How Neoliberalism affects people

• Labour rights

This LSE paper puts forward a perspective on how neoliberalism affects markets and worker rights. On one hand, bloated Government leads to market inefficiencies but reducing the Government's influence on the system through liberalisation can lead to worse labour rights ...

The Iceberg Illusion

I hope that in this year to come, you make mistakes ... - Neil Gaiman

RCTs in poverty reduction and development: why are some practitioners abandoning RCTs?

This blogpost about ethics in international development is about a randomised control trial (RCT) in Kenya. In the experiment, some households in Kenya were given unconditional cash transfers of either USD 404 or USD 1525. The researchers found, unsurprisingly, that the lucky ones were happier and that their unlucky neighbours were unhappy. The paper is aptly titled “Your Gain is my Pain”.

Most importantly, however, the blogger reflects on why this type of research is done at all: "Am I the only one to think that is not ethical dishing out large sums of money in small communities and observing how jealous and unhappy this makes the unlucky members of these tight knit communities?" 

For myself, as a development practitioner with a systems thinking perspective, RCTs can come across as having very limited usefulness and application. They can also be quite machine-based: they either choose to wilfully ignore human behaviour or they simply limit their interactions with other disciplines (psychology, sociology, anthropology) so that they can create more simple hypotheses. Thus, it is felt that the applicability of an RCT for complex problems (such as systemic poverty) is limited.

The RCT we have seen from Kenya seems to fall into that trap too. This RCT seems to need to test the notion that poor people in Kenya might not exhibit the same reactions and behaviours as other people. As if the nature of the human condition (in Africa) is under exploration. To me, this is strange and feels like the original hypotheses might have been drastically distilled and reduced down to overly simplified thoughts.

I wonder how the findings would actually be useful to policy and projects. Who might need proofs from an RCT that Kenyans are like any other human being? How could such research be useful for development planning at an economic or social level? Why is the notion that proving that desperation, jealously and unhappiness occurs among very poor people is valuable? I would also wonder what long-lasting impact this type of research would have on social relationships in the communities in the future.

Globally, there is a large community of development practitioner who feel that RCTs in poverty interventions are not ethical and not useful. From my conversations with them, they make the following points:

1. In many RCTs, an assumption is made that the the groups will not be communicating with each other. However, it is actually very difficult to have demarcated and clear boundaries for the treatment groups to be adequately isolated. People talk. Information can flow through multiple channels and through multiple mechanisms (face-to-face, mobile phone, internet, etc) across groups, geographies, social hierarchies, institutions, etc. 
2. In RCTs, people might be very desperate because of the psychological and social impact of poverty and crisis. In this case all the RCT does is exacerbate that desperation and exacerbate those behaviours that present themselves when people are in desperate situations. The results are therefore naturally biased and skewed and outlying when compared to any group at any point in time. This is not adequately recognised in RCTs and thus not at all reflected when RCTs attempt to influence policy and project applications.
3. Over time, the RCT can have a lasting negative impact. Those RCTs which test the type of reactions as the one featured here in Kenya - jealousy and unhappiness - can damage social relationships between individuals and groups even after the trial has ended. Real people are not as adept to switching off their pain and trauma (and any additional feelings of betrayal, anger, envy, frustration, etc.) as machines might be able to! 

Do market-based approaches hold too many false assumptions?

This blog post from the Institute of Development Studies (IDS) attempts to reflect the main challenges in implementing market-based approaches. It questions the "false assumptions" of market development and systems thinking for poverty reduction.

In fact, what is most evident is that a very damaging assumption held by policy makers and practitioners alike is that market-based approaches simply mean "business" and "market access". In fact these are two outcomes of a functioning market system - among many others - but not the end-goal. In reality, well-designed market-based approaches that adopt systemic principles also deliver the following benefits:

• Production and supply systems that respond to demand and the needs of the market so that relationships are inherently win-win and about capturing the value within the system 
• Inclusivity of poor, marginalised, vulnerable groups as key actors and influencers (including, women, youth, disabled, etc.) 
• Market resilience and the ability of the system to stay strong and react positively to economic, social, political shocks even after any development intervention 
• Innovation is from within the market itself and emergence of new products and services (both for mainstream as well as niche users)
• Better relationships between market actors and market-driven design and testing and learning so that products and services respond to market needs 

When talking about market-based systemic approaches to poverty reduction, the first step is for all parties to get on the same page. For advisors to development projects, these are some things to look out for:

• An inaccurate understanding of systemic thinking and a persistence towards value chain approaches. The former is about the structures, patterns and cycles in systems, and the systemic constraints that affect the functioning of a system (rather than any specific events or element or value chain). Systemic analyses then lead to solutions and leverage points that generate long-term change throughout the wider system (and not for any particular market actor value chain or sector). 
• Visible conflicts between projects and market partners and disagreements around 'ownership' and 'control'. There can often be a tug-of-war between 'who does' and 'who pays'. The project may be doing too much and be paying too much and can be reticent to relinquish control and allow market forces and systemic pressures to take over. 
• A lack of understanding of what a better functioning market system looks like. Poverty is often considered a 'wicked problem'. As a result, without diversity for multiple viewpoints in problem-solving, there can often be difficulty in envisioning a better future. Some projects also perceive that by formalising all things informal and turning informal activities into formal value chains will somehow naturally strengthen systems. 
• A lack of appreciation for (and a fear of) complexity. As a result, there may be a pattern of efforts to simplify, delineate, isolate and control within specific timeframes and outcomes, leading to tick-box approaches to measuring systems change. 
• A heavy emphasis on quantity over quality in project activities. In particular, a tendency to prioritise activities that promise large impacts for lots of beneficiaries as soon as possible ... over and above interventions at leverage points in the system that take time but draw people into the system and bring about sustainability through relationships, value creation, growth, feedback, market response and evolution 
• A tendency to directly intervene in the market instead of employing facilitative approaches and market-based tactics. Examples: 
• running 'project pilots' instead of working through market actors and offering opportunities for 'market exposure and idea testing' 
• dragging actors into the market through 'cost-sharing' instead of supporting existing interest and willingness for 'early-stage market entry' 
• organising and leading 'stakeholder forums' to get buy-in for the project's bright ideas instead of facilitating membership based groupings around common market constraints 
• when buying down the risk in new markets, offering a heavy amount of 'financial subsidy' to businesses instead of non-financial options such as 'networking, capacity building, coaching, information-sharing and relationship-building' 
• a lack of adequate focus on the incentives, relationships and behaviours in markets. This can be evidenced by projects that make broad assumptions about why the private sector does not already work in marginalised markets. e.g. ICT4Development projects often make the mistake that ICT constraints are primarily technical software issues, and do not spend enough time addressing the incentives and facilitating the relationships and interactions between firms and the market (mostly small rural-based enterprises).

The Iceberg Illusion by Sylvia Duckworth

The picture was originally found here on a Facebook feed

Do housing vouchers work for poor people?

One way of reducing poverty is by increasing the ability to pay. And one mechanism is to give cash directly to low-income people either as cash itself or through a voucher system. 

This piece of research from the Urban Institute looks at using vouchers (i.e. one type of conditional cash transfers) to help families pay for housing. The theory goes that helping families pay rent (the largest part of household budgets), they are less likely to experience economic stress and food insecurity.

The research is very optimistic about vouchers. But, it is very important to point out the potential impacts of using vouchers as welfare support on the system.

1. Vouchers can create perverse incentives. Low-income families may go to shelters in order to be eligible for vouchers. This points to a need to identify the deeper problem within the system. Families that leave housing for shelters to get vouchers to go back to housing must be thinking about things that we can't see. What are the incentives to drive this kind of behaviour? Who is making that decision to move? Is it the family career or is there pressure coming from elsewhere? What is the quality of the housing? What makes shelters (and vouchers) so attractive compared to housing?
2. Vouchers can create free rider effects and increase welfare and reduce employment. However, this is a simplistic understanding of the problem. The article points out that we should also keep in mind that helping families get jobs and better-paying jobs is not just about getting rid of disincentives to work; it is also about opportunities for people to build job skills, and access basic benefits, such as health insurance.
3. Vouchers can be expensive. A systemic analysis would look at the costs of different options and determine if vouchers is the most value-for-money considering the systemic constraints. Additional information would be needed to build a value/cost model: How long do families remain on vouchers? How do the ongoing costs of vouchers compare with not providing vouchers (i.e. families cycling in and out of shelter)? How do count families that cycle in and out of shelter (i.e. churn)?

The dangers of of the 'cash transfer magic bullet'

Cash transfers, conditional or not, are a particularly dangerous movement in development. 

The research from Harvard, MIT, NPR on cash transfers has been often cited in the media. But, it is clear that the the cash transfer mechanism is a very limited and is a short-term stimulus that does not address systemic failures that keep people poor. Could this be another magic bullet that make donors feel good about giving money? Won't money just flood the systems but play no role in building systems? How is this sustainable or scaleable beyond any donor handout?

It is the system that causes poverty, and not, as is assumed under the cash transfer paradigm, people and people's willingness and ability to pay. To take this one step further it is the weak poorly-functioning system for goods, services, information, knowledge that causes poverty. if for example, there are medicines available for poor people to buy, the systemic problem is actually that medicines are not well-distributed and clearly branded with a system for verification so that counterfeits cannot creep in. If there are agents/traders/salespeople/distributors working for the big pharmas, the question is always: what are they incentivised to do? Is it to push products for commission? If so, what will the effect be on the quality of information that goes out to people on what they should buy? Who can poor people go to make sure their ability to spend isn’t subsumed by their inability to get a good quality product?

In weak systems, there are systemic constraints that trap poor people in a cycle of no/bad/sub-optimal investment. They also have no 'voice' to complain, protest, influence, push up quality. Poor people are ‘voiceless’. Cash transfers simple result in money in the pocket but no voice or influence.

Why employee rankings can backfire

This NY Times article talks about how employee rankings to drive up performance can actually backfire.

In the workplace, promoting competition between individuals can have several effects. Instead of driving up performance, in an context that needs people working in teams with high levels of collaboration, there can be several opposite effects. One tool for promoting competition in order to improve performance is through HR assessments and ranking. When ranked in a list, people can exhibit the following behaviour:

1. Some feel positive, and strive to do better in order to increase their rank or to stay at the top
2. Some feel demoralised at the valuation of their performance, and reduce performance and fall down the table
3. Some feel content and stick with what they are doing, thus maintaining performance and rank position
4. Some feel suspicious and have less trust in management and the company, which may result in reducing performance or even a tendency to sabotage the process or the company

As a result, in some cases, it may be better to inform each individual privately of his/her performance and not to publicise ranking tables. In others, designing multi-level performance rewards that celebrate performance at different levels may be helpful – only rewarding those at the top may create animosity, however, rewarding ‘most improved’, ‘most innovative’, ‘most supportive in a team’ will create a positive team culture.

Source: http://www.nytimes.com/2015/07/12/business/why-employee-ranking-can-backfire.html?_r=0

A failure of systems thinking

The critique of systems thinking has some truth to it. 

A big problem is that a lot of time and effort goes in to just explaining the underlying principles. An example given in this Fast Company article shows that it can take 3 days or more to train managers and leaders on systems thinking. In many cases, the application comes later. This can be frustrating for practitioners.

In my work, I often train practitioners in systems thinking for market development. I mainly train practitioners in developing countries whose projects are funded by international aid agencies and donor funds. I work in Africa and Latin America and the Caribbean. These are some the tactics I have used.

"I never teach my pupils; I only attempt to provide the conditions in which they can learn." - Albert Einstein

Firstly, good systems training should allow practitioners to be comfortable with the language. The didactic approach doesn't work. People don't learn by being preached at and being told what they must know. So, at certain points, I provide space for the practitioners to reflect on the language. I allow practitioners to ask questions of common labels, such as 'counter-intuitiveness' and 'feedback loops'. I also allow room for re-wording and I give participants ownership of the lexicon.

Secondly, as a trainer, I am helping to re-energise and re-configure the mindset of practitioners to be able to practice systems thinking in actual projects. I help participants make those mental connections and I provide as many opportunities as possible to apply systems principles. I do this through appropriate case studies, stories, quotes, project briefs. I also provide lots of opportunities for discussion, analysis, and reflection.

Thirdly, as learners, we find it generally better to try out new ideas as we go along. What I like to do is couch training within a practical part of a project - a market study, a partners assessment, a strategy review, etc. I try to avoid having systems training as a disconnected piece either before a project, during a project as a response to a donor demand or as an afterthought as a posthumous project review. I try to be principled with the principles by offering the opportunity to dive deeply into specific principles. I provide an overview and then focus on certain key ideas, and I layer in opportunities for practical application as part of the training. The aim to to help participants get a specific piece of the project done. And still maintain the perspective of a systems thinker.

LESSONS LEARNED — WHY THE FAILURE OF SYSTEMS THINKING SHOULD INFORM THE FUTURE OF DESIGN THINKING BY FRED COLLOPY, June 7, 2009, available at www.fastcompany.com/1291598/lessons-learned-why-failure-systems-thinking-should-inform-future-design-thinking