall off after adding a few. Businesses that are already medium sized, will see much more significant growth. Banerjee labeled this gap the ‘missing middle.’ While this is a fascinating topics that definitely needs to be further researched, I will leave it to Rohit over at IDP to fill the missing middle I am about to create (Update: Rohit delivers his post on the "missing middle." Go read it after you read this of course).
Because, while time was spent discussing what was missing in the research, there was a significant missing middle between the researchers and the practitioners.
While exciting and really interesting, the research came back with calls for further research. The Morocco study lead by Duflo found a few things, but created new questions after two years. Same thing for Karlan, Yang, Udry, Fisher and so on. The time needed for adequate data is much longer than has been researched. This rests upon a lack of data collection for many years and a strong need to do so, but it means that real solutions will take years to be researched, studied and proven. The data provided a small glimpse like one of those puzzles where one piece is take away at a time before revealing the entire picture. Unfortunately, there are still many more pieces yet to be removed and a need to implement exists.
Morehouse college professor Laura Seay explained, from the side of a researcher, exactly why the practitioners were not happy with the researchers:
If we've gathered information thoroughly and using solid methods, if we've chosen from where and from whom to get data in a systematic manner, and we've not mixed up correlation and causation, eventually, we ought to have an answer to our original research question, right? Well, maybe. If most social scientists are honest, they'll admit that we rarely know anything for sure.
For people who run a business, hearing criticism and/or suggestions from social scientists is not sufficient. Most of the practitioners on the panels spoke about how excited they were to be learning more and what the research was discovering, but always ended by cautioning that they do not have the time to wait for every piece of research. Microfinance already is in place across the world, they cannot pull out and wait for more research. Thus began a largely defensive posture. MFIs used to be the superstar and now it is Esther Duflo.
As the trend continued with each panel, it became clear to me that the practitioners were not listening very closely to the research. Already a bit scared after taking a hit from Duflo, it became a bit like watching Mark McGuire squirm and plead the fifth to congress over steroids. The discussions were mostly unproductive and extremely awkward.
That is not to say that all practitioners do not get it and that all researchers are heroes. For example, I spoke with Shivani Siroya, founder of InVenture Fund, about a few of the presentations. She brought in a perspective that was much different than the practitioners who participated in the first two days. While she recognized the balance between immediate implementation and the time it takes to do adequate research, she was happy to hear what the researchers were presenting, not discouraged.
There were some who were encouraged by the dialog taking place in New York, but a ‘missing middle’ remains between the practitioners and researchers. RCTs are too slow, but they are by far the best way at doing the research necessary to understanding what works in development in aid. What I see missing in the middle is that there needs to be an understanding that they can provide information to each other that can lead to the innovations which can significantly shift the trajectory of poverty. There is a need for both, each knows that, but they need to learn to play nice.
Note: Prof Seay has run a great series on how social scientists think this past week which I highly suggest as additional reading.