24 March 2011

RCTs Are the New Black

Being that it is in the epicenter of Development RCT research labs (aks Boston and I am including New Haven since it is only 2 hours away), Boston Review is catching on to the movement and has a pretty extensive article on how they are being applied to discovering ways to improve development and aid.
All over the world, the poor weigh economic factors and make decisions about whether and how to invest in education and health. But their decisions are not always optimal for them or for society. Sometimes the poor do not invest because they are cash constrained, lack information, or there is insufficient incentive because much of the benefit of a product accrues to others. Often, like Americans who put off retirement savings, the poor procrastinate or don’t save enough for important lump-sum investments, such as school fees or uniforms. And just as nurses in one Swiss improved their hygiene practices when sanitizer was made more readily available, so convenience matters to the poor. Across a range of programs, small incentives can help alleviate procrastination.

The large body of behavioral study shows similar results across different sectors, products, and continents. Does this mean that the development mantra “context is everything” is wrong? Clearly programs do need to be adapted to local context—lentils are a great incentive to encourage immunization in India, but you probably would not use them to promote preventative medicine in Boston. It would be foolish to say that every result generalizes to every part of the world. In particular, randomized evaluations of supply-side health and education reforms suggest that while some results generalize, the details of institutional circumstance can matter a lot. Even in the case of consumer behavior, we have not done enough rigorous studies in enough countries to assert that observed patterns are truly universal, and much of our evidence comes from only two (albeit very different) countries, Kenya and India.

Yet several conclusions of behavioral economics—that small inconveniences and charges can prevent important health and education investments and that small incentives can yield large changes in behavior—appear to hold widely. Current research indicates that, despite our striking surface differences, there are strong similarities in how people make decisions about investments in health and education across contexts. We would be wise, then, to consider the words of Janell Cannons’ classic children’s story, Stellaluna: “How can we feel so different and be so much alike?”
That is only the concluding section, but it is worth reading the entire thing. Once you have finished, you can be exited by the fact that Dean Karlan's book (which I will finish this week and review the following), treads the same ground with much more detail.