The Economist as a Plumber

Earlier this year Esther Duflo, Co-Founder and Director of the Abdul Latif Jameel Poverty Action Lab and Professor of Poverty Alleviation and Development Economics at the Massachusetts Institute of Technology, delivered the Richard T Ely lecture at the American Economic Associationannual meeting. In this blog our Senior Partner for the Public Sector, Gulzar Natarajan, looks at Esther’s notion of the economist as a ‘plumber’ and what this might mean for the design of policy.

At the heart of Esther’s highly engaging lecture at the AEA in January was a call to action to all economists working in the development space: if we want to engage with real-world challenges in a way that delivers social impact in a big way, we need to look critically at the role economists currently play in the design and delivery of public policy.  To illustrate the point, Esther adopted a helpful analogy:

1. Good policy, of course, benefits from original insights brought about by academics, who we can think of as the scientists.
2. The subsequent design of a coherent plan of action by policy officials – or the engineers – is also absolutely integral.
3. But too often, the need for those who seek to make the policy work at an operational level are forgotten – those who Esther calls the plumbers.

It is within this third role – that of the plumber – where Esther suggests that economists can play an even greater role than they currently do.

It’s a notion that really resonates with us here at the Global Innovation Fund (GIF). We want to find and fund innovators who are pioneering new approaches to policy delivery and to help them on their journey to scale – if this describes you or your organization, check out our applications page!

But it’s also something that resonates with me personally, after grappling with countless plumbing challenges on a regular basis for nearly seventeen years as a government official in India.

A real-world problem

So what do these ‘plumbing’ issues look like in a real world context?

In her lecture, Esther takes the example of a door-to-door campaign in Tangiers, Morocco, which encourages people to take advantage of household water connections once the network has been laid.

In many developing countries, municipal governments spend huge amounts of money constructing water and sewage networks, only to find that this doesn’t automatically lead to household connections.

It’s something I have seen time and time again during my career, and what’s clear to me is that it’s a lose-lose situation – the government suffers through loss from revenues foregone on the assets, whilst residents continue to suffer without access to running water in their homes.

Yes, the problems which lead to these unexpected outcomes are numerous. Connecting a household to the network, for one thing, is no mean feat. The connection fee on the part of the consumer is often significant. Problems such as securing a contractor to undertake the necessary civil work, or bringing the contractor together with the local utility staff, can also stand in the way.

But if we are prepared to invest time in addressing them, these problems can be overcome.

Addressing the issue

In tackling so-called ‘plumbing’ issues, the first thing to acknowledge is that, as economists, unpacking these problems is not (for the most part) our forte. To help us along the way, insight drawn from practical experience is crucial and often requires the type of deep-dive problem-solving that many consultants see as their staple work.

I think going through an exercise like this would unearth potential solutions.

Sticking with Esther’s Tangiers example, if we were to take a ‘deep-dive’ approach this problem, we might realize that it makes sense to lower connection charges, offer instalments, or even facilitate small loans from local banks. Another solution might be to enlist contractors with access to the network and bring about ceiling benchmarked rate contracts for establishing connections, thereby helping out consumers. A third might be to structure the network construction contract itself to be outcomes-based, dependent on household connections actually being established.

More than just mindset

Thinking in this way is certainly a good start, but to truly address plumbing issues like these requires us to go further. Fundamentally, we as economists need to embrace a wider toolkit.

General economic analysis and field experiments remain hugely important, but they should be complemented by qualitative assessments, data analysis, time-and-motion studies, interviews and surveys, focus group discussions, and other tools. After all, it is far more cost-effective to figure out the pricing of mosquito bed-nets, chlorine ampules, or even toilets, through simple willingness-to-pay surveys than a costly and time-consuming field experiment.

Perhaps more importantly, though, it would require any analysis we undertake to begin with the problem in its entirety, and with greater acknowledgement of the context. In other words, the most effective starting point would be to take a problem that is really agitating a practitioner somewhere and resolve to find the solution.

This approach would force us to engage with what is and isn’t possible in the real world when it comes to implementation, which can only be a good thing.

Hidden benefits

Starting with the problem in this way also helps to shine a light on the less-discussed areas of the sector.

In the case of education, for example, an enquiry into what causes poor learning outcomes would help place the attention on more fundamental structural issues – this might be teacher training, or recruitment and deployment processes in school management. Action in these areas is likely to have a larger and sustainable impact on learning outcomes. In fact, if we are to impact learning outcomes in the long term, addressing these issues is essential.

Taken as a whole, this more comprehensive approach to policy design offers a clearer perspective of the challenge being faced.

Taking our enquiry to the next level

It’s also an approach which broadens our scope of enquiry. The vast and growing body of exploration on nudging to bridge last mile gaps, for instance – in areas as diverse as quitting smoking to breast-feeding and uptake of immunization services – has been largely confined to testing the efficacy of the nudge itself.

But is this the most relevant line of enquiry?

We know nudges are useful – but does the way the nudge is currently designed maximize uptake?

If we approach the challenge in this way, enquiry and research leading to design would need to be framed around optimizing implementation design – be it duration, content, presentation, frequency, or the nature of the delivery – and creating plans that can then be used for scale up. If this were then documented and made available, it would become possible for interested stakeholders to engage with the problem with far greater likelihood of success.

Finally, and possibly most importantly, adoption of this line of enquiry would resonate with practitioners themselves. Engaging with their ‘felt needs’ is likely to lead to policy-makers seeing the value in the expertise being offered by the economic researcher – this then sets the stage for a meaningful partnership for policy co-creation between the practitioner and the researcher.

Conclusion

Like with the flexibility and nimbleness of entrepreneurs, the policy entrepreneur also needs to tinker constantly with the plumbing. Economics and public policy need more of this breed, and GIF wants to identify them and to help them to succeed.

At GIF we are excited to support innovators who explore plumbing issues to overcome persistent last mile gaps that reduce the effectiveness of development interventions. One of our innovators applies behavioural insights to nudge tax payment compliance in four countries. Two others help overcome affordability barriers and default concerns by offering access to electricity through innovative pay-as-you-go model with pre-paid metering.

We endorse Esther’s call that at least some economists should become plumbers some of the time.

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Gulzar Natarajan is a Senior Partner at GIF. He is a member of the Indian Administrative Service, the elite tier of
 the Indian bureaucracy, and was, before joining GIF, working in the Office of the Prime Minister of India. He has previously held leadership positions
as municipal commissioner of a city with a population of 1.5 million, as chairman and managing director of an electricity distribution company with 4.5 million consumers, as the head of the district government of Hyderabad District, and later as the vice chairman and managing director of the Infrastructure Corporation of Andhra Pradesh. In a seventeen-year career in the IAS, he has been intimately associated with the broad spectrum of development policy design and program implementation—rural and urban development, health and education, infrastructure creation and public-private partnerships, and regulatory governance and public finance.

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