This article was finished in June 2019 for a collection of essays about RCTs (including a piece by Angus Deaton) and a really excellent piece on the rhetoric of Poor Economics (which argues the book is indeed poor economics but fantastic rhetoric in the Aristolean sense of merging logos, pathos, ethos) so is not at all a response to the Nobel Prize and all the hoopla. But, it turns out in a pre-written rebuttal to the arguments Banerjee and Duflo make in their recent Foreign Affairs article.
Turns out, as expected, we agree on a lot of things, like that getting growth going is the best thing to do. We also agree that their argument for RCTs hinges on two things.
First, it hinges on a really striking pessimism about the prospects for facilitating more rapid economic growth in any given country. They make a big deal out of that we economists cannot be exactly sure about what to do to promote growth (beyond obvious basics that have mostly been done) but, as I point out in the article, making modestly better decisions about big things is still far more important than great decisions about small things.
Second, it hinges on optimism about the extent with which the micro knowledge that RCTs generate can or will scale. Their argument is: “We don’t know how to do growth so lets invest in education and build courts that work.”
But there have been far more successful instances of accelerating economic growth in ways that led to sustained poverty reduction that there have been successful instances of going beyond expanding schooling (which most countries did and are doing) to improving learning outcomes. Some preliminary calculations with DHS data about literacy and schooling suggest that of out about 50 countries with data only 1 has had sustained success in improving literacy acquisition per year of schooling. So the idea that “we” (who?) don’t know how to accelerate growth (though, by the way, a fair number of countries have) but we do know how to “invest in education” (at scale) is not at all obvious on the face of it.
Similarly, I have done work on what we call “state capability” (of the type that would include “making the courts work” and again, at least at the aggregate level of the standard measures of state capability there is much less success on this than there is on growth–over half of countries have, by these standard measures, deteriorating state capability and most are making very slow progress. Again, the idea that “we” don’t know how to accelerate growth but do know how to improve the functioning of the courts is kind of hard given that there are many instances of the former and very few of the latter.