What if NCAA Basketball Tournament Teams were coached by Development Economists?

Tomorrow night is the next round of March Madness, the annual NCAA tournament that started off with 64 college basketball teams, now reduced to the "Sweet Sixteen" . It is not widely known that some lower seeded teams in the tournament, who had to play much better teams, desperately sought advice from leading Development Economists.

A Columbia Professor said we already know the successful ingredients for a championship, just get lots of funding for the inputs to a victory. Each of his players was given a beautfiul new basketball but had no incentive to pass it or shoot it.

An Oxford Professor distributed “peacekeeping equipment” to his team, saying it was critical for his Good Team backed by the UN Security Council and the G-7 to win. The other team fled in panic, but was declared the winner by default by tournament officials.

An NYU Professor said a lower seed had never won the tournament and he saw no reason why it would be possible now. He and his team left for a vacation in Cancún.

Other Professors such as Duflo, Banerjee, and Karlan set up randomized trials for which plays work. Treatments included 3-point shots, driving layups, pick and roll, and passing to the open player, compared to a control group holding the ball still. The results were of considerable interest, but players got very confused trying to remember which study to cite and apply in each pressure-packed moment of the game. They did not make the Sweet Sixteen.

Hernando de Soto said the only thing that mattered was property rights. He called for secure titles to his team's land. This team defended its own half-court successfully, but they were forced to recognize the other team's rights also. There was not a lot of scoring.

Mohammed Yunus said it's all about microcredit. He suggested empowering his team's players with micro loans. This was a great success, as players all left the court to start small businesses selling beer and pretzels in the stands.

Finally,the team asking advice from George Mason Professor of Economics Peter Boettke made a Cinderella run into the Sweet Sixteen. What was his brilliant economics advice? Well, he chose not to give any, but he had actually played and coached basketball in high school and college.

Were the above characterizations inaccurate? Everybody can participate in the usual heavy betting on this tournament -- fill out your own brackets below to determine who will advance to the semifinals and then the finals, and who the final winner will be.

The Counter-Revolution of Development Economics: Hayek vs. Duflo

This post is by Adam Martin, a post-doctoral fellow at DRI. F.A. Hayek, well known as a critic of central planning, also criticized what he called “scientism,” a blind commitment to the methods of the physical sciences beyond their realm of applicability. In The Counter-Revolution of Science, Hayek opposed to “scientism” the genuine spirit of scientific inquiry.

Esther Duflo’s emphasis on small-scale experimentation has affinity with Hayek’s critique of grand schemes of central planning. As Duflo said in an interview with Philanthropy Action: “I think another untested and potentially wrong idea is that you have to do everything at the same time or else. This is a pretty convenient untested belief because if you live in that world, it is almost impossible to evaluate what you do.”

But Hayek’s concerns about “scientism” might yet apply to Duflo. She continues in the same interview:

Whereas if you say, I am going to press on this button and see whether it provides this result, you might find there are many things that do work surprisingly well with surprising consistency. So it is not that the world is so incredibly complex that every place needs a unique combination of five factors just to produce anything. I don’t know that we would have been able to say the same thing five years ago, but now we are starting to be in the position to say that a number of things, if well designed, just work pretty well in a lot of contexts.

Hayek, in contrast, argues that sheer, context-independent experimentation is not a viable path to development:

An experiment can tell us only whether any innovation does or does not fit into a given framework. But to hope that we can build a coherent order by random experimentation with particular solutions of individual problems and without following guiding principles is an illusion. Experience tells us much about the effectiveness of different social and economic systems as a whole. But an order of the complexity of modern society can be designed neither as a whole, nor by shaping each part separately without regard to the rest, but only by consistently adhering to certain principles throughout a process of evolution. (Law, Legislation, and Liberty Vol. I, p. 60)

Experimentation, for Hayek as well as Duflo, is the chief instrument of social change. Making experimentation work for development requires institutional feedback mechanisms which can fit together newly-discovered ways of doing things in mutually reinforcing ways. What Hayek defends as "liberal" principles are the ways of coordinating individual experiments in a way that enhances human welfare. Ad hoc, "pragmatic" approaches might solve some local problem, but without coordination with other projects the progress will not be reinforcing and self-sustaining.

Promoting progress is like playing leap-frog in the dark. Big leaps into the unknown can easily end in disaster. Experiments are small leaps. Only when we combine those small leaps together according to some rules do we leap-frog in a definite direction and reinforce each other's progress, rather than ambling about and running into each other. Without systematic feedback mechanisms that are effective at coordinating different projects, randomized trials are like those small leaps. They might be able to solve particular problems--especially in mitigating the ill effects of poverty--but they would not lead to the self-reinforcing process of wealth generation necessary to eliminate poverty.