Two excellent interviews of Lant Pritchett by Shruthi Rajagopalan. This
The two interviews carry several insights which have been a constant themes in many of my blog posts. So I am extracting several parts in a longish post.
On fractional migration,
I think people feel they need to stay on their land to protect their claim to it. I think there’s a lot of partial migration to where somebody needs to stay on this plot that this family owns because if we leave for a year or two years, we can’t really expect that someone won’t essentially expropriate it from us. When we looked at, for instance, Dalit migration, there was a lot more migration among Dalits than among the land-owning castes... I think a lot of people in India in the rural areas have something to lose. Hence it freezes them in place because they can’t get a good return out of it and take the lump sum and move to the city. They can’t, as a family unit, as a census-counted unit, move to the city without just the risk of losing their property. Somebody has to stay at home. I think you get a lot of fractional migration, meaning parts of the household move. My conjecture is the census radically undercounts that.
However, he makes an important claim, one which I'm inclined to agree,
I would guess India is pretty near equilibria, and there aren’t these huge gains to releasing Biharis to go work in Tamil Nadu.
He advocates rotational migration instead of the politically divisive issue of open-borders and liberalised migration,
My big thing is if we actually had rotational mobility, in which people could come and perform the labor services but not necessarily instantaneously be on the path to citizenship, this could be a big thing that would be a win-win-win. It would be a win for the countries that need the labor. It would be a win for the workers that move. It would be a win for the sending countries... I think a well-regulated industry that does rotational mobility is a massive, massive opportunity. I just wrote a paper that I think I made everybody angry because I pointed out the gains from rotational mobility are bigger than the losses from climate change... if you could make rotational migration be region-specific, I think that would change the political dynamics a ton. If you could give a person a visa to come work in the United States, but they could only work in designated YIMBY areas, then, of course, the whole national dynamic that everybody worries, that all the migrants want to go to Silicon Valley or all the migrants want to go to New York, could be addressed.
A long-time critic of the $1.95 poverty line, he makes his point with two striking illustrations,
Well, my fundamental problem is it’s claiming there’s this objective function, where the derivative of that objective function with respect to income gains goes to exactly zero above the poverty line. Now, you could say marginal utility of income is well approximated by a zero at some line because above that, we’re all into positional consumption and Veblen-esque excess positional consumption. We could say that there is a line above which marginal utility of income is so low that it’s well approximated by zero and have a line... The thing is, to imagine that marginal utility income is exactly zero at $1.95 a day is just morally obscene. People at that level of income have dire material shortages in nearly every dimension of their lives, and to act as if additional income to those people isn’t enormously important and valuable is just obscene...
There is no line. One way I put this is, if we take a $1.90 poverty line, nobody has ever held a $1.95-a-day party. Who’s ever, “Holy moly, I’m at $1.95 day with my latest raise. Oh, let’s have a big old party. I’m out of poverty.” It’s just absurd. Imagine marginal utility of income really were well approximated by zero at $1.95 a day. Then why the hell people are working 45 hours a week at really demanding and dangerous and dirty occupations at those income levels? Why are people scrambling around to continue to improve their material circumstances at those levels?
The interviewer Shruti Rajagopalan makes an important point on the issue of poverty line,
I think it also changes how governments and development economists and policy people think about this. What I like about the $20 poverty or prosperity line is, you cannot redistribute your way out of it. There is no option except economic growth. Whereas at the $1.90 line, you can make some minor adjustments and redistribute and give some transfers and rations, and manipulate that whichever way you want. I think it also changes how policymakers think about the problem. There’s a question of aiming high versus aiming low, and maybe increasing that line globally will bring the conversation back to growth and convergence.
And Lant amplifies it,
... the marginal utility of a person just above the poverty line is exactly the same as the marginal utility of a person just below the poverty line. And yet the way we calculate leakage in poverty programs, it assumes that if a unit of transfer goes to somebody at $1.95 a day, it’s not benefiting poverty. And if it goes to somebody at $1.85 a day, it is benefiting poverty. That’s just crazy stupid. The marginal utility of those two individuals is exactly the same, and it creates all kinds of crazy politics and crazy obsession with how do we correctly target that aren’t good politics. They’re not good economics. They’re not good anything. It’s just wrong.
About the four-part Pritchett test for any development intervention,
One, rich countries should have more of it than poor countries. If something’s really good for level of income, then rich countries should have more than poor countries. Two, countries growing fast should have a lot more of it than countries growing slow. Three, countries that are now rich—we should have a lot more of it in countries that are now rich than when those same countries were poor. Four, and when you see substantial changes in it, we should tend to see accelerations.
When this is applied to something like RCTs,
First of all, no country that is developed is doing radically more RCTs than the developing countries—Denmark, Sweden, France, Japan. There’s no movement to do RCTs in those countries, nor did doing RCTs play any significant role in the way they become rich and develop. Neither RCTs as a movement nor the individual topics, in which if you look at the 3,000 RCTs being done, meet the Pritchett test at all...
I think we did that because we lost the purpose around broad-based prosperity and productivity in the first place, and we moved into this dollar-a-day poverty. Then that allowed you to think in a programmatic way about pushing people just above or below this line. I see RCTs as a symptom, not the disease, in the sense that they’re an opportunistic infection... I see RCTs as an opportunistic infection in the body of the development community.
On the academic success of RCTs and its persistence,
In part, you need the next big thing. Meaning RCTs came along at a period in which other previous methods, like general equilibrium modeling and growth regression empirics were becoming burnt-over districts, and it was hard to get that. I think part of the issue is if you go to a graduate student, I think a typical—first of all, you shouldn’t underestimate how much academic fields get driven by the needs to produce new Ph.D.s. An incredibly high fraction of all the research out there is produced at very early stages of academic careers, including Ph.D.s. What a graduate student says is, “Tell me what to do such that you’ll give me a Ph.D. and I’ll get a job.” RCTs provide a really wonderful answer to that, or at least have.
If I come in as a critic of RCTs, I don’t come in with the next greatest thing. Like, “No, no, no, don’t do an RCT. Do this specific, concrete, wrap-your-head-around-it, methodologically straightforward thing, and I’ll give you a Ph.D. and get you a job.” If I come along and go, “No, no, no. We need to worry about growth diagnostics, and we need to worry about deals versus development. And we need to worry about things that Daron Acemoglu and [Douglas] North and other great thinkers of various stripes are worried about.” I’m a grad student, I’m like, “No, no, no. I’m not going to hitch my fortune on becoming Daron Acemoglu. It’s like, he’s that, but I’m not that. I want to do something I know for sure is going to produce a determinate outcome in a limited period that’s going to produce something that people will call a dissertation. Boom, they’ll stamp it and I’ll go.” Until we solve that problem, I think RCTs are here to stay and independent of the critiques, because the critique that they’re no use to people in the world—when have academics really ever cared a lot about that?
One of the big problems with development economics research is the complete marginalisation of priors. It's as though world starts from the day one starts to examine the issue and conduct research. Lant describes it as "feigned ignorance",
The game that got played in graduate seminars and economics is, I’m going to disbelieve what you say unless my prior—my Bayesian or otherwise prior—let’s not even say that it’s Bayesian; it’s just a prior. I’m going to play this academic game in which my prior is that what you’re claiming, that whatever you’re talking about has zero impact. And then the dynamics of my prior or subset—I’m not going to change my prior unless you present super gold-standard evidence... Where did your prior come from? The prior that was tightly centered on zero, that I would only be willing to move off it with completely pure identification, wasn’t a well-formulated prior based on the understanding of theory, evidence and the reality of the world. It was an arbitrarily chosen prior of zero.
Having a prior based on an understanding accumulated of reconciled evidence, and then not being willing to move that prior without record evidence, that’s a reasonable way to be. Picking an arbitrary prior with no justification, Bayesian or otherwise, and then not moving off that prior unless you have perfect evidence, that’s being an asshole. There’s no side scientific justification for arbitrarily choosing a prior and then being stubborn about changing your mind. That’s just being a goof. “I’ve chosen to believe X, and I won’t stop believing X. The burden is on you to prove that I’m wrong.” The idea that you could say, “Oh, we’re going to create the pretense,” I call this feigned ignorance. “We’re going to pretend that no one really knows that if you build more schools, kids will go to school because there hasn’t been rigorous evidence of that. So I’m going to choose that my prior about the impact of building schools on enrollment zero. And then I’ll only move off that prior if you show me an RCT.”
On what Vietnam got right in succeeding with its education system and where India falls short,
After pushing our Vietnam team to say, “What was the answer? Why did Vietnam do so well?” in the end, one of our researchers, who I have a lot of respect for, he said, “Look, it’s just—they wanted to. They wanted to, and because they wanted to, they found a way to do it.” So you’re pressing for proximate determinant causes that aren’t the ultimate causal driver of this. If you want to know why Vietnam has really high learning performance among the students, it’s because they consistently, coherently wanted to. If you don’t want to, knowledge of the type of this program versus that program, it’s just not necessarily going to work as designed when you implement it. Because it’s not going to get implemented, or it’s not going to be implemented as well...
Yes, you got to want to, and if you don’t want to—and I think what India got wrong is India, as a society, as a government, was never really (and still to this day isn’t truly) committed to the belief that every child can and should achieve a relatively high level of learning performance. They’ve never really committed to it, still aren’t. There’s still the belief that education is a process of choosing the elite few who are good at it and devil take the hindermost, even inside Indian classrooms today. I think India is in the process of coming around to the “you got to want to” stage where there is generating a lot more social concern over this. But until India gets there, as we saw with SSA [Sarva Shiksha Abiyaan] was this massive, massive investment. During that whole period, as best the evidence can tell, overall learning per year of schooling of children was on a stagnant at best, but probably declining trend during that whole period.
This from the first interview
The only way it can work—and this is going to be very difficult, so this is why I’m cautious about optimism—is if the seriousness and direness is acknowledged. And you really say, “We’ve got to bring this organization back from the brink, and we have to reinvigorate this system with purpose.” I do think that you could potentially reinvigorate it if you acknowledge that this has been a selection system, and we are going to become an education system. That we’re going to radically remake Indian elementary education, as a first go, from a selection system to an education system.
About how exit by important stakeholders reduces the interest in reform,
A parent can’t stand and advocate for their child for years on end while their child can’t learn how to read and write or basic numeracy. The best way to deal with it is just to pull their kids out of school and send them to an okay school. Not that much better than the one they’re already at, just marginally better. They’re not going to have a dramatically better life, but they’ll be somewhat better off. But what that ends up doing in the larger scheme of things is that the only people advocating in front of the secretary of education or the ministry of education are schoolteachers’ unions, people who are getting construction tenders for building new schools and stuff like that. It’s not really the people who are using the services...
My friend Junaid Ahmed... was like, “Why do Indian cities not have 24/7 water?” Then wanted to reform and municipal and corporatize. It was like, I always just said to Junaid, “Everybody who really is politically powerful does have 24/7 water. The way they’ve created 24/7 water is, they put a tank on the top of their house that is filled by the public water when it’s available, filled by a private tanker when it’s not.” Once they’ve made the capital investment in a purely privatized system of providing 24/7 water to them, getting them to exercise voice and loyalty in a system in order to have a municipal provide reliable 24/7 water universally just isn’t on their agenda. Moreover, it’s like, well, wait a second. Once I’ve made this capital investment in a public sector capability-substituting investment, until that investment’s amortized, it doesn’t benefit me in the short run.
More from the first interview. This on economic growth,
One of my views is, very strongly, up to about 25,000 GDP per capita countries just need growth in order to be able for all their citizens to have access to what anybody would reasonably consider the material basics of an adequate lifestyle. I think the focus on dollar-a-day poverty has just been morally obscene... Second, I think the potential for redistribution to improve livelihoods is just radically overestimated for poor countries. One of the things about being poor is your economy tends to not be in the position to have the levers to generate large amounts of revenue. One way in which developed countries generate 40% of GDP in revenue is they have a large, formal, highly productive economy that, therefore, is easy to observe, easy to tax in relatively low-cost economic ways. That’s precisely what poor countries don’t have, so we should expect total revenue yield to be low as a fraction of GDP...
Changes in GDP per capita give you more private things that people spend on stuff they like—like sanitation, food, housing, more adequate transport. Just how revolutionary having a scooter is to people just cannot be overestimated. Imagine if your life is really circumscribed to how far you can walk. That’s how nearly all of humanity lived for nearly all of history, and all of a sudden you have the scooter—not even a car, just a scooter. Anyway, A, I think you have more private income. B, all of the data suggests at least unit elastic, if not more, buoyancy of revenue with expected GDP. So the government has more.
This on how philanthropic capital have been critical in the success of RCTs,
What a philanthropist says is, “I want to spend a very limited amount of money in the grand scheme of things. I want to have attribution of the outcome to me, and I don’t want to mess with politics because I’m a small player. I know I have to work with the cooperation or tolerance of the host government, so I want to be apolitical. I want to have attribution, and I want to spend a small amount of money.” They’re the only people to whom the RCT can give a reasonable answer about what you should do. In my mind, we never ever should lump together philanthropists, the governments or even development agencies because development agencies historically didn’t regard themselves as philanthropists.
They regarded themselves as development, by which they meant national development, and by which they meant they were partners to government about what government should be doing, and what the society as a whole, and what the rules of the game should be, and how much private-sector actors should be involved, and what the policy stance was with respect to private-sector actors and all of the big-picture questions. I agree that if we slice off philanthropists, they have a case. I want to spend a small amount of money; want to do it with the tolerance of, but not necessarily the cooperation of, the existing government; and I want to have attribution. Okay, then you’re doing TOMS Shoes giving away a free pair of shoes, and wanting to realize the impact of that is silly.
This on the donut organisations and the importance of filling the core as a starting point in any meaningful education reform in India,
Most organizations, they have these shell of service functions: IT, procurement, HR, around a core. The core is purpose and practice. Here’s a purpose to which the organization is committed. Here are the practices that we feel reach those purposes. I’m describing generically a university, a religion, an NGO, a unit of the armed forces, the police. The problem is, if you don’t have purpose and practices aligned and at the center, then—I call this the donut—you’re trying to fix the organization, but it becomes a donut. Because all there is a shell of HR is hiring teachers and procurement is buying desks. These service functions are continuing to service a hollow core. Reform of the Indian education system has to start with revivifying the core of, what can we agree is the purpose of it? What can we say are the practices that lead to that purpose?... We really need to revivify the whole thing around purpose and practice and rebuild it from the core out.
This post is a right place to point to two remarkable things on Lant Pritchett. One, he's able to internalise development contexts like an insider. I don't know of too many even foreign-based Indian researchers who have the capability to exercise similar good judgement about issues in India's development context. Second, he's able to communicate difficult concepts with clarity and simplicity, in a provocative enough manner as to not not trigger thinking about the concept.