I’m taking a class on bridging research and policy with Rohini Pande and Sendhil Mullainathan this semester.  Each week we have to answer discussion questions related to our readings, and last week mine was chosen to share with the class.  I figure that’s a pretty good sign it’s worth sharing with the world at large as well. 

In your view what are (up to) three important principles that an international organization should follow in allocating development aid?
 
I’m going to take a slightly different angle to this question and articulate not what I think should be principles driving development allocation, but what I think is a more important question -- which is what do I think is the biggest constraint to effective allocation?  Hopefully I won’t lose too many points for taking this liberty.
 
The reality is that donor decisions to allocate aid are highly complex and must be made with limited information.  As Banerjee and He point out in “Making Aid Work,” they are often driven by true believers who see no value in rigorously testing the policies that they are advocating.  While ideology may be the basis for some resistance to contrary evidence, a more nuanced view is that aid allocation decisions are seriously constrained by the preferences of well-intentioned donors.  They may want to make an impact on AIDS because it is their pet cause even though targeting diarrhea might have a larger impact on public health.  They may believe in utilizing technology to improve education even through the returns might be much higher by just providing a free lunch.  As economists, we often assume that donor’s objective functions are about optimizing broad things like poverty, public health, and human rights when they might be specific things like nutrition, AIDS, and genocide.  There will always be a gap then, between what economists consider efficient allocation of resources and reality due to these constraints.  
 
 
Discuss how one or more of these principles makes the case for (or against) rigorous evaluations.

Better information can help to narrow that gap.  Rigorous evaluations have the potential to provide valuable information that can shift the preferences of donor organizations, which in turn can contribute to efficiency improvements in aid allocation. Whereas a philanthropist might believe strongly that the best way to improve global health is through mobile technology, rigorous evaluations can shed light on the relative impact of different interventions.  Information is crucial to easing the constraint that’s naturally imposed when the decision maker has her own complex preferences.