What to Do? Maybe Begin with some Decent Measurements

1. What to Do?Maybe Begin with some Decent Measurements Itai Sened Professor and Chair Department of Political Science & Director: The Center for new Institutional Social Sciences Washington University in St. Louis

2. Abstract • Recent literature is very skeptic about the future of developing countries and, more specifically, the role of foreign aid as part of the solution. The general picture is grim regardless of how one looks at it. Decades of research have made some serious stride at understanding the problem but very little is available in terms of concrete ideas as to what to do about it. This paper suggests a very fresh look at the problem. Depending on how one reads this paper, one may or may not find in it an answer to the title question but it does suggest a somewhat more optimistic vision for the future (it is true that it is hard to be any more pessimistic than the current state of the art in the literature). Some of the answer to the title question will have to wait for future research, but at the very least, a fresh idea is put forward to suggest where this future research may go.

3. Structure of the Talk • Introduction: • What to do about world poverty? • Some very disturbing facts • A methodic distinction between facts and non facts • Globalization • Democratization • Redistribution – Jeffrey Sachs • IAD – Elinor Ostrom • Humanitarian or Strategic Foreign Aid – BDM & Smith • The Uncovered Set as a Concept – Miller (1980) McKelvey (1986) Bianco et al. (2004, 2005, 2006). • The Uncovered Set – Experimental Evidence – Bianco et al. Forthcoming • The Uncovered Set as a Measure • Examples from Recent History of Parliamentary Politics in Israel • Conclusion

4. Introduction • What to do about world poverty? • The most urgent question for political scientists to tackle • The most interesting question for political scientists to work on • The concept of the Institutional Matrix • Defined: The Institutional Matrix of a society is the set of all formal and informal institutions that regulate the daily life of this community • The Genome project and the Question at hand • This paper as a modest example

5. Some Disturbing Facts

6. A Methodic Distinctions Between Facts and Non- Facts • Facts Defined • ‘Local Grammar Facts’: Undisputed Observations • ‘Scientific Facts’: Based on some accumulation of empirical evidence guided by theory. • Non Facts: Any argument about the world that is not supported by ‘local grammar facts’ or by ‘Scientific Facts’

7. Globalization • Why Should Globalization help? • Does it help? • The non facts of globalization and development

8. Democratization • Why Should Democratization Help? • Yi Feng 2005 • Itai Sened 1997 • Does Democratization Help? • Not clear • See previous slide • Depending on the case

9. Redistribution • Jeffery D. Sachs • The End of Poverty – 2005 • The Economic Theory of Development • The Economic Theory of Redistribution • Endowments trade and transfers – Everybody wins • The IMF is not allowed to consult political scientists, neither does Sachs. • The Science and art of redistribution is really the domain of Political Science (Knight, 1992).

10. IAD • Micro-level Institutional Analysis of Development • Context • Action Arena • Incentives • Interactions • Outcomes • Non-Cooperative Game Theory and its Shortcomings • How do we generalize?

11. Humanitarian or Strategic Foreign Aid – BDM & Smith • Most foreign Aid is obviously strategically motivated – Facts: • Theoretically motivated • Empirically Corroborated - McKinley and Little (1977, 1978); Schraeder, Hook and Taylor, (1998). • Donor countries are much better off with small elite/ dictatorial regimes – they deliver and they come cheap • Short term? Maybe • Long term? Probably not • What about medium term?

12. The Uncovered Set as a Concept - I • Let N be the set of an odd number of n legislators. For any agent, i, preferences are defined by an ideal point pi. Let x,y,z be elements of the set X of all possible outcomes. A point x beats a point y by majority rule if it is closer than y to more than half of the ideal points.[1] A point x is covered by y if y beats x and any point that beats y also beats x. The uncovered set includes all points not covered. [1] We assume that preferences are Euclidian.

13. The Uncovered Set as a Concept - II • The attractiveness of the uncovered set as a solution concept lies in that if y covers x, then y dominates x, at least in a loose sense of the term, as an outcome of a majority-rule voting game (McKelvey, 1986; Ordeshook, 1986: 184-5). If y defeats x, any outcome that ties y defeats or ties x and any outcome that defeats y also defeats x, strategic legislators should eliminate covered points from voting agenda. Instead of promoting outcomes that are bound to be defeated, sophisticated legislators should promote uncovered policies that may survive (Cox, 1987). This logic suggests that the feasible set in a legislative process governed by majority rule may be restricted to the uncovered set.

14. Experimental Data - I

15. Experimental Data - II

16. The Uncovered Set as a Measure • Willingness to pay of the donor • Ability to deliver of recipient • Effectiveness of ruling coalition (Huber 1998) • Cost to donor of affecting policy change • It turns out it is a little more complicated than that – policy concessions must be within the feasible set – otherwise the donor is wasting its money • This is high resolution science but so far we have only seen experimental evidence

17. Recent History of Parliamentary Politics in the Israeli Knesset • What do the people want? • What do the people get? • And what different does it make? • Size does matter • But it is really all about location

18. Election of 1988

19. Election of 1992

20. Election of 1996

21. Election of 1999

22. Election of 2003

23. Election of March 2006

24. Conclusions • Measures of final outcomes are hard to come by in modern political science. Bianco et al (2004) have given us the opportunity to begin and do much work based on a theoretically appealing and empirically successful tool to estimate the range of expected outcomes. • This measure allows us to reinvigorate the study of developing communities by providing a better tool to measure what our true expectation from a society at any given time may be. • It also helps us measure the extent to which recipient countries can be relied upon to make a good use of the help they get and to what extent they would be expected to make the expected concessions in return for this help. • A critical challenge in the study of developing countries is good measures of policy outcomes and other variables we need to know a lot about in order to be effective in measuring what we need to measure. At the very least, this paper proposes a theoretically grounded measure to be used in the analysis and formation of expectation in foreign aid policy making. • Immediate future research should substitute this measure in the rather inconclusive studies of foreign aid and see if we get any clearer results from the analysis. • Future research will have to develop more such theoretically inspired, high precision high resolution measures to help us get better empirical estimates of different variables that constitute the institutional matrix that regulates the daily lives of communities and countries we want to better understand. • In the end this is the only way to achieve progress in the fight against poverty and misery around the world. It will take a while and there are no easy answers but short cuts and non facts lead us nowhere.