Sunday, March 31, 2019

Another potential cause of confusion is the misidentification of cause and consequence.

From Doing Bad by Doing Good: Why Humanitarian Action Fails by Christopher J. Coyne. Page 83.
Another potential cause of confusion is the misidentification of cause and consequence. All too often, certain conditions are viewed as causes of economic progress when they just as easily could be the consequence of economic progress. Here is how this confusion emerges. In the absence of economic calculation to guide them, planners look to the existing conditions in developed countries and assume those conditions must be the cause of the economic progress they observe. They therefore attempt to replicate these conditions in poorer countries under the assumption that like conditions will cause similar progress there as well. The planner may be correct in drawing this causal inference, but even if true, there is a difference between identifying causes and successfully replicating them. However, it is also possible that the planner is confusing cause and consequence.

Consider the case of education. While education may contribute to economic progress, it is also possible that the demand for education is a consequence of previous economic progress. Under such a scenario, economic progress raises the rate of return for obtaining an education, which in turn increases the demand for education. This same logic can be applied to a host of other factors typically viewed as causal drivers of growth.

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