Evidence-based policy report

This summary and the write-up of IGI reflect our up-to-date views as of 2022. Our original report on evidence-based policy was written in 2018. While our overall views remain unchanged, some details in the original report may be out of date.

By supporting increased use of evidence in the governments of low- and middle-income countries, donors can dramatically increase their impact on the lives of the millions of people living in poverty. This report explores how focusing on evidence-based policy provides an opportunity for leverage, and presents the most promising organization we identified in this area: J-PAL's Innovation in Government Initiative.

A high-risk/high-return opportunity for leverage

Nearly one in ten people live in extreme poverty as of 2017.¹ As the figure from Our World In Data below illustrates, the vast majority of people living on less than $1.90 a day live in low- and middle-income countries.

This unequal distribution is even more apparent when considering the share of population living in extreme poverty:

And by other indices, like the Multidimensional Poverty Index (MPI):

Source: Max Roser and Esteban Ortiz-Ospina (2013). "Global Extreme Poverty". Published online at OurWorldInData.org. Retrieved from: https://ourworldindata.org/extreme-poverty [Online resource].

By far the most resources spent on tackling poverty come from local governments. The Brookings Institution found that, in 2011, $2.3 trillion of the $2.8 trillion spent on financing development came from domestic government revenues in the countries affected.² Moreover, governments are often best positioned to understand local contexts and implement tailored solutions.

As in philanthropy, there are often large differences in the effectiveness and cost-effectiveness of social programs—the amount of good done per dollar spent can vary significantly across programs. Employing rigorous evidence like randomized controlled trials (RCTs) allows us to identify the most cost-effective social programs. This is useful information for donors choosing which charity to support, but also for governments choosing which programs to implement, and how.

This suggests that employing philanthropic funding to improve the effectiveness of policymaking in low- and middle-income countries is likely to constitute an exceptional opportunity for leverage: by supporting the production and use of evidence in low- and middle-income countries, donors can enable policy makers to implement more effective policies, thereby reaching many more people than direct interventions.

For many organizations working on policy, most of their positive results come from only a few exceptionally successful programs. This is because success is extraordinarily hard to achieve in this area, since policymaking is a complex and often unpredictable process. However, when successful, changes can be highly impactful because of the large number of people they reach.

Because of the way impact is distributed across different projects, supporting policy interventions is a "hits-based" high-risk/high-return investment: most investments are likely to fail, but the successful ones are likely to have an enormous impact.

Selecting charities

We started with an initial list of over 90 charities, and based on expert advice and desk research, we progressively narrowed down the focus to select the donation opportunity we deemed most promising in this area.

We assess charities based on their cost-effectiveness, organizational strength, transparency, and room for more funding. To find out more about our research methodology, read Our Approach to Charity. Three factors are central when evaluating future cost-effectiveness of organizations working in policy: track record; project selection; and theory of change.

When assessing track record, we focus on selected case studies, and estimate the benefits derived from those projects. We use this as a proxy for the organization’s overall impact because the positive impact created by policy organizations often comes from a few exceptionally successful programs.

When assessing project selection, we consider two factors. First, we focus on the quality of evidence used, since higher-quality evidence indicates higher likelihood that the suggested policies will be effective. Second, we focus on the role cost-effectiveness plays in organizational decision-making procedures; the more the charity’s decision-making criteria explicitly target effectiveness and cost-effectiveness, the more confident we are in the organization’s future cost-effectiveness.

When assessing an organization’s theory of change, we consider whether the organization employs strategies supported by the literature, such as involving policymakers in the planning and development of research, building long-term relationships, and employing tailored messaging.

Notes

1. https://data.worldbank.org/topic/poverty ↩

2. See section 1.2 in our Evidence-Based Policy Report. ↩