As I mentioned, 2009 is a milestone year in the study of the impacts of microfinance. It's also a case study in how subtle conclusions get distilled and simplified and misunderstood as they ricochet around the media. Remember Tim Harford plaintively tweeting, "Note to all microfinance enthusiasts: I DO NOT WRITE MY OWN HEADLINES"? It is tempting to blame "the media" for all this oversimplification. But the media responds to incentives such as people's narrowing bandwidths and preferences for clear-cut conflictual stories. And the media pass those incentives back to people like me who position themselves as experts. And sometimes we respond. Anyway, it gets harder to blame the media as we hurtle into a media-R-us world. 2009 is the year of Twitter too.So what's my point? Other than an invitation to blame yourself (which I'd prefer to blaming me), it is that public conversations about complex topics are inevitably cacophonous and inefficient, even comical. I guess the best you can do is keep at it.I gather that Abhijit Banerjee, Esther Duflo, and Dean Karlan, the leaders in testing microfinance with randomized trials, have felt somewhat dismayed at how their careful experiments and nuanced conclusions became "Perhaps microfinance isn’t such a big deal after all" and "Billions of dollars and a Nobel Prize later, it looks like ‘microlending’ doesn’t actually do much to fight poverty." As blogging guests of Nicholas Kristof yesterday, they attempted to regain control of the message:
MFIs have managed to find ways to be financially sustainable and to keep growing fast.This is itself is a remarkable achievement. Very little works in many of these countries in terms of delivering to the poor; previous attempts to deliver credit, through state-run banks, for example, collapsed in the face of widespread corruption and defaults. Many microcredit institutions are led by dynamic entrepreneurs who have mastered quality service delivery on a large scale, a tough challenge in many developing countries....[A]s we see it, microcredit seems to have delivered exactly what a successful new financial product is supposed deliver—allowing people to make large purchases that they would not have been able to otherwise. The fact that some people expected much more from it (and perhaps they are right, may be it will just take longer), is perhaps inevitable given how eager the world is to find that one magic bullet that would finally “solve” poverty.This piece is very thoughtful and well written. Naturally I see it through the framework of my book. It exemplifies the different definitions of success, which are really different conceptions of development, sounding amid the cacophony: development as proven poverty reduction, development as freedom, and development as organization building. Like me, the economists have turned to the second and third definitions to nuance their disappointing results with respect to the first. I should point out that in summoning these alternative notions of success, Banerjee, Duflo, and Karlan have departed somewhat from their past rhetoric. Listen, for example to how Dean Karlan, the chief public representative of this research, starts a BBC interview by accentuating the negative ("This is by no means a panacea"), before going on to explore his myth-busting results with care. Banerjee and Duflo went subtly iconoclastic (root meaning: smashing religious icons) in their paper's title, "The Miracle of Microfinance?". I have never, ever, ever played that game. I’m trying to suggest, without being too hard on the trio, that they are not entirely innocent in the way the media have spun their results. I suppose people who want to get a message out are trying to play by the media's rules---for example, accentuating the negative to get attention---while protecting their message from distortion. That is perhaps impossible. Live by the meme, die by the meme.At any rate, you should read the post on Kristof’s blog. And then if you want to hear the cacophony resume, read the comments. Many left me scratching my head. I wonder if the tres randomistas are dismayed all over again about the lack of penetration of their message. They may console themselves with the hypothesis that commenters are a non-representative (since non-random) sample of the readership.
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