29 May 2014

What have been the underlying drivers of stunting reductions over the past 40 years? Which underlying factors should we focus on post 2015? New paper.

On June 3 I will be presenting this new IDS Working Paper by Lisa Smith and me at the LCIRAH conference on "Agrifood policy and governance for nutrition and health". The paper is an update of our paper from 2000.  

The old paper focused on explaining declines in underweight rates over the period 1970-1996 for 63 countries.  The update (supported by the Transform Nutrition consortium) focuses on the period 1970-2012 for 116 countries and switches attention to explaining declines in stunting.  

We use an unbalanced panel estimation method to estimate two models: 

  • stunting explained by underlying determinants (calorie supply, the percent of calories from non-staples, women's secondary education, the ratio of female to male life expectancy to pick up gender inequalities in health and other inputs, safe water access and improved sanitation access).  Sanitation and percent calories from non-staples are new additions to the regressors from 2000. 
  • stunting explained by basic determinants (GDP per capita, governance variables, and demographic indicators relating to rural/urban and age structure of the population)

We test for the endogeneity of all explanatory variables to make sure we are getting and independent effect of the right hand side variables on the dependent variable.  Where we detect endogeneity we use instrumental variables to (try to) manage it. 

We find:
  • A reassuring validation of the UNICEF food-care-health environment model.  For the 1970-2012 period and across all 116 countries, the contributions of our sets of variable proxies for food, care and health environment each approximate to one third.  For example, calorie supply per capita and the percent of calories from non-staples together account for 1/3 of all the declines in stunting observed (we can explain nearly all of the declines). 
  • We find some regional variations.  The broad results hold for the regions, but we do find some notable variations.  For South Asia, the gender equity variable is twice as powerful in reducing stunting as in the other countries.  For South America, food supply is stronger in reducing stunting than in other regions and in Sub Saharan Africa the percent of calories from non staples has no effect on stunting. 
  • We found no differences between the pre MDG and MDG periods.  There is little difference between the results for the years up to 2000 compared to the years 2000-2012.  In many ways this is encouraging.  It suggests that increased inputs to stunting reduction (and the MDGs are widely thought to have resulted in greater investment in the social sectors) are showing no decline in their ability to reduce stunting (and we do allow for non-linearities in the regressions). 
  • Do priorities change if we use stunting or underweight?  Put another way, are the results different for underweight?  Underweight is the MDG indicator but stunting is likely to be a key post MDG indicator.  We find that there are some differences, but they are not huge.  The main difference is that safe water access is a more important driver of underweight, but this does not shift the focus of priorities too much because the scope for increasing safe water coverage remains lower than for the other determinants (such as sanitation or female secondary education enrolment).
  • What are the priorities for the future?  Any prioritisation exercise would be most useful at the country level, but we have too few observations per country to do this (although it is increasingly possible with accumulating waves of DHS and MICS survey data).  In the paper, priorities are determined by two things: (a) how strong the underlying determinant has been in the past at driving down stunting and (b) the scope for further declines in the underlying determinant.  On this basis we conclude that the priorities for South Asia are: access to sanitation, diversity of food supply and gender equality. For Sub Saharan Africa we conclude that the priorities are: access to sanitation, women’s secondary education and gender equality.
  • Does governance matter for stunting reduction?  There are too few countries for which we have nutrition governance indicators (see HANCI), so we use general ICRG governance indicators from the PRS Group.  When entered one by one, we find that most of the 5 governance variables are positively associated with a decline in stunting--even after including, GDP per capita, demographics and country fixed effects. But when we include the governance variables together they are insignificant.  Most interestingly they seem to work through the access to safe water indicator.  More work is needed here to unpack these effects, but they are the first time we have seen these types of variables included in a big picture examination of stunting declines
So, some interesting results that speak to a number of big questions.  But the study has a number of flaws (it is currently in review at a journal).  

First, there is no variable for strength of/access to health system.  We searched high and low and dismissed proxy after proxy.  Some were available for a subset of countries and years, but they described use, not access, and are self reported. We tried to minimise the inclusion of these kinds of variables for conceptual consistency and econometric reasons. We do have secondary school enrolment of girls and this is a choice variable but it is available for all years and countries and is not self reported.  If we did have such a health system variable it would surely show up as an important contributor to stunting reduction.  Our results do not imply health systems are not important, but they do highlight a key data gap. 

Second, we have no cost data.  We can say that it requires a 9.7% increase in access to safe water to generate a one percentage point reduction in stunting rates and that it requires an 8% increase in access to improved sanitation to do the same, but we cannot compare the relative costs of increasing the underlying determinants by these amounts. This makes the priority setting less useful for policymakers. 

Third, the study is a cross-country regression.  The pendulum has swung from "these are all the rage" in the 90s's to "these are worthless" in this decade.  The truth is surely in-between.  These kinds of analyses give us useful big picture views which are needed every now and then, but they are not fine grained enough and do not have the causal power we would like to see to represent any more than a rough guide to the landscape. 

Fourth, the study is easily misinterpreted.  Does it mean nutrition specific and nutrition sensitive interventions are unimportant? Absolutely not! What the study does say is that the underlying determinants (a big resource flow, which nutrition sensitive interventions are chiseled from) must not be overlooked in the fight against stunting.  Does it mean that health systems are not important?  Of course not, micro studies show how important health systems are.  Does it mean income growth will solve stunting?  No. The long term elasticities are around 0.6 (i.e. a 10% increase in GDP/capita is associated with a 6% decline in stunting rate) and the short term ones are around 0.2.   Income growth is very important, but it is not nearly enough.

The final flaw is a common enough one--the past is an imperfect guide to the future.  Priorities in nutrition need to be constantly challenged not driven solely by researchers.  They depend on capacity, political windows as well as evidence. Studies like these can help, but they are only one input into the constant press for progressive change. 

28 May 2014

Inclusive capitalism: what can the rich countries learn from other nations?

Yesterday the City of London Corporation ("the world's leading international finance and business centre") co-hosted a big conference on "Inclusive Capitalism".

At its heart inclusive capitalism seems to be about relying on the morals of the rich to do something about inequality.

The onus seems to be on the banks and CEOs to change "mindsets" (see this article by Mark Boleat, chairman of the City of London policy and resources committee).  Remind anyone of Corporate Social Responsibility? Frustration number one.

The second frustrating thing about the recent series of articles on this topic is that they are long on describing the problem and almost silent on solutions. (See these articles by Prince Charles and George Monbiot.)

It seems to me that the only way to generate inclusive capitalism is to change the rules of the capitalism game and to focus on reducing inequality via fiscal policy.

In March of this year the Bank of England appointed Nemat Shafik its Deputy Governor for Markets and Banking.

Minouche, as she was known when the Permanent Secretary at DFID, will hopefully bring some lessons from international development to the UK and rich country scene.   What might they be?

1. Treat financial sector wealth in the way one would treat other potential "resource curses".  We know how to regulate oil and mineral wealth so that they generate inclusive growth rather than exclusive growth.  Learn from these experiences.

2. Make everyone in the Bank of England read Ha Joon Chang's "23 Things They Don't Tell You About Capitalism". Excerpt:  "The free market doesn’t exist. Every market has some rules and boundaries that restrict freedom of choice. A market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them."  The type of capitalism we get is a political outcome, one that is shaped by rules hammered out by competing interests.  There are many "capitalisms" around the world--it is time we looked outside the West for some inspiration and ideas. 

3. Make fiscal analyses more equity sensitive.  In development economics we worry a lot about the distributional aspects of who are taxes raised from and who are they spent on (Public Expenditure Reviews).  This kind of analysis does not often puncture public consciousness in the rich countries.  

4. Invest in education and health.  Boring, I know, but yet another article (this time in Science) notes the net value of a higher degree in the USA to be $500,000 over the life course.  Investing in inclusive education (early child and higher education --not only the stuff in-between)  and health (maternal and early childhood again) is an incredibly sensible way of making capitalism more inclusive, no matter the set of rules it is governed by. 

So the next time you hear someone going on about inclusive capitalism, ask them what they would do if they were in charge. If you work in international development, you might even have some new ideas and evidence to share.     

22 May 2014

SUN member nutrition plans: they should be analysed, used, improved and backed

Another interesting SUN publication came out this week.  It is focused on the experiences of 20 SUN countries in planning and costing for the acceleration of actions for nutrition.  It is based on an analysis of 20 national plans and the processes behind them.

The Report describes the processes behind the development of the plans, emphasising the trust building and effective communication between stakeholders.  In particular the conclusion from the analysis is that the more inclusive and iterative, the more likely the plan is to be used (although this must be a prospective assessment).

The Report really hits its stride in section 2, opportunities for investments. Here the 20 plans are analysed in terms of spending on actions that are nutrition specific, nutrition sensitive and governance related (great to see this last set of items explicitly recognised).

Things that struck me:
  • there was very little involvement of business in the development of the plans. Some will applaud this, others will lament it.  As I have noted before, if the public health sector knows what it wants from an engagement with the private sector and the right governance arrangements are in place, the private sector can play a positive role as one voice among many
  • in some plans over 80% of the resource allocation was to nutrition specific interventions (Benin, Kenya, Tanzania and Mozambique) while in others, more than 90% was allocated to nutrition sensitive investments (Peru, Guatemala, Indonesia, Bangladesh).  More analysis needs to be done to understand why.   Is it because the African countries have weaker health systems and need nutrition specific programmes to fill the gap?  Or does it reflect something about nutrition outcomes in each set of countries? We need to know. 
  • the nutrition sensitive spending is dominated by food and health environment spending, with very little on care and with activities to empower women almost absent. Again there is huge variation in composition of nutrition sensitive spending: in Rwanda it is nearly all food security and in Kenya it is nearly all health environment.  It would be good to know more about the drivers. 
  • on governance, there was more balance between the 3 sub-categories: information management and coordination; advocacy; communications and policy and system capacity building.   Again there was wide variation, with Guatemala allocating nearly all its governance spending to information management and Indonesia nearly all to system capacity building.
  • average costs of plans (over 4-5 years): $200m for nutrition specific, $1496m for nutrition sensitive and $114m for governance. I'm quite impressed by the level of spending on governance. A few tentative estimates of funding gaps are included but the Report highlights this as an area where much more work is needed
  • only 12 of 20 plans showed some level of prioritisation of actions.  Why could some and not others? 
  • "most plans do not currently include the requisite assumptions and detail on costing methodology that is required to understand, replicate and revise national plan". Again, good to know what the key bottlenecks were.  
  • Tanzania, Madagascar, Ethiopia, Malawi and Bangladesh were highlighted as places where the greatest progress was being made in costing plans, all using methods that they are comfortable with rather than an externally imposed method
All in all this represents some really impressive work  from the stakeholders in the countries and by the SUN secretariat to pull it together (with some support from the IDS Knowledge services team).

I was asked to write a conclusion to the report and, after reading it, I was happy to do so.
This is how I concluded.

"Potential investors in nutrition should be encouraged and motivated by these plans. They may not be perfectly formed as yet, but they embody that most precious of development assets: the commitment and the determination of national champions to make them become so. In this way the plans serve as the most credible basis for investments to accelerate the reduction of undernutrition. They should be analysed, used, improved and backed."

Back the plans.  Lives depend on it.

20 May 2014

Over 30% of World Bank Policy Reports are NEVER downloaded. What about your own organisation?

Many thanks to Luz Marina Alvare at IFPRI for alerting me to this new World Bank Policy Research Working Paper by Doerte Doemeland and James Trevino (Which World Bank Reports are Widely Read?) and for providing the bullet points below, drawn from the paper.

  • Nearly one-third of their PDF reports had never been downloaded, not even once (see table above)
  • Another 40 percent of their reports had been downloaded fewer than 100 times
  • Only 13 percent had seen more than 250 downloads in their lifetimes
  • Well funded multi sector policy reports are likely to do better
  • There seems to be some evidence that a media push alone is not sufficient for a good dissemination
  • Policy reports in English received the largest number of downloads 
What to make of this?  

First, it is important to note that these Policy Reports are not what the World Bank classifies as "public goods" (e.g. World Development Reports, Policy Research Working Papers and Open Data)--they are mainly country and sector specific.  Nevertheless they include glossy things like country policy reviews, poverty assessments and public expenditure reviews (this site gives you an idea). These are things you would expect to be of interest to many policynakers, NGOs and researchers. 

Second, never downloaded is not the same as never viewed or never read.  And hard copies may be distributed to the audiences that do not have high speed downloading capacity.  

Third, these Reports tend to be quite country and sector specific so we should not necessarily worry too much about quantity of downloads and reads if the right people (e.g. who can make decisions or who can influence those who make decisions) are reading them. 

Nevertheless, a huge amount of money (our taxes, don't forget) goes into these reports and it is worrying that so few seem to be getting download even once!  With all these resources at its disposal, and given its platform, the Bank surely should, and could, be doing more to ensure their use. 

  • Make the language more accessible--often the language is too intimidating for non-economists or economists that do not have a PhD from a top US university
  • Co-author with non-Bank national authors.  I don't know if this is possible (these papers are designed to represent corporate views) but from my experience the positionally of the authors counts as to whether something is read in country-- whether or not the report is any good
  • Use social media and blogs to  get the word out and distill the messages in lively formats.  I often despair at even the short form policy briefs that many organisations put out under the name of communication.  They are written the world over in language that is designed to minimise risk rather than inspire action. 
  • Write fewer Reports. Can I really be advocating the provision of less information?  Well there is such a thing as saturation and the ability to prioritise is perhaps one of the least valued attributes out there in this "let it all hang out Internet world".  Is there a financial incentive to have a plethora of Reports or could there be a focus on fewer reports with a greater effort to build an audience for each?
These ideas aren't exactly rocket science, but the Bank needs to be worried about these stats and come up with it's own response (and it is great that the Bank is publishing this report about its Reports, let us not forget). 

But it is not just the Bank, it is all of us.  None of us can be complacent.  If we are complacent we are akin to a vanity press. 

Our work, if it is of the required quality, needs to be read, discussed, challenged, improved and factored into decisions that can help improve people's lives.  We all have a responsibility to mobilise high quality knowledge, whether our own or others. 

18 May 2014

Is "Resilience" a Mobilising Metaphor for 21st Century Development?

I just returned from Addis from the IFPRI 2020 Conference on Building Resilience for Food and Nutrition Security.

It was a rich and diverse conference with many excellent speakers--all wonderfully visioned and organised by Rajul Pandya Lorch and her team at IFPRI.

So, 150 presentations later, what did I learn about resilience?

1. A definitional consensus on resilience seems to be emerging around 3 dimensions: absorptive, adaptive and transformational.  The transformational component is the hardest to envisage and tends to get lost, but is, I think, the most important for not simply surviving but for thriving.  Transformation is about taking action that changes the likelihood of occurrence, exposure to and severity of stressors and shocks.  It might mean moving from an area, or new environmental infrastructure, or a peace settlement, or legislation that outlaws discrimination.

2. The technicians think resilience measurement is possible.  Given the uncertainties and dynamics that stimulate the need for resilience, data--quantitative and qualitative--have to be collected more frequently (the HKI surveillance systems in Bangladesh were held up as a good model).  Measurement is necessary but not sufficient for identifying the drivers.

3. Policy development is going to be a real challenge.  But even if resilience can be measured and the drivers can be identified, can programmes and policy actually do anything about it?  It is not obvious to me.  Some speakers talked about resilience in hushed awe--why could some people, communities and systems display it and others not?  Surely it is not all chance, but if it is the result of deliberate action, are the interactions of those actions so complex that the best we can do is make sure there are enough ingredients around and hope they come together in uplifting ways?

4.  Resilience has value added.  This is not always clear.  Risk, vulnerability, social protection, climate adaptation, poverty dynamics and livelihood diversity are all closely related topics and have all seen their hype curve rise and fall. At the moment at least, resilience seems to encapsulate all of them, perhaps not in a technical sense, but certainly in a heuristic, mental short cut kind of way. It offers the hope of solutions to those faced with increasing uncertainties.

5.  Resilience for whom?  Who is driving the agenda? Joachim von Braun suggested that the growing middle classes may be the ones pushing the agenda most strongly--they don't want their hard earned gains eroded by the irresponsible actions of others.  If this is right, then the resilience we get may not work for the poorest (see Chris Bene's paper on this point).

6.  Resilience is a "mobilising metaphor".  Different groups use it to advance different agendas.  Here the fuzziness of resilience may be a strength: a lot of important ideas can be smuggled in --knowingly or not--using reliance as a Trojan Horse.  At various stages in the conference it was used to make the case for breaking down barriers between the ideas of "developed" and "developing" countries and between development and relief, and also for working across disciplines, sectors, levels and stakeholders, focusing on the long term as well as the short, and paying much more attention to dynamics.  All good ideas and long overdue. Of course bad ideas may also get smuggled in.

Much of our current development thinking was developed in the last half of the 20th century--in a world very different from today.   Even if resilience has no unique conceptual contribution (and for me the jury is still out), it is clearly resonating with many different stakeholders.

Perhaps the greatest contribution of resilience will be to create the space for new ideas to flourish and help us move development, food security and nutrition more decisively from the 20th to the 21st century. Time will tell.

15 May 2014

The Upside of Down: Charles Kenny on why we do not live in a zero sum world

I am a fan of Charles Kenny.  He writes regularly for Foreign Policy and he is always challenging, thoughtful and provocative.

His latest book, the Upside of Down, is very readable (and mercifully brief).  In it, he takes aim at those who say that the Rest of the world's rise is at the expense of the West.

Nonsense, he says.

He goes through the 4 big assumptions the "declinists" make:

(1) the West is to blame for its own decline.  Too little investment, too high taxes. Kenny notes that US and European growth rates have been pretty stable for the past 40-50 years, no matter who is in charge.

(2) being the biggest is always the best.  Kenny argues that being big is overrated.  For example, having the largest army in the world does not guarantee success (see Iraq and Afghanistan).

(3) the rise of the Rest is a terrible thing for the West.  Job losses.  Resource depletion. But as the author notes, growing incomes in the Rest, means markets for the West--if it keeps innovating and is not complacent. There will be painful transitions for some, but these can be softened or prevented with appropriate retraining and transition arrangements. And Kenny is optimistic that poorer countries are in a better place to adopt sustainable technologies than the West, so resource depletion worries are misplaced (greenhouse gases he says are the real worry and we know how disproportionately the West generates these).

(4) fortress America or Europe is how we reduce uncertainty.  But in a globalised world, where the West needs migrant labour and where the West cannot shut itself off from climate change, isolationism is not a sustainable option.  

For someone like me, there is not a lot to object to in the book.  The book was written to counter the Weekly Standards/Fox News Channels of this world.  (The overtures to Europe in the book feel a bit added on--its really about the US.)   But I don't think that the book will change their minds, partly because their perspective is ideological and partly because their perspective is commercial (it sells), but partly also because the book feels as though it written without any real deep knowledge of how they think and more importantly why they think the way they do.

It would have been much more powerful book if co-authored with a right wing writer who could really calibrate the good arguments to push the hot buttons of the "declinists" (not easy, I realise, to find such an accomplice).

So all in all a really enjoyable read, especially for someone who is already sympathetic to the arguments.  I just wonder if it will change any minds.

Ultimately I think Kenny is wrong that the folks at places like Fox News and the Weekly Standard don't think there is an upside to down.  They do--it is circulation and ratings.  It is just a different upside to the one he argues for.

14 May 2014

Nutrition and the SDGs: OWG or OMG?

This time last year I was feeling pretty good about the position of nutrition within the next set of development goals.  

The High Level Panel's Report had got it right on nutrition--bracketed with food security, but recognising that food security and nutrition were equal partners (see below). 

5. Ensure Food Security and Good Nutrition

5a. End hunger and protect the right of everyone to have access to sufficient, safe, affordable, and nutritious food
5b. Reduce stunting by x%, wasting by y%, and anemia by z% for all children under five 
5c. Increase agricultural productivity by x%, with a focus on sustainably increasing smallholder yields and access to irrigation 
5d. Adopt sustainable agricultural, ocean and freshwater fishery practices and rebuild designated fish stocks to sustainable levels
5e. Reduce postharvest loss and food waste by x% 

But does the text emerging from the Open Working Group (OWG) on the Sustainable Development Goals (SDGs) make for less reassuring reading? 

In the latest SDG OWG working group Focus Areas document for the May 5-9 Session that just concluded  nutrition has been bracketed with "Sustainable agriculture, food security, and nutrition". 

This is what Focus Area 2 looks like.

Focus area 2. Sustainable agriculture, food security and nutrition

End hunger and improve nutrition for all through sustainable agriculture and improved food systems

a) all people have access to adequate (safe, affordable, diverse and nutritious) food all year round
b) end malnutrition in all its forms, notably stunting and wasting in children under five years of age
c) by 2030 ensure sustainable food production systems with high yields, and reduce intensity of use of water by at least x%, chemicals by at least y%, and energy by at least z%
d) by 2030 achieve access to adequate inputs, knowledge, productive resources, financial services and markets for small farmers and fishers, with a particular focus on women and indigenous peoples
e) reduce the global rate of loss and waste along the food supply chain by 50 percent by 2030
f)  all countries have in place sustainable land-use policies by 2020, and all drought-prone countries develop and implement drought preparedness policies by 2020
g) achieve climate-smart agriculture that is resilient and adaptable to extreme weather including drought, climate change and natural disasters
h) achieve by 2030 protection of agricultural biodiversity, including through use of the practices and local knowledge related to agro-biodiversity and diversity of food

On the face of it the first 2 lines in each document are similar.  What gives cause for some concern is the imbalance that follows in terms of another 6 priorities. 

In addition, it seems to be somewhat business as usual with regards to agriculture and nutrition.  There is, for example, no language about the need to make the food system more nutrition sensitive and supportive.  

I may be worrying about nothing, but if you are also somewhat concerned, make some noise and engage with the OWG process. The Beyond2015 website is a good place to start.  

12 May 2014

Scaling up nutrition -- how to get effective engagement of multiple stakeholders?

In a world where it seems harder than ever to find the time for quiet reflection a new "In Practice" series from the Scaling Up Nutrition (SUN) movement is most welcome.

The first out in the series is entitled "Effectively Engaging Multiple Stakeholders".

In it, six of the 50 SUN members reflect on what it takes to develop effective multi-stakeholder platforms and why it is important to do so.  The members are: Benin, Chad, Guatemala, Maharashtra, Malawi and Zambia.

While the diversity of multi sector platform (MSP) experience is interesting, the sections I was most interested in were the lessons learned and the challenges of trying to work in this way.

Key lessons and challenges listed across the 6:

  • Successful MSPs bring people together, resolve conflicts and get tangible things done--things that are likely to accelerate undernutrition reduction and which can be tracked.  There is no magic formula, just lots of hard work.
  • These MSPs remain reliant on the personal commitment of key individuals.  Some might say this personal commitment is too fragile a basis for a sustainable MSP, but I'm not worried.  This is how positive change happens.  The main question for me is how can we create an environment where the current champions can nurture the development of future ones. 
  • Those outside of government are often the most able to engage the media and parliamentarians and put pressure on less committed parts of the government to act--again familiar from other progressive social change movements
  • Capacity is a key brake on effective MSP functioning--we know that "multi" anything means a lot more work: more conversations, meetings, trips, emails, headaches and conflicts.  The challenge here is to keep the activist spirit going without killing the MSPs with the formal reporting and accountability processes that would accompany increased government investment in them
  • Whether to focus solely on nutrition specific programmes and ignore the world of nutrition sensitive actions which are often messy (which ones to focus on?) and difficult (nutrition is typically not their number one priority)?  I feel we should resist delaying action and thinking on nutrition sensitive actions--the need is to prioritise across both and to be selective within each area
  • Private sector--some countries worry about how to get them more interested in nutrition and other countries worry that they are too interested.  We need to know why we want these actors involved (for what?) and then to be able to figure out which companies to engage with.  We have a long way to go in this area, and I very much hope the reported SUN work with the Global Observatory will help guide us
  • Triangulation.  One of the reasons the MSPs are valuable is that they help us focus on one issue from multiple perspectives.  We can finally get a truly rounded perspective on nutrition.  But what if the different angles of observation generate very different implications?  This is not a problem but a strength--we want to proceed on a secure basis, one that everyone owns.  But what happens if we get stuck?  Do the most powerful stakeholders (unlikely to be communities themselves) begin to throw their weight around? And then what happens?
I would have liked to hear more about what did not work and what was deeply frustrating and how these challenges are being addressed, but in a practice paper it is very difficult to expose the mistakes we all make, never mind the vulnerabilities we all have.  

So I really applaud the 6 countries for giving us a glimpse into their processes and to the SUN Secretariat for facilitating the lesson learning--within and outside of SUN.   

And as the MSPs develop I hope they will feel more able to move a little more from valuable  reflection to even more valuable critical self reflection.   

06 May 2014

Economics: It doesn't have to be dismal

This week the student group, the International Student Initiative for Pluralist Economics (ISIPE), wrote a letter to the Guardian newspaper complaining about the "lack of intellectual diversity" in the way economics is taught.  Six months ago a group of academics had made a related point in another letter to the Guardian.   

Having spent 10 years at IDS it is clear that most social science disciplines have a greater tolerance of plurality and diversity than economics.  That is changing with behavioural economics modifying the way we think about rationality and political economy changing the way we think about governance, imperfections and distributional consequences of markets. 

But has it caught up in the classroom and in the text books?  I suppose not.  

The UK academics argue that this is partially because of the UK incentive systems whereby economics departments have to submit their best papers to the UK's Higher Education Funding Council for assessment of quality, an assessment that is related to future funding decisions.  This may be the case, but the reasons are likely to be more profound than that (vested interests, power, status quo)  and will take longer to change.  

I wrote about this in an article in the journal Development about 4 years ago.  It was one of 5 dominant assumptions that I listed as being severely stress tested by the financial crises of 2007-2008.  

Here is an excerpt. 

"Assumption 3: Economics should be the dominant discipline in the policy discourse

Economics as an analytical tool and as a generator of evidence has a primacy in the international development debate. This primacy has many drivers including colonial economics (Tignor, 2005), reconstruction (the establishment of the Bretton Woods organizations) and the economics of the great depression (Skidelsky, 2009). This drives and is further driven by the recruitment of economists at major international development research organizations. This primacy puts economics in the spotlight when things go wrong.
Key assumptions of economics have been found to do violence to reality, and hence, via poor policy choices, violence to well-being. Core assumptions around information asymmetries, definitions of rationality, independence of behaviour, discounting and the ability to insure against all risks were shown wanting before 2008 (Coyle, 2007). Krugman (2009) ‘don’t mistake truth for beauty’ and Skidelsky (2009) ‘we need to acknowledge irreducible uncertainties’ elaborate on how economics got it wrong in the context of the global financial crisis. The LSE letter to the Queen describes the failure to predict the ferocity of the crisis as a ‘failure of collective of imagination of many bright people’, which leads me to conclude that there are not enough checks and balances in place to keep economics grounded in the real world where flaws and friction are the norm, not perfection and the absence of friction (Krugman, 2009). Dasgupta (2005) describes economic modelling as a ‘strategic simplification of complicated reality’. I would argue that the space over which such strategic simplification is valid is diminishing.
In terms of the other great crisis, global warming and natural resource mismanagement, the use of economics gives us a very particular perspective and one that is different from environmental sciences. Collier (2010) shows how economistic models can generate views about our obligations to the future, which are profoundly different to those generated by environmentalists. He draws on mainstream environmental work to suggest an alternative: the idea of custody. Unlike preservation, custody of the natural world implies that the current generation has to have an answer to the future generation's question: If you used up these natural resources, did you leave us ‘man-made’ assets of equal value? Collier argues that if future individuals are wealthier, they will be awash with ‘man-made’ assets and will value the natural assets that we have used unsustainably even more highly than we do. While utilitarianism says that the richer the following generations the fewer are our obligations to save assets for them, the custodian principle suggests that the increased wealth of the following generations means that we have an even greater obligation to answer their question from the future in a satisfactory way.
Of course, there are plenty of counter-views about whether economics is in trouble. Halsey-Rogers (2010) concludes ‘the global crisis does provide new information in key policy areas, but it need not provoke any crisis of confidence in the current state and direction of development thinking ... over the longer term, the crisis could have its biggest effects on the development thinking of those who are not development specialists. In many cases, policy prescriptions from policymakers and researchers from outside the development field have relied on implicit or explicit models that assume that developing-country markets function much more like textbook models than is actually the case’. But if those outside the development field have unrealistic expectations about how well markets work in the developing world, surely this raises the possibility that those from within the field and trained in the same universities will too.
It seems to me that economists must become much more alive to when their models and assumptions can no longer offer a strategic simplification of complex reality and in fact when they begin to do violence to reality and to people's lives and livelihoods. This has fundamental implications for how economics is taught, the mix of disciplines that development research organizations hire and the heterogeneity of economics schools and economic schools of thought that they draw on."