Using Data To Determine The Most Effective Use Of Your $50 Donation

Economist Dean Karlan's new book looks at what works and what doesn't work in the fight against global poverty. Thinking about giving some money to a cause? Give it to one that works.

Yale economist Dean Karlan may be best known for starting Stickk.com, a site that aims to help you achieve personal goals by forming "commitment contracts" in which a liberal Democrat might be forced to forfeit $1,000 to the Tea Party, let's say, if he or she falls off the wagon. But Karlan has amassed weightier accomplishments as the protegee of pioneering development economist Esther Duflo, who I write about in this month's Life in Beta column. Like Duflo's Poverty Action Lab at MIT, Karlan's Innovations for Poverty Action is dedicated to evaluating various poverty interventions using randomized controlled trials: the rigorous, scientific gold standard, like a doctor conducting trials of a new drug. His new book More Than Good Intentionswritten with Jacob Appel—is full of surprising insights on what really works to fight global poverty. It's also full of funny, human stories about the people that Appel and Karlan have met around the world in the course of this research.

FAST COMPANY: Your book and Esther Duflo's book Poor Economics came out at almost exactly the same time and have often been reviewed together. How are the books different?

Dean Karlan: I think their book is more academic—aimed at the Guns, Germs and Steel audience. Our book is much more for the retail donor, who wants to know how I can make a difference with my $50 or $100. 

Your studies often get at some surprising relationships, like the fact that deworming schoolchildren has a better impact on school attendance than providing uniforms or paying teachers more, for example. (On IPA's site, you can donate to the Proven Impact Fund, supporting the deworming program and others that have been shown to make a real difference.)

The real thing we’re hoping to do with the data is create better actions, so we don’t just act on compassion.That's why we called the book, More Than Good Intentions.

It's interesting that you talk about compassion. In many instances, you're exposing seeming irrationalities: the fact that farmers can't be convinced to buy drought insurance, or that they run out of money to buy fertilizer even though the return would be huge. Won't reading about these self-destructive behaviors among the poor actually make the average donor lose his or her patience?

Sure, if one wanted to be a hardass you could look at someone in moneylender debt, for example, and say they obviously chose this at some point. But the minute you understand that in your own life you’re not perfect, you have a little more sympathy for how people get stuck in bad decisions. So we then look at how do can guide them into better decisions—in household finances, for example, we're looking at creating incentives to save more.

Read more about Esther Duflo's assessment of social impact in this month's Life in Beta column

[Image: Flickr user Canned Muffins]

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1 Comments

  • David Kaiser, PhD

    OK, I need to read more about this! I would love to see time and money spent well to make a difference, not just score political points or make someone feel better.

    A friend, Pierre Vigilance, now at George Washington University, formerly of the Director of the DC Department of Health, is undertaking a similar project to determine where money is being best spent and making the most difference (If I misrepresent Pierre's effort's, the fault is mine of course, not his). Definitely a worthwhile endeavor.

    David Kaiser, PhD
    Time Coach
    www.DarkMatterConsulting.com
     
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