Episode 31: David Roodman on Microfinance

Center for Global Development Senior Fellow David Roodman talks about his latest book ‘Due Diligence, An Impertinent Inquiry into Microfinance’.

David discusses the evidence surrounding the effects of microfinance on the lives of the world’s poor and its implications on aid donors, within the context of his book’s key findings. David then goes on to speak about what he himself has learned about the roles of different kinds of evidence, along with the unusual way in which he used open blogs to guide and inform the writing of his book.
Running time 44 minutes; size 34.5 Mb
Download transcript (pdf)

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With the fashion for evidence based everything, then maybe we could turn the tables and ask, what is the evidence for evidence based decision making? It is a Mantra which is only -questioned by those who want to reject outcomes, it is not rejected or re-evaluated by those people who are using it as the prime determinant of decisions. Over decades, if we stand back, evidence based decision making has been pretty dubious. Why did it take so long for the health dangers of cigarette smoking to become apparent yet now we face campaigns for awareness of the dangers of just about everything we do, eat, drink or just think after just one report, usually contradicted by a second report and then again reversed by a third report. You would think those running world economies had plenty of facts before them yet they created a mess which seems hard to get out of. We devote massive resources to health and wealth at all levels yet hardly seem to be much if any better off, except for a period of time, which soon passes. It seems to me that we should now look at how different kinds of evidence are appropriate or not in different kinds of situations. Complex environments cannot be reduced to simple blocks of numbers. Risk can be catalytic or progressive. Ventures can be healthy when competitive and healthy when collaborative. And all projects have different life phases, so evaluation in the early stages is not the same as evaluation later and towards the end of a project, And the learning can be specific or general. ‘Does microfinance relieve poverty?’ is perhaps, in itself, simply a meaningless question. Even the question does chocolate make me happy has the answer, well, it depends, sometimes yes and sometimes no, but always no if I think about it too much. What we need to be better at i not getting more numbers but at developing our ability to judge outcomes in a multifaceted way that reflects the true nature of the complexity involved.

Human wish want to believe that intervention will significantly improve things. It’s human nature. If evidence-based research shows that such interventions rarely make a dent in the problem, don’t blame evidence-based research.

Graham, if you read my book (Due Diligence) I think you’ll see that I work hard examine the many facets of microfinance–history, business realities, various definitions of success. For each facet, I examine the relevant evidence that I found. Sometimes it is quantitative, sometimes not.
–David

David, you briefly remarked on the fragility of the results from one randomized control trial. Do the arguments of Angus Deaton (http://nyudri.org/2012/05/25/banerjee-v-deaton/) sway you to be more skeptical of RCTs?

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