Poor Economics

I am working through this great book by MIT economists Abhijit Banerjee and Esther Duflo called Poor Economics. This beautifully written tome goes through various problems in economic development and discusses how evidence from the fast growing array of randomized field experiments in development economics can be used towards designing incisive policy interventions. What I love about this book is that it is theoretical and practical all at once. While there is still a healthy debate over the utility of experiments in development economics (see this recent post by Chris Blattman, and this one), what can't be argued is the importance of this methodology as at least a complementary tool in our quest to understand why some places are poor and others are not.

One of my favorite aspects of this new book is the accompanying website (linked above). In addition to access to various tables and datasets for 18 different countries, the website has a link to lectures on Banerjee and Duflo. The lectures on health, in particular, are quite interesting: they cover prevention, deworming, the importance of information, and the role of health in development. Some of these are practical resources that would be highly useful for health care practitioners who are interested in global health.

Lost in the Mail

I just read an interesting paper by Marco Castillo and coauthors on crime in Peru. The study involves a field experiment where the researchers sent out a bunch of envelopes to people involved in the experiment. They signaled the presence of valuable items in the envelopes by making them thicker and/or implying that the letters were sent between relatives (who might be more likely to send valuable things).

This is a clever paper with three really interesting findings:
1) 18% of the envelopes never made it to their destination.
2) Thicker envelopes and those addressed to putative relatives were far less likely to make it.
3) Mail sent to poor neighborhoods did not make it to its destination 18% of the time and mail sent to really rich neighborhoods failed to arrive about 10% of the time. Where most of the mail was lost is in middle income neighborhood. Apparently, this is where the trade-off between the expected value of the envelope contents and the risk of facing retribution due to complaints from influential people is maximized.

Here's the kicker: Peru's mail system is privatized. While privatization is often tossed around as a solution to inefficiencies in developing countries, this paper makes the great point that such changes may have little impact if employees in the system are not held accountable. Ultimately, bad incentives are bad incentives are bad incentives.

Write Our Future...

...is the name of a fantastic NGO that my good friends Brendan and Rebecca Maughan-Brown have started in South Africa (you may recognize Brendan as a frequent co-author of mine in previous posts). The broad goal of WoF is to intervene on disadvantaged children in South Africa to improve health, nutrition and education.

Currently, the Maughan-Browns are working towards providing school-based meals for 100 children for an entire year in the Eastern Cape, where budget issues have led to the cessation of a government-funded program doing the same. It's a great cause, as school meals have been shown to increase attendance and perhaps even test scores, both of which can have important long-run benefits.

I encourage you to donate if you are interested. The Maughan-Browns are smart people looking for evidence-based, high impact interventions. They are running WoF with low overheads, guaranteeing that your money is well spent.

The Internet and Prescription Drug Abuse

Abuse of prescription drugs has grown markedly over the last decade or so. Some have argued that this is due to the growth in online pharmacies, particularly ones that do not require physician visits prior to dispensing medications or, more ominously, ones that do not require any physician approval or prescription or even questionnaires to assess medical histories.

A recent paper by Anupam Jena and Dana Goldman argues that this connection might be quite real. The authors find that a 10% increase in the use of high speed internet - which increases access to online pharmacies - at the state level is associated with a 1% increase in admissions to treatment facilities for prescription drug use. Importantly, this finding is robust to a variety of falsification checks. In particular, the authors show that admissions for abuse of other drugs, such as cocaine and alcohol, whose purchase is unlikely to be linked to access to internet, did not rise with the proliferation of internet during the same time period.