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Introduction Theory Design Results
The Distortionary Effects of Classifications onAid Allocation Decisions
Lindsay Dolan
Columbia University
November 18, 2017
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Motivation
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Dissertation Project
Classifications coordinate the perceptions and behaviors ofinfluential actors in the global economy.
I Evidence? Cross-national statistical analysis and interviewsshow that MICs receive less aid but are rated as moredemocratic and creditworthy than LICs
I Why? Classifications (1) simplify cognitive decision-makingand (2) allow certain actors to strategically justify theirdecisions
I So what?I Helps us understand power of IOs (Barnett and Finnemore 1999, 2004)
I Illustrates why beliefs and ideas affect market behavior (Blyth
2002; MacKenzie 2006; Shiller 2017)
I Fits into broader literature on labels, metrics, indicators ingovernance (Buthe 2012; Cooley and Snyder 2015; Gray 2013; Brooks, Cunha and Mosley
2015; Kelley and Simmons 2015)
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Dissertation Project
Classifications coordinate the perceptions and behaviors ofinfluential actors in the global economy.
I Evidence? Cross-national statistical analysis and interviewsshow that MICs receive less aid but are rated as moredemocratic and creditworthy than LICs
I Why? Classifications (1) simplify cognitive decision-makingand (2) allow certain actors to strategically justify theirdecisions
I So what?I Helps us understand power of IOs (Barnett and Finnemore 1999, 2004)
I Illustrates why beliefs and ideas affect market behavior (Blyth
2002; MacKenzie 2006; Shiller 2017)
I Fits into broader literature on labels, metrics, indicators ingovernance (Buthe 2012; Cooley and Snyder 2015; Gray 2013; Brooks, Cunha and Mosley
2015; Kelley and Simmons 2015)
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Explaining Aid Allocation
Why would donors use classifications to allocate aid?
I Puzzle: Classifications do not convey any private or expertinformation
1. CognitiveI Classifications simplify or distill information (Kahneman 2011)
I Conflicting information about developing countries (Jerven 2013)
2. StrategicI Using classifications created by credible third party improves
appearance of impartialityI “When we can show that most of our aid is benefiting Least
Developed Countries, this helps our numbers.”— U.S. Treasury official
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Allocation Activity
Timor-Leste $Zambia $South Africa $Tonga $El Salvador $
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Allocation Activity: Classifications Treatment
Timor-Leste $Zambia $South Africa $Tonga $El Salvador $
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Identifying the Classification EffectClassifications
Treatment Control
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Distinguishing the Mechanism
I Classifications treatment captures cognitive effect becausetreatment and control groups face identical incentives
I Introduce second treatment (factorial design) to vary thestrategic incentives participants face
I Control: Randomly selected participants receive prize
I Treatment: Randomly selected participants receive prize onlyif a “judge” approves of their allocations — “The judge willbe an intern (i.e an entry-level staffer) in the office of apolitician (i.e. a congressperson/MP) in a major donorcountry. The judge is NOT an expert on development.”
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Factorial DesignClassifications
Treatment Control
Treatment
Jud
ges
Control
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Identification Strategy
I How to operationalize a participant’s allocation?
I Ideal : Amount given to country if classified as lower-middleincome versus amount given to country if classified asupper-middle income
I Obstacles: Country-specific characteristics, no deceptionI Solution: Exploit variation in data
I GNI figures revised over timeI Identify instances when various estimates put above/below
thresholdI Circulate both versions (to different participants)I Compare allocations made by participants seeing “just-below”
version to those seeing “just-above” version
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Example
I Paraguay’s 2013 GNI per capita, reported in WDI inNovember 2014: $4,040
I Paraguay’s 2013 GNI per capita, reported in WDI inSeptember 2015: $4,190
I 2013 threshold separating LMICs from UMICs: $4,125
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Example
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
“Just-Below” RandomizationClassifications
Treatment Control
Treatment •◦•◦•
•◦•◦
◦•◦••
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◦•◦◦
◦•◦◦◦
•◦••
Jud
ges
••◦◦◦
•◦◦•
◦•◦••
◦◦•◦
◦•••◦
•◦••
◦•◦◦•
•◦••
Control •◦◦•◦
◦◦••
•◦•◦•
◦◦•◦
•••◦◦
•◦◦◦
•◦•◦•
◦•◦◦
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••◦◦
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◦•◦•
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Identifying Equation
Yij =α + γCi + λJBj + σJi+
δ1(Ci ∗ JBj) + δ2(Ji ∗ JBj) + δ3(Ci ∗ Ji )+
δ4(Ci ∗Mi ∗ JBj) + µj + ρj + εij
δ1 = Total effect of classificationsδ4 = Strategic effect of classificationsδ1 − δ4 = Cognitive effect of classificationsµr = Round F.E.ρr = Country identity F.E.Standard errors clustered at participant level
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Sample
I Fielded September 2017 at International Conference forSustainable Development (side meeting of UN GeneralAssembly)
I Fielded online and in person
I 232 participants (2088 rounds)
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Effects on Allocation to Threshold Country
treat_judge: 0 treat_judge: 1
treat_class: 0treat_class: 1
0 25 50 75 100 0 25 50 75 100
0.00
0.01
0.02
0.03
0.04
0.00
0.01
0.02
0.03
0.04
Allocation to threshold country
Den
sity
Just Above Just Below
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Effects on Allocation to Threshold Country
Allocation to threshold country (logged)TreatClass*TreatJudge*JustBelow (δ4) 0.269 0.158Strategic effect (0.174) (0.161)
p=0.12 p=0.32
TreatClass*JustBelow (δ1) −0.068 −0.046Total effect (0.121) (0.115)
p=0.57 p=0.69
TreatClass −0.028 −0.038(0.106) (0.106)
TreatClass*TreatJudge −0.270∗ −0.213(0.152) (0.151)
JustBelow 0.093 0.057(0.070) (0.072)
TreatJudge*JustBelow −0.094 −0.004(0.117) (0.106)
TreatJudge 0.118 0.074(0.092) (0.093)
Observations 2088 2088Num. Participants 232 232Threshold Country F.E.? No YesRound F.E.? No YesNote: ∗p<0.1; ∗∗p<0.05; ∗∗∗p<0.01
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Effects on Overall Allocation Behavior
15
20
25
30
1 2 3 4 5
Country Position
Allo
catio
n
treat_class Control Treatment
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Effects on Overall Allocation Behavior
treat_judge: Control
treat_judge: Treatment
1 2 3 4 5
10
15
20
25
30
10
15
20
25
30
Country Position
Allo
catio
n
treat_class Control Treatment
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Conclusion and Next Steps
I Classifications distort donors’ aid allocation behavior in favorof lower income countries
I Distortion primarily driven by strategic incentives
Additional analysis
I Heterogeneous treatment effects?
I Observational determinants of allocations?
Additional data collection
I Other development conferences in spring 2018?
I Create online sample of development experts?
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Extra Slides
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Countries Used to Populate Graphics
1 2 3 4 5
Honduras Sri Lanka Georgia B&H MaldivesVietnam Indonesia Mongolia Ecuador AzerbaijanGhana Guatemala Paraguay Macedonia Namibia
Uzbekistan Micronesia Albania Jamaica PeruMoldova Congo Angola Algeria SerbiaBolivia Nigeria Belize Thailand BelarusBhutan Morocco Jordan Tuvalu ColombiaKiribati Philippines Tunisia DR Botswana
PNG Ukraine Guyana Cuba Iraq
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Randomization
ClassificationsTreatment Control
Treatment 66 52Ju
dge
s
Control 60 54
N.B. Both treatments balanced on gender, age.
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Descriptives: Education
0
30
60
90
High school degree
Bachelor degree
Masters degree
Doctoral degree
NA
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Descriptives: Current Occupation
0
20
40
60
80
Grad−
DevR
elated
Grad−
NotD
ev
Undergrad
DevP
artner
Govt
NG
O
Research
PrivateS
ector
Other
PN
TS
NA
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Descriptives: Years of Experience in Development
0
30
60
90
120
0 1−4 5−9 10−14 15−20 20+ NA
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Descriptives: What Country Are You From?
I Representatives of 48 countriesI Largest delegations from...
I USA (40%)I India (9%)I China (7%)I Nigeria (4%)I Japan (4%)I Germany (3%)I Colombia (3%)
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)
Introduction Theory Design Results
Descriptives: Knowledge About Development
I “What does a GINI coefficient measure?”(Inequality / Democracy / State Fragility / Corruption /Don’t Know)
I 74% answered correctly
I “DFID is an aid agency of which national government?”(France / UK / Germany / Japan / Don’t Know)
I 56% answered correctly
Development Classifications and Aid Allocation Lindsay Dolan (Columbia University)