make that money

I’ve been thinking a lot lately about a conversation I had with a 12-year-old boy about a year ago. It was early afternoon and drizzling, and I was setting up for a family educational session on eco-bathroom usage and maintenance as part of my project in the mountain village of Naranjo. As usual, a handful of barefoot local kids were scampering in and out of the meeting house, alternately kicking a tattered soccer ball and marveling at my laptop and projector. By this point they were no longer completely terrified of me, and I was making small talk with one of them. I asked him what he liked to study, and advised him to work hard in school. His earnest response: “Yeah, so I can grow up and make lots of money someday!”

I had to laugh. But the more I thought about it, I realized that to dismiss this as a “kids say the darndest things” kind of comment would be remiss – rather, it was indicative of an increasingly recognized facet of development work: financial incentives. This seems obvious; increasing per-capita income constitutes the very essence of development, right? Well, sort of. The truth is it’s something that for most of the 70-odd year history of modern development work, has been completely absent from most charitable and aid-related forays into the global South. This kid had touched on the heart of a debate that has been raging for decades among economists and sociologists and other “-ists” in the universities and think tanks of North America and Europe – Which is the correct way to go about this whole thing, by targeting social indicators or by promoting economic growth?

It’s a chicken-or-the-egg type question, and it says a lot about the way one sees the world. On the conservative – or right – side, generally, economic growth has been the name of the game. The theory, espoused perhaps most famously by the former World Bank economist William Easterly (The White Man’s Burden), is that open markets and free trade pave the way toward economic prosperity, which then trickles down to social effects like improved healthcare and nutrition, access to safe water, better educational opportunities, and even more transparent and effective governance. On the other, more liberal side, the approach has been to target these indicators through direct interventions, and wait for the economy to catch up as each generation becomes smarter and healthier. Dr. Jeffrey Sachs has been the face of this camp since the publishing of The End of Poverty in 2005. Obviously this is a very watered-down version – nothing in life, and certainly not how to solve the world’s biggest problem, is this simple. But the line in the sand has been drawn for years, with the pro-growth crowd berating the “handout” approach employed by the left, and the NGO/government-aid camp bemoaning the millions or billions left behind by the global marketplace with no way to get a foot on the first rung of Sachs’ proverbial economic ladder.

I think both approaches are valuable and necessary depending on the context. I also don’t think they are at all mutually exclusive (Nobel Peace Prize winner Muhammad Yunus’ success with social businesses, which seek both economic and social returns, is a great example). On the one hand, Peace Corps identifies more strongly with the “aid” side of things, and I think most of us are doing really important work that otherwise would not get done. I also believe, as I’ve mentioned here before, that Peace Corps is an industry leader in sustainability. At the same time, like many of my peers I’ve gained a far more nuanced understanding of development work during my years here than I ever could have by reading 100 of the books I mention above. And like many, I now maintain a healthy skepticism of do-gooder initiatives in the developing world that lack rigorous planning and long-term sustainability.

International NGOs and official government aid programs frequently do incredible things that continually lift millions out of poverty. However, we also can’t ignore the fact that something like half of all water handpumps installed by aid groups in the last 20 years in Sub-Saharan Africa have failed, that literally millions upon millions of latrines sit unused or have become really nice houses for chickens, or that mass condom distribution hasn’t stopped the spread of HIV. Indeed, if I’ve learned one thing in my three years here, it’s this: what we in the developed world assume to be universal values and priorities are very often not so, once we step outside of our own little bubble.

In other words, health as an incentive is not always enough. This is why we see filthy shantytowns of plywood and sheet metal and plastic tarps, where every second house has a satellite dish balanced precariously on the roof despite the fact that kids are defecating in the street below it. I can talk about the health benefits of chlorine-treated water or a proper diet until I’m blue in the face, but unless people buy into it, I will have wasted my breath. I think it’s not a coincidence that the same places where health-focused interventions fail in Peru are also the places where grandmothers and seventh graders alike talk about the existential perils of consuming cold beverages, or about the snake-venom-neutralizing powers of eating human feces (yes, you read that right). We’re not talking about the remote jungle where entire tribes don’t believe in the existence of germs, but these certainly are places where the science we take for granted is not the automatic explanation for things. And so the question becomes, How do we get people to buy into this stuff?

I would wager that incentives – financial or otherwise, and be they carrots or sticks – aren’t a bad strategy. In my time here I’ve observed all kinds of incentive-driven self-starters who are addressing social issues not because they’re necessarily humanitarians, but because it pays. A few examples:

Everywhere I’ve been in Peru solid waste management is lacking if not glaringly absent. Trash is burned, mostly, with huge health implications for anyone around. Unfortunately entire poor families often can be found picking through piles of garbage to scavenge what they can. Of course this is a dangerous and humiliating way to go through life. But you have to marvel at their resourcefulness. Every day I see little ladies carrying huge sacks of plastic bottles and aluminum cans that they sell to middle men, who ship them off to recycling plants in major cities. I know their compensation is pitifully low. But there’s no question that they’re making more than the other little lady who begs on the street corner all day. And in fact, as municipalities finally get around to dealing with the trash problem, often these informal recyclers are hired as paid municipal workers to continue doing what they do – all because they themselves identified an economic opportunity and took some initiative.

A similar, if less dramatic example involves the families that sell cow manure to their neighbors in the outlying neighborhoods of the city of Ica. Up in the mountains, cow manure was all over the place, but its use in agriculture was limited. Here on the coast, probably because of the elevated cost of living, poorer families can’t always afford synthetic fertilizers, and so the cow manure becomes a scarce – and therefore valuable – resource. One can imagine demand for organic food spiking in Peru within the next decade as the growing middle class “matures,” and all the sudden these small farmers – both those who sell the manure and who utilize it to enrich their soils – will be ahead of the game.

A third instance has to do with the men and women who benefit indirectly from humanitarian projects – the guys who make the chimneys for our improved cook stoves, or who mold the special toilet seats for eco-bathrooms, or especially the locals who get paid to help build these things, and who then have a unique skill they can employ in future profitable ventures. None of these people are a charity; rather they getting the best of both worlds, doing well (ok, doing well enough) by doing good.

The economists at MIT’s Jameel Poverty Action Lab study this stuff for a living. They apply rigorous scientific analyses to humanitarian interventions to find out what’s working, what isn’t, and most important, why not. And among their findings they confirm what Easterly calls the most basic principle of economics: People respond to incentives. I recently read about a J-PAL study in a rural district of India, for example, where they awarded prizes to families who got their children vaccinated (for free) against deadly but preventable diseases. Sure enough, significantly more of these families followed through, as compared to the control group of families that received only free shots. Of course, this raises the ethical question of whether anyone has the moral right to tell anyone else what to do, and much less whether an outsider ought to be awarding prizes for what s/he calls correct behavior. But as the article points out, we all do this, and we do it all the time. We give kids stars for not crapping on the floor, or for brushing their teeth, and they learn to do these things on their own – even if they’re oblivious to the health benefits. On the flipside, so many of us smoke, or drink, or engage in risky sexual behavior despite our total awareness of the health risks involved. So why shouldn’t we expect poor people to seek rewards, and to be susceptible to choosing pleasure above health benefits? We’re all human, after all.

I am not saying we should just pay poor people to make healthy choices like some kind of patronizing Pavlovian experiment. But as a volunteer I’ve found even myself unconsciously opting toward incentivizing approaches, because I’ve found that it’s a great way to get the ball rolling. In Chalaco we awarded water-specific tool kits to the best performing village committees in the district as part of a year-long water management campaign, and in general it worked; those that won have continued to prioritize safe water in their communities, with no expectation of further prizes. I awarded cheap prizes to kids who collected the most cans or bottles or old batteries as part of a school recycling campaign – and some of them brought in more than they could carry. I have to believe that they will grow up thinking twice about pitching a bottle out the window. And going back to my college years, my friends and I who started a local chapter of the Student Global AIDS Campaign used strategies like apple juice chugging contests to get people to come by our table and donate or write a letter to their congressperson. The point, obviously, was not to promote apple juice – it was to get someone to stop and talk to us who otherwise would have walked right by (these ideas were at least partially inspired by initiatives like the ProductRED campaign). We realized that the do-gooders were money in the bank; we wanted to spread things to a much wider population. In the same way, the people in a village who quickly pick up on the benefits of proper handwashing are not the ones we’re worried about – they’re already with us. It’s the other 75% who continue to spread e.coli every time they shake a hand that we want to bring into the circle. Incentives can help do that.

In terms of negative incentives, development workers all over have found that shame is an incredibly poignant cultural element. I’ve read case studies showing that families opted to build and use their latrines or flush toilets not because they really cared about the health benefits, but rather because the most respected figures in their villages had done so, and to not follow suit had become quite shameful. It was all about status.

To sum up with a nice little cliché, I think it all comes back to whether you give a man a fish or teach him to fish for himself. The more I see, and the more I think about and read about this stuff, I can’t help but come to the conclusion not just that it’s better to teach him, but also that if he needs a little push unrelated to fishing to help make it part of his life in order to reap the benefits for his family for years to come, so be it.

The left may call it condescending and the right may call him lazy, but if one of the two approaches were truly a stand-alone panacea, wouldn’t we have agreed on it by now?