So here it
is: You can check, I am short, I'm French, I have a pretty strong French
accent, so that's going to be clear in a moment.
Maybe
sobering thought, and something you all know about. And I suspect many of you
gave something to the people of Haiti this year. And there is something else
that I believe, in the back of your mind, you also know is, everyday, 25,000
children die of entirely preventable causes. That's a Haiti earthquake every
eight days. And I suspect that many of you probably gave something towards that
problem as well, but somehow it doesn't happen with the same intensity.
So why is
that? Well, here is a thought experiment for you. Imagine you have a few
million dollars that you've raised. Maybe you're a politician in a developing
country, and you have a budget to spend; you want to spend it on the poor. How
do you go about it? Do you believe the people who tell you that all we need to
do is to spend money, that we know how to eradicate poverty, we just need to do
more? Or do you believe the people who tell you that aid is not going to help,
on the contrary it might hurt, it might exacerbate corruption, dependence,
etc.? Or maybe you turn to the past. After all, we have spent billions of
dollars of aid. Maybe you look at the past and see has it done any good.
And, sadly,
we don't know. And worst of all, we will never know. And the reason is that --
take Africa for example -- Africans got a lot of aid. These are the blue bars.
And the GDP in Africa is not making much progress. Okay, fine. How do you know
what would have happened without the aid? Maybe it would have been much worse.
Or maybe it would have been better. We have know idea. We don't know what the
counterfactual is. There's only one Africa.
So what do
you do? To give the aid and hope and pray that something comes out of it? Or do
you focus on your everyday life and let the earthquake every eight days
continue to happen? The thing is, if we don't know whether we are doing any
good, we are not any better than the Medieval doctors and their leeches.
Sometimes the patient gets better, sometimes the patient dies. Is it the
leeches? Is it something else? We don't know.
So here are
some other questions. They're smaller questions, but they are not that small.
Immunization, that's the cheapest way to save a child's life. And the world has
spent a lot of money on it. The GAVI and the Gates Foundations are each
pledging a lot of money towards it. And developing countries themselves have
been doing a lot of effort. And yet, every year, at least 25 million children
do not get the immunization they should get. So this is what you call a
"last mile problem." The technology is there. The infrastructure is
there. And yet, it doesn't happen. So you have your million. How do you use
your million to solve this last mile problem?
And here's
another question: Malaria. Malaria kills almost 900,000 people every year, most
of them in sub-Saharan Africa, most of them under five. In fact that is the
leading cause of under-five mortality. We already know how to kill malaria, but
some people come to you and say, "You have your millions. How about bed
nets?" Bed nets are very cheap. For 10 dollars, you can manufacture and
ship an insecticide treated bed net, and you can teach someone to use them.
And, not only do they protect the people who sleep under them, but they have
these great contagion benefits. If half the community sleeps under a net, the
other half also benefits because the contagion of the disease spread. And yet,
only a quarter of kids at risk sleep under a net. Societies should be willing
to go out and subsidize the net, give them for free, or, for that matter, pay
people to use them because, of those contagion benefits. "Not so
fast," say other people. "If you give the nets for free, people are
not going to value them. They're not going to use them, or at least they're not
going to use them as bed nets, maybe as fishing nets." So, what do you do?
To give the nets for free, to maximize coverage? Or do you make people pay in
order to make that they really value them? How do you know?
And a third
question: Education. Maybe that's the solution. Maybe we should send kids to
school. But how do you do that? Do you hire teachers? Do you build more
schools? Do you provide school lunch? How do you know?
So here is
the thing. I cannot answer the big question, whether aid did any good or not,
but these three questions, I can answer them. It's not the Middle Ages anymore.
It's the 21st century. And in the 20th century, randomized, controlled trials
have revolutionized medicine by allowing us to distinguish between drugs that
work and drugs that don't work. And you can do the same randomized, controlled
trial for social policy. You can put social innovation to the same rigorous,
scientific tests that we use for drugs. And in this way, you can take the
guesswork out of policy-making by knowing what works, what doesn't work, and
why. And I'll give you some examples with those three questions.
So I start
with immunization. Here's Udaipur district, Rajasthan, beautiful. Well, when I
started working there, about one percent of children were fully immunized. That's
bad, but there are places like that. Now, it's not because the vaccines are not
there. They are there and they are free. And it's not because parents do not
care about their kids. The same child that is not immunized against measles, if
they do measles, parents will spend thousands of rupees to help them. So you
get these empty village sub-centers and crowded hospitals. So what is the
problem? Well, part of the problem, surely, is that people do not fully
understand. After all, in this country as well, all sorts of myths and
misconceptions go around immunization. So if that's the case, that's difficult
because persuasion is really difficult. But maybe there is another problem as
well. It's going from intention to action. Imagine you are a mother in Udaipur
district, Rajasthan. You have to walk a few kilometers to get your kids
immunized. And maybe when you get there, what you find is this. The sub-center
is closed, so you have to come back. And you are so busy, and you have so many
other things to do, you will always tend to postpone and postpone, and
eventually it gets too late. Well, if that's the problem, then that's much
easier because, A, we can make it easy, and, B, we can maybe give people a
reason to act today, rather than wait til tomorrow.
So these are
simple ideas, but we didn't know. So let's try them. So what we did is, we did
a randomized, controlled trial in 134 villages in Udaipur districts. So the
blue dots are selected randomly. We made it easy. I'll tell you in a moment. In
the red dots, we made it easy and gave people a reason to act now. The white
dots are comparisons, nothing changed. So we made it easy by organizing this
monthly camp where people can get their kids immunized. And then you make it
easy and give a reason to act now by adding a kilo of lentils for each
immunization. Now, a kilo of lentils is tiny. It's never going to convince
anybody to do something that they don't want to do. On the other hand, if your
problem is you tend to postpone, then it might give you a reason to act today
rather than later.
So what do
we find? Well, beforehand, everything is the same. That's the beauty of
randomization. Afterwards, the camp, just having the camp, increases
immunization from six percent to 17 percent. That's full immunization. That's
not bad. That's a good improvement. Add the lentils and you reach, and you
reach to 38 percent. So here you've got your answer. Make it easy and give a
kilo of lentils, you multiply immunization rate by six. Now, you might say,
"Well, but it's not sustainable. We cannot keep giving lentils to
people." Well, it turns out it's wrong economics because it is cheaper to
give lentils than not to give them. Since you have to pay for the nurse anyway,
the cost per immunization ends up being cheaper if you give incentives than if
you don't.
How about
bed nets? Should you give them for free, or should you ask people to pay for
them? So the answer hinges on the answer to three simple questions. One is: If
people must pay for a bed net, are they going to purchase them? The second one
is: If I give bed nets for free, are people going to use them? And the third
one is: Do free bed nets discourage future purchase? The third one is important
because, if we think people get used to handouts, it might destroy markets to
distribute free bed nets. Now this is a debate that has generated a lot of
emotion and angry rhetoric. It's more ideological than practical, but it
answers an easy question. We can know the answer to this question. We can just
run an experiment. And many experiments, and they all have the same results, so
I'm just going to talk to you about one.
And this one
that was in Kenya, they went around and distributed to people vouchers,
discount vouchers. So people with their voucher could get the bed net in the
local pharmacy. And some people get 100 percent discount, and some people 20
percent discounts, and some people get 50 percent discounts, etc. And now we
can see what happens. So, how about the purchasing? Well, what you can see is
that when people have to pay for their bed nets, the coverage rate really falls
down a lot. So even with partial subsidy -- three dollars is still not the full
cost of a bed net. And now you only have 20 percent of the people with the bed
nets, you lose the [unclear], that's not great. Second thing is, how about the
youth. Well, the good news is, people, if they have the bed nets, will use the
bed nets regardless how how they got it. If they got it for free, they use it.
If they have to pay for it, they use it. How about the long term? In the long
term, people who got the free bed nets, one year later, were offered the option
to purchase a bed net at two dollars. And people who got the free one were
actually more likely to purchase the second one than people who didn't get a
free one. So people do not get used to handouts; they get used to nets. Maybe
we need to give them a little bit more credit.
So, that's
for be nets. So you will think, "That's great. You know how to immunize,
you know how to give bed nets." But what politicians need is a range of
options. They need to know: Out of all the things I could do, what is the best
way to achieve my goals? So suppose your goal is to get kids into school.
There's so many things you could do. You could pay for uniforms, you could
eliminate fees, you could build latrines, you could give girls sanitary pads,
etc., etc. So what's the best? Well, at some level, we think all of these
things should work. So, is that sufficient, like, if we think they should work
intuitively, should we go for them? Well, in business, that's certainly not the
way we would go about it.
Consider for
example transporting goods. Before the canals were invented in Britain before
the Industrial Revolution, goods used to go on horse carts. And then canals
were built, and with the same horseman and the same horse, you could carry ten
times as much cargo. So should they have continued to carry the goods on the
horse carts, on the ground, that they would eventually get there? Well, if that
had been the case, there would have been no Industrial Revolution. So why
shouldn't we do the same with social policy? In technology, we spend so much
time experimenting, fine-tuning, getting the absolute cheapest way to do
something, so why aren't we doing that with social policy?
Well, with
experiments, what you can do is answer a simple question. Suppose you have 100
dollars to spend on various interventions. How many extra years of education do
you get for your hundred dollars? Now I'm going to show you what we get with
various education intervention. So the first ones are if you want the usual
suspects, hire teachers, school meals, school uniforms, scholarships. And
that's not bad. For your hundred dollars. you get between one and three extra
years of education. Things that don't work so well is bribing parents, just
because so many kids are already going to school that you end up spending a lot
of money. And here are the most surprising results. Tell people the benefits of
education. That's very cheap to do. So for every hundred dollars you spend
doing that, you get 40 extra years of education. And, in places where there are
worms, intestinal worms, cure the kids of their worms. And for every hundred
dollars, you get almost 30 extra years of education. So this [unclear] your intuition.
This is not what people would have gone for, and yet, these are the programs
that work. We need that kind of information. We need more of it. And then we
need to guide policy.
So now, I
started from the big problem, and I couldn't answer it. And I cut it into
smaller questions, and I have the answer to these smaller questions. And they
are good, scientific, robust answers.
So let's go
back to Haiti for a moment. In Haiti, about 200,000 people died. Actually, a
bit more by the latest estimate. And the response of the world was great. Two
billion dollars got pledged just last month. So that's about 10,000 dollars per
death. That doesn't sound like that much when you think about it. But if we
were willing to spend 10,000 dollars for every child under five who dies, that
would be 90 billion per year just for that problem. And yet it doesn't happen.
So, why is that? Well, I think what part of the problem is that, in Haiti,
although the problem is huge, somehow we understand it, it's localized. You
give your money to Doctors Without Borders, you give your money to Partners in
Health, and they'll send in the doctors, and they'll send in the lumber, and
they'll helicopter things out and in. And the problem with poverty's not like
that. So, first, it's mostly invisible. Second, it's huge. And third, we don't
know whether we're doing the right thing. There's no silver bullet. You cannot
helicopter people out of poverty. And that's very frustrating.
But look
what we just did today. I gave you three simple answers to three questions.
Give [unclear] to immunize people, provide free bed nets, deworm children. With
immunization or bed nets, you can save a life for 300 dollars per life saved.
With deworming, you can get an extra year of education for three dollars. So we
cannot eradicate poverty just yet, but we can get started. And maybe we get
started small with things that we know are effective.
Here's an
example of how this can be powerful. Deworming. Worms have a little bit of a
problem grabbing the headlines. They are not beautiful and don't kill anybody.
And yet, when the young global leader in Davos showed the numbers I gave you,
they started Deworm the World. And thanks to Deworm the World, and the effort
of many country governments and foundations, 20 million school-aged children
got dewormed in 2009. So this evidence is powerful. It can prompt action.
So we should
get started now. Now, it's not going to be easy. It's a very slow process. You
have to keep experimenting, and sometimes ideology has to be trumped by
practicality. And sometimes what works somewhere doesn't work elsewhere. So
it's a slow process, but there is no other way. This economics I'm proposing,
it's like 20th century medicine. It's a slow, deliberative process of
discovery. There is no miracle cure, but modern medicine is saving millions of
lives every year, and we can do the same thing.
And now,
maybe, we can go back to the bigger question that I started with at the
beginning. I cannot tell you whether the aid we have spent in the past has made
a difference, but can we come back here in 30 years and say, "What we have
done, it really prompted a change for the better." I believe we can, and I
hope we will.
Thank you.
(Applause)
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