Who has the power to count chickens?

In March I recounted how former colleagues Michael Clemens, Steven Radelet, and Rikhil Bhavnani wrote an excellent paper in 2004 on the impact of foreign aid on economic growth, “Counting Chickens When They Hatch.” The idea captured in that title is that it is important to think about the likely timing of the impacts of aid. Don’t design your analysis as if you expect that funding for teaching 6-year-olds will raise economic growth in four years. Match the follow-up period to the type of aid. Count your chickens only when they hatch. Some years later, and joined by another CGD recruit, Samuel Bazzi, those authors overhauled their paper and published it in the top-flight Economic Journal (ungated version). The final version is quite different but also excellent (it won the journal’s best-article prize). Instead of doing its own econometrics afresh, it modifies the three most-cited studies in the aid-growth literature in light of the “counting chickens” insight. Although those studies disagree on whether and when aid “works,” in the sense of boosting growth, Clemens, Radelet, Bhavnani, and Bazzi (CRBB) conclude that revising the studies to take timing into account causes all results to converge, to a ginger but positive appraisal. (Listen to Michael speak cautionarily about “Chickens” in this Library of Economics and Liberty podcast.) I say “excellent” and I mean it. But, true to type, I actually doubt the econometric reasoning. I am not persuaded by these results that “aid inflows are systematically associated with modest, positive subsequent growth.” In 2010, the journal Public Finance Review inaugurated a section for replication studies, in order to increase incentives to...

Comment on “Counting Chickens”

In 2012, the top-flight Economic Journal published an article by my former CGD colleagues about the impact of foreign aid on economic growth in receiving countries. It is called Counting Chickens When They Hatch: Timing and the Effects of Aid on Growth (ungated version on cgdev.org). The journal’s publisher, the Royal Economic Society, awarded the authors its annual prize for best article. I think you’ll see why, if you read the paper. It’s sharply written and firmly argued, yet judicious in its conclusions. Those conclusions are that “aid inflows are systematically associated with modest, positive subsequent growth”; and that “the most plausible explanation is that aid causes some degree of growth in recipient countries, although the magnitude of this relationship is modest, varies greatly across recipients and diminishes at high levels of aid.” One of my first projects at CGD was to assist Bill Easterly and Ross Levine in replicating and questioning (ungated) an older paper favoring the theory that aid causes growth. Perhaps this baptism into econometrics permanently converted me to skepticism. Perhaps it merely reinforced my distrust as a mathematician of a structural tendency in the social sciences to use equations full of Greek letters to claim objectivity and superior insight. At any rate, I’ve doubted such aid-growth studies ever since. Here is a comment that explains why I’m not persuaded by “Counting Chickens.” A version of this comment has been accepted for the new replication section of the Public Finance Review. Here is the code needed to reproduce the results. It runs off the CRBB data sets. Perhaps the authors of “Counting Chickens” will respond. And perhaps they will change my mind. For now, this...