Effective Altruism Must Rise!

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“They only asked us to remember the poor–the very thing I also was eager to do.” Galatians 2:10.

We are all obsessed with the poor. We frame our political positions around them and use them to guilt our children into finishing their food. Students are particularly eager to make a difference. Campuses around the world have an endless supply of student run programs which target low-income communities using various education and health interventions. A new trend has been the rise of entrepreneurship as tool to build the self-reliance of the poorest and hopefully lift them out of poverty and the associated social-ills. And like all trends, it hasn’t missed campus.

One of the projects I got involved with was an entrepreneurship course for unemployed people living in the townships of Cape Town. Actually it wasn’t the townships, it was a township. Can you guess which one? Khayelitsha duh! The intervention was meant to equip the participants  with the necessary skills to become self-reliant entrepreneurs. We would recruit the entrepreneurs through an interview process, then teach them some basic business accounting skills. Upon completion of the program they would be given credit at a second-hand clothing store to stock up on inventory for their new retail business (though there we some who didn’t go this route). To a second year economics undergraduate this sounded great. Of course the cure to South Africa’s unemployment issue is more businesses to employ people. We weren’t handing out fish, we were teaching people to fish, Mrs Thatcher would be proud. Being involved was a great deal of fun for us, the consultants. We saw ourselves applying our dull world-class business knowledge in a meaningful way and the entrepreneurs kept coming back so it felt like it all worked for the most part. The program has since fizzled out due to a host of issues and has since been relaunched under a new name, this time the target is existing business owners.

Upon reflection, this time as someone with slightly more education, I now see that the original program had some problems which may have led to it’s ineffectiveness. The first problem was the premise that the unemployed are latent entrepreneurs waiting for the right boost. This may be true of other places, but South Africa has low rates of latent as well as actual entrepreneurship. A second problem lay with the course content. We only taught simple accounting to the entrepreneurs and little else. The Business Bridge is a program  which provides business skill training to entrepreneurs in low-income communities. They have partnered with the World Bank, London Business School and J-Pal to evaluate the efficacy of their programs using a Randomized Control Trial (RCT). RCTs are currently the gold standard in development impact research. As of 2014 the results were still preliminary, but none the less clear. Both interventions did better than the control group, but marketing skills did more to boost sales, profit, survival rates, and employment generation than financial management. The third problem was assuming that there was a market for second-hand clothing. I don’t think this is true for South African townships. Only the Bohemian suburbs of Cape Town. A World Bank survey on the South African Informal Economy conducted in Diepsloot (A Gauteng township) found that only 38% of total household clothing expenditure was spent in Diepsloot. With average expenditure being R54, this doesn’t seem like a market for an inexperienced entrepreneur selling second-hand clothing. The evidence in support of our little project just wasn’t there.

The evidence problem is not one which is peculiar to our project or student run projects alone. Many well-meaning (often expensive) interventions are carried out without considering whether or not they will be effective. For some, it is only money that is being wasted. Others actually result in a negative impact on the targeted group. A famous example of an intervention that went wrong was Scared Straight which took children on jail tours to disincentive a life of crime. RCT evidence later showed that children who had gone through the program were actually more likely to behave badly in the future. South Africa as a reasonably resourced, yet issue-plagued, country has a host of NGO, private sector, and government run interventions. I am not sure how many of these are founded after considering existing evidence in support of them, or engage in regular impact evaluation to track whether the intervention is producing the desired impact in the target group.

There many methods for evaluating social impact, each ‘for-good organisation’ can and should find one which works best given the work they do and make those results as readily available as their financials. Few of us would be willing to take medicine which hasn’t been through some process to verify it’s efficacy. We also wouldn’t be willing to pay for someone to be given that medicine so let’s stop trying to fix strangers’ lives with tools which may not fit for purpose.

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