S6 Ep2: Rethinking evidence in development economics
Jan 15, 2025
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Lant Pritchett, a renowned development economist from the London School of Economics, joins Tim Phillips to challenge the reliance on rigorous evidence in policy-making. They discuss the limitations of RCTs and the importance of local context in understanding policy impacts, using Indonesia as an example. Pritchett calls for a return to holistic strategies over mere poverty alleviation, while also examining how emerging economies like India and China are reshaping development debates. The conversation highlights the critical balance between economic growth and sustainable development.
Relying solely on randomized controlled trials for development policy is flawed, as context-specific insights from traditional methods can be more applicable.
The future of development economics should emphasize sustained growth and enhancing state capabilities, ensuring that policies address governance alongside economic improvements.
Deep dives
Limitations of Relying Solely on Rigorous Evidence
Relying exclusively on rigorous evidence, such as randomized controlled trials, for policymaking in development economics is a flawed approach. While rigorous evidence can provide valuable insights, it should not overshadow traditional methods like ordinary least squares (OLS) estimates, which can be more applicable in certain contexts. For example, in selecting the appropriate approach for understanding the impact of education systems, evaluating the local context and inherent biases can result in better predictions than relying solely on averaged results from systematic reviews. This suggests that the emphasis on testing the external validity of experimental findings may lead to misguided decisions that overlook critical local information.
The Complexity of National Development
National development remains a crucial aspect for improving human well-being and should not be neglected in favor of programmatic approaches that address immediate needs. Economic growth, governance, and the capability of the state should be fundamental objectives, as these elements directly correlate with the overall well-being of populations. Historical efforts, such as the post-World War II development agenda, were centered on creating capable nations that would effectively participate in the global economy, emphasizing the importance of a broader vision beyond just alleviating poverty. A narrow focus on mitigating consequences can sideline transformative growth that enables countries to become full players on the global stage.
Future Directions in Development Economics
The future of development economics should focus on promoting sustained and inclusive economic growth while enhancing the capabilities of state organizations for effective policy implementation. Challenges remain in addressing how growth can positively affect human well-being while ensuring it is accompanied by strong governance and rule of law. An example underscores this concern, where the efficacy of public health initiatives is hampered by inadequate state capabilities, demonstrating that merely having programs in place is insufficient for generating real impact. Young development economists are encouraged to explore these dimensions, as addressing state capability alongside growth presents critical intellectual challenges moving forward.
Many development economists would argue that the most important innovation of
the last two decades has been a commitment to use only rigorous evidence for
policy, and usually what they mean is evidence generated by RCTs. But are
systematic reviews of the results a useful guide to policy? And should development
economics continue to be focusing so much on the programmes that flow from RCT-
driven research? Lant Pritchett of LSE talks to Tim Phillips about the nature of
“rigorous” evidence in development economics, and the future of the discipline itself.