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Donors Should Be More Systematic In Evaluating Development Interventions, Consider Using Cash Transfers As Benchmark

The Atlantic: A/B Testing Foreign Aid
Michael Faye and Paul Niehaus, co-founders of GiveDirectly and Segovia Technology

“How can we innovate in the huge, $140 billion foreign aid sector? The same way we do in the private sector: routine evaluations of what’s working well and what isn’t. Yet donors rarely measure the effectiveness of individual programs, let alone weigh one intervention against another. … Donors should be more systematic in evaluating interventions, and they should consider using cash as a yardstick. Because if an intervention isn’t more effective than cash, then perhaps the donor should switch gears. Cash is simpler, and arguably cheaper and more scalable, than traditional interventions. … This is the minimum role cash transfers can and should play for aid and philanthropy: not as a replacement for all interventions, but as a basis for comparison. There is a deeper question, however, that benchmarking forces us to ask: Who gets to decide what the ‘best’ outcome is? … Divergence between donor and recipient preferences is not surprising, and traditionally we have chosen, paternalistically, to let the donor’s vision win out. But if the goal is sincerely to help the extremely poor live better lives, shouldn’t they have more say?” (9/14).