Why Bill Gates thinks chickens can help the poor in Africa - and why he may be wrong

Gates’ relatively brief post perhaps deliberately glossed over practical considerations and lacked in-depth economic analysis. It soon sparked a lively debate within the development community, a debate that has spanned everything from practical economic considerations to the very philosophical core of development economics.

In response to Gates’ analysis, Chris Blattman, a prominent development economist at the University of Chicago in the US, wrote an open letter critical of the proposal. Blattman takes issue with an uncharacteristic oversight of fundamental economic theory on Gates’ part.

Gates casually assumes that the prevailing market value of a chicken would be maintained even after the distribution of chickens to hundreds of thousands (if not more) of families in sub-Saharan Africa. This clearly cannot be the case. Gates’ policy would entail a huge increase in the supply of chickens, which would almost necessarily reduce the equilibrium price of poultry. The income gains to poor women are thus unlikely to be anywhere near US$1000 per year.

The more constructive aspects of Blattman’s argument are divided into two key themes: cash and experiments. He belongs to the camp of development economists who believe that one of the best poverty alleviation prescriptions is simply to distribute cash effectively. Such hand-outs are something Gates has vocally opposed in the past in favour of training programmes and similar solutions that build human capital more directly.

Blattman postulates that the versatility of cash means that it is more likely to be used by the poor in an optimal manner, as opposed to the “one-size-fits-all” nature of a chicken distribution programme. Bolstering his argument, Blattman notes that there is a strong body of evidence suggesting that it is not a dearth of investment opportunities, but rather limited access to capital that prevents the poor from pursuing profitable business opportunities.

He concedes that there is as yet no conclusive evidence to suggest that the poor would be better off with cash handouts than with programmes such as chicken distribution, but counters that the distribution of chickens, and the training costs associated with teaching families how to succeed at raising them, would fundamentally make the programme financially wasteful. Multiple studies are cited showing that the disbursement of cash is significantly more cost-effective than training programmes or the distribution livestock. Ultimately, if cash is what people want, chickens can easily be sold.

In the second part of his letter, Blattman advocates a more empirical and experimental approach – referred to within the field as Randomized Control Trials (RCTs). Essentially, he proposes a controlled experiment involved six to eight different treatments, including Gates’ chicken idea, tested against a group given only cash and a control group that is left alone. The RCT method has gained much popularity among the development economics community, and is often considered among the most creditable method of establishing policy efficacy.

Yet, it was not long before debate on the topic extended beyond practical efficacy and into moral and philosophical perspectives on development research and methodology. Lant Pritchett, economist at Harvard University’s Kennedy School of Government, takes a more institutional approach towards development. He is deeply sceptical of marginal fixes. In short, as Pritchett sees it, Gates and Blatmann are wasting time.

Pritchett’s view is that the most worthwhile research would centre on determining how to craft institutions that will foster growth in Africa and maximise human potential. He insists that this is the only method of generating long-term growth. Pritchett puts forward an impassioned defence of research and policy institutions like the World Bank. He maintains that it is their work on the fundamentals of economic growth that make the maximum impact by contributing to a body of knowledge on the subject.

In response to Pritchett, Blatmann laments that prioritising long-term growth research over more immediate fixes holds only in a purely utilitarian perspective – which would advocate undermining today’s generation in benefit bolstering knowledge about how to improve future generations. Blatmann acknowledges that there are core philosophical differences within development theory. Logic and analysis alone cannot resolve the gulf between differing ideologies. He reasons that we have an obligation to combat the suffering in the present, and that it is noteworthy to be part of an effort to ensure that the tens of billions being poured into international aid each year are spent well.

With all its complexities, the optimal path toward development is impossible to reduce to one theory or a single set of approaches. What constitutes development is itself a topic of extended dispute among scholars in the field. Strong theoretical foundations for models of development, rigorous empirical experimentation, critical analysis of theories and objectives, and learning from past failures will all be critical. The uncertainty surrounding paths toward development take nothing away from the fact that it is vital work, with the ability to radically transform the fortunes of billions in the present and the future.