Earlier this month, Dr. Nathan Fiala came to CERGE-EI to lecture about his research in Africa. The lecture was titled “Employment Generation in Rural Africa: Mid-term Results from an Experimental Evaluation of the Youth Opportunities Program in Northern Uganda.” Dr. Fiala sat down with CERGE-EI for a brief interview where he discussed his current research, the morals of sustainable development, and the expedience of experimental methods. Have a look!:
What research are you currently working on?
Right now I am doing randomized control trials. This is a big, new, exciting field. In the last ten years it has become a special interest to a lot of developmental economists. I am conducting experiments in Africa, mostly in Uganda, but also India, and hopefully a few coming up in Kenya.
One that I’m working on right now is a ‘Cash Grant’ program, geared toward young men and women who are unemployed or underemployed in Uganda. The government has transferred money to them in order to help them set up businesses and gain some kind of employment and income generation.
There is a lot of unemployment and underemployment in Uganda, and very little formal sector employment. So for a lot of young people there, setting up their own business is basically the only option that they have. But there is doubt whether these types of ‘Cash Grant’ programs have any real impact, whether they provide any kind of meaningful help for individuals.
In order to explore this, we randomized who received the cash grant and who did not receive the cash grant. We did that because we wanted to try to compare those that received the cash grant with some kind of comparison group. It has to be a very well thought out comparison group, and randomization gives you the opportunity to basically ensure that with a large enough sample size. The people who receive the program versus those who do not receive it still have the same characteristics. They’re about the same age on average, the same ratio of gender, the same education levels, etc. But most importantly they have the same level of excitement and interest in starting their own businesses.
Is there anything unique about doing research in Uganda?
Well one of the unique things about this is that it’s a program being conducted in a post-conflict area. It’s in Northern Uganda, which just finished a 20-year civil war. The government is interested in how to decrease the likelihood of civil unrest, violence, and proclivity to anti-social behavior. They hope these cash grant programs will cause citizens to become more productive citizens and less likely to engage in negative social behavior.
One very nice thing about this project is that we are able to track not just economic outcomes for individuals but also social outcomes. We worked with a psychologist to help us develop some indicators so that we can make really strong claims about the impact of the program; not just on income and wealth, but also on happiness, pro-social and anti-social behavior, levels of violence, and these kinds of things.
How was the program set up?
The program started in 2007, so in early 2008 we did a baseline data collection before the actual beginning of the program. This is a sample of 2,600 individuals who we follow over time. Individuals received cash grants in June through September of 2008, and then about a year and a half later we did a follow up data collection, and then another two years after that we did a final data collection that we have now just completed.
So we have a panel dataset on individuals for a baseline and two subsequent data collections during the program. In the initial midline results we were finding some very strong social impacts for men. We found indications of decreasing violence and increasing pro-social behavior in the test group of men. Interestingly enough it had the exact opposite effect on women—we found increased levels of violence for women who had received the grant, and we’re not entirely sure why that would be the case. Now you could imagine that these are poor women who do not have a lot of power or options within the communities. One possible interpretation is that women are becoming more empowered in the community. Or it could be just that now that they have more money perhaps women are becoming more problematic within the community. We can’t really say if this is a positive or negative development for the women or the community, we can only say that there was some kind of change.
How about economic impacts?
We do find very strong economic impacts, for both the two-year and the four-year follow up. These are very strong for both men and women. Over time, between the two-year and the four-year period, we see a kind of a flattening of results for men. Basically men with the cash grant perform better at the two year interval and the four year interval, but at about the same amount. So this is not a program that is skyrocketing people out of poverty.
For women however, we are actually seeing big improvements over time. Compared to the treatment group, the women did better after two years and even better after four years. This is due in part because there is a lot of growth and development occurring in northern Uganda right now. The war is over, so there is a lot of trade and developments happening in general. For men in the control group, they are seeing their incomes rise significantly over time. So it’s hard for men in the treatment group to do better than the control group because everyone is getting better off.
We are not seeing that effect for women however. Women in the control group are not doing any better off today than they were two or four years ago. But the treatment group is doing better. They are building their businesses and growing much more. So this also points to the importance of a randomized control trial for a comparison group, especially in a region where everyone is doing better off, and growth is happening across the region. You could easily get a spurious comparison group if you’re not careful about the selection. Everyone is changing their lives over the last four years of this program so it’s important to compare similar people who are changing their lives in similar ways in order to compare people properly.
How is this cash grant different than micro-credit in developing regions?
The difference is that no one has to pay back the funds. With microfinance, there are repayment requirements. One thing interesting about our results is that we find that the individuals who receive cash grants from the government have literally zero oversight after receiving that cash grant, and yet people are still putting that money to good use. They are still using it to start businesses; they are still using it productively, even with no oversight. A lot of NGOs and governments spend a lot of time and money on oversight of their programs. But the Uganda government has spent no time and no oversight, and yet people put the money to very good use anyway.
Since you raise it, there is a debate right now where some people are saying that first development should come and then you worry about the environment, and others say you need to work on them together if you want to sustain development. Do you have a position on this?
I think the question of ‘do you develop first and then worry about the environment?’ is an important question. I personally think that the environmental problems the world faces are not being caused by people in developing countries. It’s the people in the developed countries who are radically affecting the environment. I think it’s unfair for people in developed countries to tell developing countries that they should scale back in order to reach some kind of environmental goals.
I consider myself an environmentalist, but I am first a humanist, and for me the goal is human development first. That said, I think there are ways to combine development and environmental protection at the same time. And certainly they are very linked to each other in terms of human life quality. Look at China, where there have been questions of water 
quality from all the industrial plants. Development needs to happen, but it can’t happen at the expense of individual quality of life, otherwise that’s not really development—it may be economic development, but it’s not human development.
What do you think about experimental methods in the field of economics, and the controversy surrounding them?
I engage with experimental methods with my research. There is a lot of controversy surrounding experimental methods, in part because it’s new economics. It’s not new in medical science or in the natural sciences, this has been happening for a long time in those fields. But it is new in some social sciences. I’m sympathetic to a few of the criticisms of experimental economics, and I’m not so sympathetic to others.
One that I am particularly sympathetic to is the ethical considerations when running experiments. There are ethical decisions that have to be made because you are dealing with human subjects. The research does not come first, the individual comes first. And the research can only happen if it fits within the needs and ethical considerations that you need to provide to the subjects.
Experimental methods force us to be a little more involved. I’ve talked to some researchers who find that to be a little bit concerning. I think it’s a good thing for researchers to realize that their involvement is essential to any type of evaluation or any kind of scientific exploration. We cannot believe that we are just in lab coats sitting far away, or that we have no vested interested in our subject. I think there is a lot of vested interest there.
There is a discussion right now about if randomized control problems solve all of our problems. They don’t. Absolutely not. They can’t answer all the questions we are interested in, but traditional methods can’t either, and I think experimental methods allow us to answer a lot more questions that we used to not be able to.
Students at CERGE-EI would like to know where the research gap is, and how to pursue their careers. Do you have any advice for them?
I think that for a young PhD student, finding the research gap is really important, but can often be a little more difficult and to be honest a bit more boring than we would like to think of. It’s hard to find a question from a large topic that someone hasn’t already tried to answer in some way. So the first thing to think about when looking for the research gap is not to think of that gap as something that’s huge, or that you’ll revolutionize the field. As a starting researcher, the best you can hope for is a marginal impact on your topic. Larger impacts on research will happen later in your career, but right now it’s going to be small steps.
Interviewer: Borga Liyousew Gebremedhin
Monday, 1 October, 2012
Here is a link to Dr. Fiala’s working paper:
