22 July 2020

Perspectives from Africa on policy responses to Covid-19

There is a very interesting set of interviews by FolashadĂ© SoulĂ© and Camilla Toulmin giving perspectives from Africa on the policy responses to the Covid-19 pandemic. Two interviews are highlighted in this post that bring out issues that merit much more policy attention from governments who are currently narrowly focused on Covid-19 numbers - the deep debt distress and the disproportionate negative impact on women have long term implications for the resilience of societies and economies. 


Pr Benno Ndulu, the former Governor of the Bank of Tanzania, flags the severe debt distress that the Covid-19 pandemic is accentuating in many African countries - "There has been a huge change in the composition of African debt: it’s shorter in maturity, and commercial to a large extent which means reputational risk is a much bigger issue than it has been in the past. That’s where the rating agencies come in. Unfortunately, rating agencies have tended to act in procyclical way: when things are bad, that’s when they pronounce you to be in really bad shape. African countries now have also to deal with a creditor coordination problem. It used to be the Paris Club and everything was settled there, but now there are new donors like China and the real question is how does one get coordination among all the creditors to deal with this issue."


He also raises the need for countries to get digitally ready and inclusively, pointing to the increasing role of technology in improving productivity and formalisation as well as globalisation through tele-migration taking "jobs to where people are rather than having to force migration of people from the rural areas into the cities in order to be able to offer their services."


Takyiwaa Manuh, Emerita Professor of African Studies at the University of Ghana, brings out the impact on women: "We’ve been very concerned about the gendered impacts of COVID-19. Government statements hardly mention gender, but mainly focus on the economy. It is expected for instance that GDP growth will fall from more than 6% this year to 2% and this will affect tax revenues, production, trade and commodity prices. Government speaks of these things as if there are no people who lie behind the changes, but just disembodied activities. But when you begin to disaggregate, say the tourism sector, which has been badly affected, you find the hotel industry, food chains, restaurants and catering establishments are run mainly by women, so there’s a disproportionate impact."..."even when there is a focus on gender it tends to be on the economic aspects, and not on the human rights and bodily integrity of women, which are essentially considered as private matters."  


01 July 2020

Responsible modelling in times of uncertainty

Axel Leijonhufvud's piece on economists, "Life Among the Econ" did a brilliant takedown of what he termed "modls" as in "recognized status has come increasingly to be tied to cleverness in modl-making." Raising model-making to such high status has created considerable scepticism towards the discipline. There is now a new brilliant paper by 22 researchers - a manifesto with five principles to ensure that mathematical models best serve society (June 2020 Nature 582(7813):482-484).

1. Mind the assumptions: The results of models are only as good as their assumptions, which are often not adequately assessed. Solutions from one model therefore do not fit alternative situations. The recommendation is to undertake global uncertainty and sensitivity analyses - that is, allowing all that is uncertain — variables, mathematical relationships and boundary conditions — to vary simultaneously as runs of the model produce its range of predictions. Many a times the uncertainty in predictions is substantially larger than originally asserted, there should be transparency about the analysis to provide real value and applicability.

2. Mind the hubris: Researchers must resist the attraction of adding complexity to a model without reason. The authors note the lack of accountability leads to such hubris: "Whereas an engineer is called to task if a bridge falls, other models tend to be developed with large teams and use such complex feedback loops that no one can be held accountable if the predictions are catastrophically wrong."

3. Mind the framing: This is a critical principle that many forget to factor into their work. The example given of cost-benefit analysis is a common one we run up against when projects are being evaluated.
"Modellers know that the choice of tools will influence, and could even determine, the outcome of the analysis, so the technique is never neutral. For example, the GENESIS model of shoreline erosion was used by the US Army Corps of Engineers to support cost–benefit assessments for beach preservation projects. The cost–benefit model could not predict realistically the mechanisms of beach erosion by waves or the effectiveness of beach replenishment by human intervention. It could be easily manipulated to boost evidence that certain coastal-engineering projects would be beneficial7 . A fairer assessment would have considered how extreme storm events dominate in erosion processes."
"Modellers should not hide the normative values of their choices."
The authors therefore recommend that there should be international guidelines for a set of social norms that would include how to produce a model, assess its uncertainty and communicate the results.

4. Mind the consequences: The authors take examples from the ongoing Covid-19 crisis to show how quantification can backfire towards giving precisely wrong results and spurious predictions cause significant harm. The recommendation therefore is to avoid opacity, and give full disclosure on the uncertainty - this alone will build trust and utility of modelling.

5. Mind the unknowns: Acknowledging ignorance is no crime, in fact it builds accountability and trust. "Experts should have the courage to respond that “there is no number-answer to your question”, as US government epidemiologist Anthony Fauci did when probed by a politician."

These principles have been set for responsible modeling in all disciplines, but will mean the most towards setting appropriate policies in developing economies.

30 June 2020

A classic revisited - "Life Among the Econs"

When mulling over where economics, particularly development economics has been heading, the best reference is Axel Leijonhufvud's 1973 work "Life Among the Econ". This has to be read in its entirety, it continues to hold true, almost half a century later.

I have picked three excerpts that are classic gems, trust these will entice young economists to read the full paper.

***

The Econ tribe occupies a vast territory in the far North. Their land appears bleak and dismal to the outsider, and travelling through it makes for rough sledding; but the Econ, through a long period of adaptation, have learned to wrest a living of sorts from it. They are not without some genuine and sometimes even fierce attachment to their ancestral grounds, and their young are brought up to feel contempt for the softer living in the warmer lands of their neighbours. such as the Polscis and the Sociogs. Despite a common genetical heritage, relations with these tribes are strained-the distrust and contempt that the average Econ feels for these neighbours being heartily reciprocated by the latter-and social intercourse with them is inhibited by numerous taboos. 

***
Whatever may have been the case in earlier times. the “fields” of the Econ apparently do not now form a strong rank-ordering. This may be the clue to the problem of the non-transitivity of individual status. First, the ordering of two castes will sometimes be indeterminate. Thus, while the Micro assert their superiority over the Macro, so do the Macro theirs over the Micro, and third parties are found to have no very determined, or at least no unanimous, opinion on the matter. Thus the perceived prestige of one caste relative to another is a non-reflexive relation. In other instances, however, the ranking is quite clear. The priestly caste (the Math-Econ) for example, is a higher “field” than either Micro or Macro, while the Devlops just as definitely rank lower. Second, we know that these caste-rankings (where they can be made) are not permanent but may change over time. There is evidence, for example, that both the high rank assigned to the Math-Econ and the low rank of the Devlops are, historically speaking, rather recent phenomena. The rise of the Math- Econ seems to be associated with the previously noted trend among all the Econ towards more ornate, ceremonial modls, while the low rank of the Develops is due to the fact that this caste, in recent times, has not strictly enforced the taboos against association with the Polscis, Sociogs, and other tribes. Other Econ look upon this with considerable apprehension as endangering the moral fiber of the tribe and suspect the Develops even of relinquishing modl-making.


*** Under circumstances such as these, we expect alienation, disorientation, and a general loss of spiritual values. And this is what we find. A typical phenomenon indicative of the break-up of a culture is the loss of a sense of history and growing disrespect for tradition. Contrary to the normal case in primitive societies, the Econ priesthood does not maintain and teach the history of the tribe. In some Econ villages, one can still find the occasional elder who takes care of the modls made by some long-gone hero of the tribe and is eager to tell the legends associated with each. But few of the adults or grads, noting what they regard as the crude workmanship of these dusty old relics, care to listen to such rambling fairytales. Among the younger generations, it is now rare to find an individual with any conception of the history of the Econ. Having lost their past, the Econ are without confidence in the present and without purpose and direction for the future.


21 June 2020

Economics in a Churn at last


While there has been a concerted movement over the past two decades to bring heterodox analysis back into the domain, the threads seem to be coming together now with the  #BlackLivesMatter movement at the forefront. Can we hope that this churn will see a difference in the way economics is studied and practiced as the White Male perspective is questioned? 

As Dani Rodrik tweeted (quoting here for easy reference to readers), 
It doesn’t surprise me that the field, as a whole, reflects the ingrained attitudes and practices of the society of which it is part. But there are some features of the discipline that magnify and aggravate the problem. First, Economics is clubby. While good research does get recognized, the ability to produce it depends on networks. If you don’t start with the networks in place–a PhD from a top dept, a well-recognized advisor--you start with a significant handicap difficult to overcome. Second, the field is hierarchical. Even if you are in the right networks, you feel you are constantly being ranked. As a result even top economists are a weirdly insecure bunch. This self-absorption reduces the generosity & mentoring that junior members of the profession receive. Third, there are too many jerks in the discipline. Reputation hangs on your publications, and if you are doing well there relative to your peer group – which could be the profession as a whole or simply your own department–you get away with a lot of awful personal behavior. Given the clubbiness, hierarchy, and jerk quotient it's not surprising so many people, especially people of color and women, feel slighted & discriminated against. Only way things can change is by discussing these problems openly and instilling new norms of behavior which is why this discussion is so important. We all have responsibilities here--but change must start with senior scholars. I'm grateful to all who have spoken out – sometimes at some risk to their career – and made us all so much more conscious of the urgency of the task."

Development economics, in particular, has always suffered from the prevalent Anglo-centric perspectives. In a review of Morten Jerven's book Africa: Why Economists Get It WrongGrieve Chelwa noted

"Jerven thinks development economics should engage more historians given their unique skills for interrogating historical data sources and narratives. This is welcome. Surprisingly, Jerven does not call for the active engagement of African economists given that most of what he critiques has been authored by North American and European economists (his book should really have been titled Africa: Why Western Economists Get It Wrong). This oversight is telling because his critique clearly builds on the often neglected contributions of the Malawian economist Thandika Mkandawire. This last pickle aside, Morten Jerven’s book is a refreshing contribution to the debate about development scholarship on Africa and it deserves to be read by all."

We need a considerable shakeup in the way we, as economists, study our economies, teach in classrooms, analyse and give prescriptions. The least we can do is introspect our conditioning, and read more widely, with an open mind. We have to make sure we cite outside our comfort networks and give space to voices that have been unheard so far. 

Writing on this blog after a gap of nine years, it feels good to know that there is a strong movement for the better in place now. The churn will take time, but once established in universities, we can expect economics to be a more realistic discipline.