Economic Growth - Donation suggestions and ideas

By DavidNash @ 2024-01-08T12:14 (+136)

There was a recent post about economic growth & effective altruism by Karthik Tadepalli. He pointed out that a lot of people agree that economic growth is important, but it hasn't really led to many suggestions for specific interventions.

I thought it would be good to get the ball rolling[1] by asking a few people what they think are good donation opportunities in this area, or if not, do they think this area is neglected when you have governments, development banks, investors etc all focused on growth.

I'm hoping there will be more in depth research into this in 2024 to see whether there are opportunities for smaller/medium funders, and how competitive it is with the best global health interventions.

I have fleshed out a few of the shorter responses with more details on what the suggested organisation does.

Shruti Rajagopalan (Mercatus Center):

Tyler Cowen (Marginal Revolution, Mercatus Center):

Jason Crawford (Roots of Progress):

Startup Founder:

Matt Lerner (FP):

Anonymous:

Arthur Baker (Development Innovation Lab):

"On investments to increase agriculture productivity (and economic growth), I would consider weather forecasting. There's an investment case here. The following is my subjective view, from the perspective of an impact-maximizing donor. I think this is a case where a few million dollars could help get things moving, and could be really quite transformational. The cost-effectiveness ratios are off the scale (hundreds to one at least). I think this would happen eventually anyway, so we're talking about accelerating access. But the cost-effectiveness calculations above are over 5 years. I think you could easily accelerate availability by 5 years

For investments in improved crops, I would consider pull mechanisms, to complement CGIAR's work. Here is a memo on ‘The return to investing in climate-resilient crops'"

Tom Drake (CGD)

“My suggestion would be to invest in research and innovation systems – not specific innovation projects per se but creating an enabling environment for institutions and individuals to be productive and creative. When I was at DFID I created something called the Research and Innovation Systems in Africa (RISA) Fund”

Development and policy professional from Switzerland

“I have worked at the economic development agency of Switzerland which does a lot of economic projects in MICs, often together with World Bank and IMF or similar entities. Things like better tax resource mobilization, resource management, independent central banks.

So one question would be: how neglected is this? It is very much on the radar of the traditional large players and the interventions are usually not that costly (as it often involves capacity building and technical expertise). The hard part is the political economy of the recipient countries - and the question which recipes are really applicable to a wide range of countries.”

Anonymous

Consultative Group for International Agricultural Research - a global partnership that unites international organisations engaged in research about food security

Karthik Tadepalli

“I don't really have any well-vetted opportunities in this space. I think this is an area where the potential of direct interventions is generally much lower than advocacy interventions, and I don't know of good advocacy organizations working on growth.

There are a few organizations I know of doing direct work in a promising area.

  1. Building Markets. This is a nonprofit that connects small/medium enterprises in developing countries with buyers in rich countries. In other words, it helps firms in developing countries get export market access. This is the single most promising direct intervention I can imagine, and from scanning BM's website, it seems like they are literate in research and impact evaluations of export promotion programs, so they could be a good opportunity.
  2. One Acre Fund. This is a nonprofit that focuses on providing quality seeds and services to smallholder farmers. Agricultural productivity is a big constraint on growth, so I think there's a lot of promise there. I also know researchers who have collaborated with OAF, who attest to their focus on credibly measuring their impact, and if I recall correctly, OAF has been recommended by The Life You Can Save.
  3. GiveDirectly. This might be surprising, but I would guess that purely from a growth perspective, GD is more promising than any GiveWell top charity. The reason is simply because of the general equilibrium spillovers; people spending money creates income for other people, who then spend money to create income for other people, and so on. This is the most immediate source of growth.

One important thing to note from a cost-effectiveness perspective is that the first-order effect of any growth-enhancing intervention will simply be to increase incomes. The push towards growth is a second-order effect that takes much longer to manifest, and may be almost zero for a marginal dollar spent. So the cost-effectiveness of different interventions will be determined mainly based on how much income they generate, rather than their potential growth impact. But I see that as a pretty decent proxy for growth impact.”

  1. ^

    Also this coincidentally from Astral Codex Ten.

Karthik Tadepalli @ 2024-01-09T12:39 (+14)

Reading some of these other responses made me realize how many organizations I overlooked in my response, but I want to especially emphasize CGIAR. CGIAR was key to the Green Revolution, which is (imo) the greatest philanthropic achievement of all time. I understand that their more recent efforts have been considerably less successful, for reasons I don't fully understand, but certainly they deserve more attention.

katriel @ 2024-02-04T13:43 (+1)

Do you know if other CGIAR centers contributed significantly to the Green Revolution or if it was only CIMMYT? I do not. 

Karthik Tadepalli @ 2024-02-04T21:23 (+3)

There were a bunch, most prominently IRRI in the Philippines - Table 1 in this paper lists all of them.

Corentin Biteau @ 2024-01-11T12:08 (+10)

Thanks for the post.

One point I'm curious about, however, is whether more economic growth really will contribute to higher wellbeing. 

So far, the relationship seems slim, as argued here. In many rich countries, subjective well-being levels have stagnated since the 1970s, even though GDP has more than doubled. At a given point in time, richer people are more satisfied than poorer people, and richer countries are more satisfied than poorer countries, but over the course of time, countries which grow faster don't seem to get happier faster. The effect of more money is not based on how objectively wealthy we are, but how much we have compared to others.

For India specifically, happiness levels seem to have been declining between 2008 and 2018, despite strong economic growth.

https://forum.effectivealtruism.org/posts/gCDsAj3K5gcZvGgbg/will-faster-economic-growth-make-us-happier-the-relevance-of#1__Introduction

This answer to the post argues that although the effect on individuals is slim, there can be an aggregate effect. Michael Plant answers that even though there can be an effect, we don't know if it's more than chance.

Karthik Tadepalli @ 2024-01-11T15:48 (+8)

Growth is correlated with all the good stuff as argued here with good back-and-forth in the comments. One thing it's not (robustly) correlated with is subjective wellbeing. I personally see that as one of the many issues with SWB measures and I place almost no stock in them.

NickLaing @ 2024-01-12T08:34 (+6)

Interesting Karthik. Why does economic growth not being robustly associated with SWB make you less confident in the measure particularly? 

Putting "almost no stock" in a self-reported measurement which is fairly well correlated with measures like good health, income etc. seems like a strong response, but responding to that might be too long for this thread! 

I'm also interested in why you think orgs like One Acre fund and Givedirectly are more "Growth" orientated than GiveWell interventions like deworming, which has been shown to improve education outcomes (a big deal for growth) or even mosquito nets which through avoiding sickness help improve productivity and energy levels a huge amount. On this note it would be interesting to see some kind of specific comparative analysis of potential pro-growth spillover effects of different interventions that are already highly rated. Obviously uncertainty of second-order effects will be through the roof but the analysis might be worth doing.

Karthik Tadepalli @ 2024-01-12T09:53 (+4)

Putting "almost no stock" in a self-reported measurement which is fairly well correlated with measures like good health, income etc. seems like a strong response, but responding to that might be too long for this thread!

GDP per capita is also strongly correlated with all of those things... but yes it's a bit long of a discussion for this, see some comments here for a good discussion.

There are a couple of papers showing that disease eradication has real but quantitatively small effects on income. (Acemoglu and Johnson 2007, Bleakley 2007, Bleakley 2010) They are severely problematic in many ways but they are the best evidence we have and they don't point to large effects. So health interventions are just not that promising in that regard. I plan to elaborate on this argument in the final post of my growth series... some day...

Edit: I should note that Bleakley is more positive than me in his interpretation, but I think the effect sizes are just not large and certainly wouldn't survive any skeptical adjustments downwards (of which many are warranted)

NickLaing @ 2024-01-12T14:14 (+5)

Thanks so much that's great. And yeah I commented on that thread a bunch :D :D :D.

I'm interested in what attracts you to the impact of eradication on economic growth as the best evidence we have. Intuitively it seems to me like not a great case study, as moving from low malaria prevalence to eradication may only improve productivity for a small percentage of people who were getting malaria. Anywhere where malaria has been "eradicated", seems unlikely to have had malaria as a massive economic issue in the 30 yeas before eradication.

Wheras Here in a Ugandan town though with high prevalence where most people get sick with malaria every year I would say, even with nets and prompt treatment, it really seems to affect productivity and motivation. Also malaria causes anemia and iron deficiency which obviously can reduce productivity in the long term.

There's a bit of research on malaria and economic burden as well, but obviously. The systemic review below is interesting, it seems like it has potential be a fairly big deal on a number of measures including catastrophic expenditure for families, absenteeism, even GDP loss. Obviously those are very much proxys (and you could argue some aren't even that) for economic growth but at least they can be robustly measured.

https://malariajournal.biomedcentral.com/articles/10.1186/s12936-022-04303-6

Karthik Tadepalli @ 2024-01-12T15:34 (+4)

The systemic review below is interesting, it seems like it has potential be a fairly big deal on a number of measures including catastrophic expenditure for families, absenteeism, even GDP loss.

Most studies in this space are just correlational, and having high burden of malaria is obviously correlated with lots of bad things - that doesn't tell us anything meaningful. For example, being poor could cause countries to be unable to deal with malaria, and also cause all those bad things. It looks like the systematic review is also correlational. The studies I linked are the only ones I know of that have a quasi-experimental approach, which is why I lean on them.

as moving from low malaria prevalence to eradication may only improve productivity for a small percentage of people who were getting malaria. Anywhere where malaria has been "eradicated", seems unlikely to have had malaria as a massive economic issue in the 30 yeas before eradication.

Broadly I don't think this is true. DDT was an incredibly powerful anti-malarial tool and caused near-eradication even in places with quite high burdens. Malaria has always been endemic to the Americas and my impression is that DDT is the reason it's mostly gone, though it's still a real public health problem in e.g. Brazil.

even with nets and prompt treatment, it really seems to affect productivity and motivation.

I'm sure this is true, but the productivity and motivation of individual workers isn't the big constraint on growth. A lack of jobs, mobility frictions, inability to invest in growing firms, etc - so even if you made every worker able to 2x their working hours because of better health, that would have <<2x impact on GDP.

Nathan Young @ 2024-01-19T11:48 (+4)

I generally think that people with less wealth would trivially swap to having more wealth if they could, which suggests to me that they prefer the latter to the former. I get that wellbeing may not scale linearly with wealth but I would be surprised if it wasn't positively correlated.

Corentin Biteau @ 2024-01-23T10:15 (+1)

Let's formulate this another way. Suppose I propose to give you a Ferrari. Would you accept? 

Of course you would. However, will that really make you happier in the long term? Or will you just take the Ferrari for granted in 3 months? 

Think of the last 3 items you bought on Amazon, or you received as a gift. Did they make you significantly happier compared to a universe where you didn't receive them?

One aspect of having more money is that we get used to it. Fast! And we underestimate how fast we adapt to these kind of changes. 

Nathan Young @ 2024-01-24T08:17 (+2)

Sure, but I think we should be wary of thinking that things people choose aren't on some deep level what they want. It's a small but useful amount of information.

Corentin Biteau @ 2024-01-30T15:48 (+1)

Well, I'm personally a bit sceptical of that, due to the fact that many things influence what we choose or not. We're not that good at predicting what will make us happier, and a large amount of what people choose derives from several influences like marketing. 

To take the Ferrari example - the marketing team at Ferrari has been very good at making this kind of car desirable, by associating it with status. But status is relative - in a world with no Ferrari we'd use other symbols (and we did). Marketing is pretty strong when it comes manipulation.

The fact that chasing one's desires (or, more exactly, craving), does not contribute to happiness has been documented in many spiritualities, and I think this still applies today. I recommend this text : https://www.dhamma.org/en/about/art

 (of course, this does not apply to basic stuff like eating, sleeping, etc.)

I don't want to detail, but I have one example in mind : one survey looked at lottery winners (who presumably wanted to win it), and it turns out that one year later, they were less happy than before, on average. This is because they got used to their wealth, but the quality of their relationships with others (friends, family) declined, as people around them started seeing them differently.

David T @ 2024-01-12T16:25 (+2)

The lack of improvement in developed countries is relatively easy to explain: they had a high starting base and many of the material gains accrued to those at the top - wide distribution of gains is really important when you're measuring average happiness. We do see rich countries having fairly consistently higher reported happiness levels than poor ones, it's just that average differences of subjective wellbeing are only a couple of points despite a very large difference in average incomes.

How much of that is genuine hedonic adaptation and how much of it is a culture of not reporting being very unhappy because your neighbours are even poorer is open for debate (it's probably both, and personally I'd hate people to make too many decisions about my welfare based on a semi arbitrary self assessment on a ten point scale). But it might be a moot point anyway, because if GDP growth mean the country can afford a range of interventions to halve infant mortality, that's a lot of extra WELLBYS even if average happiness only changes from 5.2 to 5.4 (Granted, "promoting economic growth" may not be the most efficient way to do this, but ultimately the history of economic growth in much of the world is why there are people with enough disposable income to consider donating to other ways of improving happiness...).

I also think that it's worth drawing a distinction between the direct interventions which aim to boost individual businesses like the One Acre Fund and the indirect interventions aimed at policy reform like supporting think tanks. The former are much more tractable, they have relatively fast positive effects on individuals (relative to others so hedonic adaptation and Easterlin Paradox arguments don't really apply) and there's definitely room for more spending

On the other hand, promoting economic reform is an all-or-nothing intervention; either the government acts or it doesn't. And whilst advocacy has tractable results in other fields: few are as politicised and competitive and thoroughly studied as development economics, so it's very hard to see where an EA institute or funding would have any impact at the margin. Many plausible economic policy interventions also can be expected have negative impacts on welfare or even growth if actually implemented [in the wrong circumstances]. So I think "many strategies to promote economic growth probably don't work" is a better critique than macro data on subjective wellbeing

Vasco Grilo @ 2024-01-10T08:37 (+7)

Thanks for sharing, David! People can find some good ideas in Copenhagen Consensus Center's best investment papers for the sustainable development goals.

  • Each paper does a cost-benefit analysis which accounts for health and economic benefits. The benefit-to-cost ratios across the 12 papers range from 18 (nutrition) to 125 (e-Government procurement).
    • All 12 ratios are much higher than the 2.4 estimated for GiveDirectly's cash transfers to poor households in Kenya.
    • 4 are similar to and 8 are higher than GiveWell's cost-effectiveness bar of around 24 (= 10*2.4), equal to 10 times the above.
  • Cash transfers are often preferred due to being highly scalable, but the 12 papers deal with large investments too. As can be seen in the table below, taken from a companion post, all 12 interventions together have:
    • An annual cost of 41 G 2020-$ (41 billion 2020 USD).
    • Annual benefits of 2.14 T 2020-$ (2.14 trillion 2020 USD), of which 1.12 T 2020-$ are economic benefits corresponding to 14.6 % (= 1.12*1.13/(8.17 + 0.528)) of the gross domestic product (GDP) of low and lower-middle income countries in 2022.
    • A benefit-to-cost ratio of 52.2 (= 2.14/0.041), 21.8 (= 52.2/2.4) times that of GiveDirectly's cash transfers to poor households in Kenya.
  • I think 3 of the papers focus on areas which have not been funded by GiveWell nor Open Philanthropy[1]:
    • e-Government procurement (benefit-to-cost ratio of 125).
    • Trade (95).
    • Land tenure security (21).
jenny_kudymowa @ 2024-01-11T14:25 (+6)

Thanks, David! Nice post, and interesting to see a range of options pointed out by different people.

Some suggestions touch upon topics we've done research on at Rethink Priorities. For example, we have a report on charter cities and one on improving weather forecasting for agriculture for anyone who's interested in more detail. We're also planning to publish something on improving scientific research capacity in sub-Saharan Africa soon.

Karthik Tadepalli @ 2024-01-11T15:40 (+1)

Can't wait for the work on research capacity in SSA!

Lizka @ 2024-01-11T19:18 (+4)

I appreciate the discussion here and am curating this post. (Thanks for getting the ball rolling!) Some related things I think I'd like to see: 

  1. More comparisons between the options discussed here (e.g. how good are some pro-immigration options, or even an idealized pro-immigration option, relative to something like GiveDirectly, targeted agricultural productivity research/investment, or governance improvements?)
  2. More discussion about and estimates of the actual value of donations aimed at boosting economic growth
    1. Donations vs. other approaches
      1. E.g. maybe the bottleneck tends to be in specialized knowledge (e.g. research based on a deep understanding of key economic factors for LMICs) or other kinds of "direct work" that might be hard to buy via more funding
      2. Or maybe it's hard for people from outside major LMICs to fund the most promising work
    2. How much it's worth prioritizing work in this area at all (and how to approach that) — e.g. a continuation of the discussion in this podcast (skip to section): 
      1. Elie Hassenfeld: "We’ve spoken a number of times with Lant Pritchett, who is a leading academic proponent of these ideas. We’ve looked for specific organisations we could support that are focused on growth specifically. [...] we looked at that level and we’re not super optimistic about the opportunities that we considered. [...] It’s also a question of how you would attack this philanthropically — like I also wonder how neglected this space truly is. There’s the World Bank, IMF, there’s other institutions. There are the Washington think tanks that are definitely focused on economic growth, and academics who focus on macroeconomics and how we can improve low-income country conditions. [...] I think my story would be more that we do know some things that countries should really avoid. I think people are working on that. This is not a totally neglected space. Then there is some degree of disagreement among the different groups working on this about what the right approaches are. Some of the evidence for that is a disagreement about the extent to which past efforts have been effective and to what extent. [...]  It strikes me that there’s more of a risk of doing harm here, by assuming that we do have the answer and pushing economic policy in a certain direction. [...] I also think there are some more detailed things. I think Alexander Berger actually raises this in the comments, that when you’re modelling the effect of GDP, you might want to look at log GDP instead of straight GDP. That is a big effect as you look at the big benefits of the very big numbers. I suspect those are smaller, in terms of their effect on the overall argument, but important nonetheless.
  3. Discussion of the implications of forecasted AI progress, e.g. more like Could AI accelerate economic growth? (or this report or this discussion - both from 2021)
    1. More generally, I'm interested in more like: How does AI progress affect other EA cause areas?
    2. Note that I think AI progress might go catastrophically and I find it hard to think about the potential benefits while still considering potential harms. I really like The costs of caution.
Fernando Irarrázaval @ 2024-01-08T18:48 (+4)

There is also the Harvard Growth Lab. They work with governments to foster economic growth. There isn't a way to donate, but an actor to keep in mind. Their work is mostly based on the theory of Economic Complexity. 

Seth Ariel Green @ 2024-01-08T17:44 (+4)

Pro-immigration orgs probably meet the bill, e.g. https://malengo.org/ or https://freemigrationproject.org/ (see here for discussion: https://vipulnaik.com/blog/my-q1-2022-donation-to-free-migration-project/)

I don't know much about these org's efficacy, but we generally have good reason to think that more immigration will lead to more growth: https://www.aeaweb.org/articles?id=10.1257%2Fjep.25.3.83

DavidNash @ 2024-01-08T18:02 (+3)

I found the Global Skills Partnerships from CGD interesting but I don't know how active it still is/if you can fund it specifically.

katriel @ 2024-04-02T20:11 (+3)

My perception is that LaMP is leading that work now after being incubated at CGD

SummaryBot @ 2024-01-08T13:48 (+1)

Executive summary: The post discusses potential donation opportunities to support economic growth, especially in developing countries, with a focus on India.

Key points:

  1. Suggestions include supporting policy/advocacy organizations, think tanks, research groups, and programs focused on reforms, capacity building, and enabling entrepreneurship.
  2. Specific ideas cover agriculture, manufacturing, exports, governance, regulations, financial inclusion, corruption reduction, etc.
  3. Donation opportunities seem limited for individuals but some options are highlighted like Emergent Ventures and CGIAR.
  4. It's noted that growth impacts likely manifest slowly so cost-effectiveness may depend more on immediate income changes.
  5. There appears to be room for more research into particular interventions and their effectiveness.
  6. The post aims to start discussion on this broad area which may attract more analysis.

 

 

This comment was auto-generated by the EA Forum Team. Feel free to point out issues with this summary by replying to the comment, and contact us if you have feedback.