, ,

How Economists Are Using Social Programs to Fight Global Poverty

Social ProgramsEncouraging immunization has long been a major focus for development organizations working to improve conditions in poor regions. But for households in many communities, a lack of time and money can pose major obstacles, making it difficult for families to send their children to health clinics.

In an effort to combat this trend, economists are testing incentive programs to see whether or not communities can be encouraged to immunize on a larger scale.

Across the Indian subcontinent, scientists and economists are using randomized controlled trials (RCTs) as part of a massive trial, testing whether incentives such as food can increase the “stubbornly low” immunization rates for children in impoverished areas. As part of the experiment, 70 local health clinics in the Indian state of Haryana provide parents with a free kilogram of sugar if a child begins a standard series of vaccinations and a free liter of cooking oil if they complete it.

Researchers randomly assigned clinics in the seven Haryana districts with the lowest immunization rates to either provide incentives or not. While initial results of the experiment are not expected until next year, similar experiments suggest that results are likely to be positive. In a study conducted in India and published in 2010, monthly medical camps caused vaccination rates to triple, and offering incentives increased the rate of vaccination by six times.

“We have learned something about why immunization rates are low,” said Massachusetts Institute of Technology economist Esther Duflo, who notes that for families in poor communities, sending their children on a trek to a faraway clinic can carry high opportunity costs. “And you can balance that difficulty with a little incentive.”

According to a 2011 study on vaccination rates in India, the country is home to one-third of the world’s unimmunized children, despite being a leading producer and exporter of vaccines. Nearly half of Indian children do not receive the full schedule of immunizations.

Among the leading causes of the vaccine deficit are “little investment by the government; a focus on polio eradication at the expense of other immunizations; and low demand as a consequence of a poorly educated population and the presence of anti-vaccine advocates.”

The implementation of RCTs has come at a time when people are raising doubts as to the efficacy of foreign development aid provided by countries like the United States. While some $16 trillion of aid has flowed to the developing world since World War II, there is little empirical data as to whether, and to what extent, that money has improved recipients’ lives. Scientists see these tests as the answer to that question and hold that such studies will help development organizations better target areas of need in developing countries.

Research organizations are primarily interested in implementing tangible policy changes and hope to do so by demonstrating empirical research regarding development aid. Such is the aim of the Global Innovation Fund, which offers funding for organizations looking to conduct similar tests.

The fund has received nearly 2,000 applications for projects in 110 countries, and it will announce the first wave of grant recipients later this year. The amount of funding provided by such organizations, however, is tiny, and even at major lending institutions, the portion of investments backed by rigorous and empirical research is small.

The World Bank started a Development Impact Evaluation division in 2005, and the number of projects receiving “formal impact evaluations”—by means of RCTs, for example—increased from 20 in 2003 to nearly 200 in 2014. But that only accounts for 15 percent of the bank’s projects. This is largely because of the up-front costs of such evaluations, which carry average funding requirements of nearly $500,000.

While expensive and time-consuming, the more empirical research is conducted on social programs and development aid, the more effective those initiatives will become in remedying the conditions that drive global poverty rates. As this information is presented to donor governments in the developed world, and as aid allocation becomes more transparent, development experts will be better able to target areas of need in poor and developing countries.

Zach VeShancey

Sources: Nature, NIH
Photo: Nature