Wednesday, February 29, 2012

Poverty Traps and Best Charities

In Monday's post I linked to a post on the World Bank Development Impact Blog discussing the merits of different types of interventions.

First I should have read the full article it was talking about, but too many clicks made me stop. Here is the article

In short the article talks about which types of charities would likely be the most effective based on economic study evidence. The blog provides results of a survey of [excellent!] development economists  on which intervention are the best. I think my issue with the rankings is that the top five (clean water, deworming, bed nets, child sponsorship, and clean stoves) are problems most likely to be found in the very poorest those living on less than $1 a day. Microfinance, animal donation, fair trade coffee, and libraries are more likely to be targeted at those living on $1-$2. I agree with survey results and would provide similar rankings. However, I don't want to ignore the possibility that helping those making $1-$2 could be more effective in the long run. Development economist sometimes think of poverty as a trap. If you are really poor you cannot invest in your health, education, and nutrition so you become poorer. If you get a little help (say clean water, free bed net) you may be slightly less poor but still living on close to a $1 a day. Those slightly richer might be able to see permanent change from a small donation (see this post on the development impact blog). Of course the impacts of getting 10 cents extra income are greater for the poor.

As the author of the 2nd impact blog post David McKenzie noted in response to my comment on the first post I linked, there is a need for long term evaluations. So I guess the next step is to find a project that looks for long term impacts. I have a couple in mind that I'm working on and hopefully they can shed light on interventions.

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