TED Talks Daily - Why spending smarter beats bigger budgets | Karthik Muralidharan

Episode Date: November 15, 2024

Billions of dollars are poured into global development every year, but results are lacking, says economist Karthik Muralidharan. Diving into an example with public education, he outlines how smarter resource allocation and evidence-based interventions, like learning software that dynamically responds to students and teaches at the level that's right for them, can accelerate global development worldwide — not by spending more, but by spending smarter.

You're listening to TED Talks Daily, where we bring you new ideas to spark your curiosity every day. I'm your host, Elise Hwu. Today's speaker says we can sharply accelerate global development without spending more money. In his talk from 2024, economist Karthik Muralidharan shares a way to get education and innovation to low income populations at scale, simply by spending smarter.

That's coming up after the break. Support for this show comes from Airbnb. If you know me, you know I love staying in Airbnbs when I travel. They make my family feel most at home when we're away from home. As we settled down at our Airbnb during a recent vacation to Palm Springs, I pictured my own home sitting empty. Wouldn't it be smart and better put to use welcoming a family like mine by hosting it on Airbnb? It feels like the practical thing to do, and with the extra income, I could save up for renovations

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And we are the hosts of a new TED podcast called Fixable. We've helped leaders at some of the world's most competitive companies solve all kinds of problems. On our show, we'll pull back the curtain and give you the type of honest, unfiltered advice we usually reserve for top executives. Maybe you have a coworker with boundary issues, or you want to know how to inspire and motivate your team.

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However, the bad news is that though many more children are surviving, large numbers are not thriving. As of 2022, we had nearly 150 million stunted children, or around 22 percent of the world's children. Similarly, 70 percent of children aged 10 in low- and middle-income countries could not read a simple passage. Put together, the world is behind schedule

on over 85 percent of the United Nations' sustainable development goals. Now, at one level, this might seem very bleak, but I'm here today to tell you that I'm optimistic that we can accelerate global development because there is a free lunch. OK? Now, you may be thinking, is this guy really an economist? You know, we're taught that the first basic lesson of economics

is there's no such thing as a free lunch. OK? But I am a professor of economics, and I am going to show you a free lunch today. And the source of a free lunch today. And the source of this free lunch comes from the fact that over the past two decades, the explosion in the availability of data, computing power

and better research methods, including the growing use of randomized control trials in social policy, has helped us identify large sets of interventions that have a 10x return on investment that we're not acting on. At the same time, the research has also identified that governments around the world spend billions of dollars on interventions

that are pretty ineffective. And so the free lunch is pretty simple, that we can deliver a lot more for global development, not necessarily by spending more, but by spending smarter, which basically means spending less on things that are less effective and more on underfunded ideas that could be transformative. So let's explore this with a deep dive into global education.

As with all other areas, the good news is that school enrollment is higher today than ever been before. The bad news is that this increase in enrollment has not translated into learning outcomes. So with 70 percent of 10-year-olds in low- and middle-income countries not able to read a simple passage, we have a global learning crisis. This is both a moral tragedy for the individual children whose lifelong capabilities and opportunities

are constrained by weak education, but it's also a tragedy for their countries because it limits long-term productivity and economic growth. Now, the normal approach to dealing with this problem is to say we need to spend more, either through more foreign aid or through higher government budgets. But what the research also shows is that most of the business-as-usual spending that we do is not very effective.

In particular, we have studies showing that upgrading school infrastructure, hiring more credentialed teachers, increasing teacher pay, or even giving students free textbooks and laptops don't seem to be having much of an impact. So the question is, what is going on? How do you make sure that you're not even giving students free textbooks and laptops don't seem to be having much of an impact.

So the question is, what is going on? How do you make sense of this? Now, one problem is a problem of governance and accountability, which limits the translation of public expenditure into outcomes. But a bigger problem may be weaknesses in pedagogy and teaching within the classroom. Now, this figure comes from one of my studies in India with a sample of over 6,000 kids,

and I consider it to be perhaps the most important figure for understanding education in low- and middle-income countries. In practice, kids fall behind quickly for a variety of reasons and stay behind, and the true rate of progress is around half of what is in the curriculum. And so what that means is your average eighth-grade kid in public school in India has about a fourth-grade level of understanding of mathematics.

Now, further, with dynamic computer adaptive testing, we can pinpoint the exact learning level of every student in the sample. If you focus on the eighth-grade part of that picture, is that in one eighth-grade classroom, you have students at a second-grade level, at a third, at a fourth, at a fifth, all the way up to eighth-grade level of understanding. And so what that means is that this teacher has a nearly humanly impossible task

of catering to that kind of variation in the classroom. And so what does a teacher do? Even a sincere, motivated teacher will focus on completing the curriculum and the classroom. And so what does a teacher do? Even a sincere, motivated teacher will focus on completing the curriculum and the textbook. But the problem is that does not translate into much learning because it is so far ahead of the level of where the kids are. Now, if I start speaking in another language, you won't understand anything. No matter how qualified I am, how motivated motivated you are, the more sincere you are, you won't understand anything. Why am I speaking in another language?

So that you can feel for a few moments what every child feels in the millions of classrooms of the world. If you are understanding now, then please raise your hand. Now what have I just done to you? Now, what have I just done to you? I have given you 25 seconds in the shoes of a typical kid in a typical classroom in millions of schools around the world. And so what that helps you understand is I could be highly motivated, highly qualified, highly sincere, but that instruction is not going to result in learning

because it's way above your level of understanding, and it'll only reach a small fraction of the kids in the class. And now that also helps make sense of why default things like upgrading school infrastructure, increasing teacher pay, giving free textbooks or even free laptops often don't seem to have much of an impact. And that's because it's not just about the kids Default things like upgrading school infrastructure, increasing teacher pay, giving free textbooks or even free laptops often don't seem to have much of an impact,

and that's because they're not addressing the binding constraint to learning, which is the mismatch between instruction and comprehension. Now, while free tablets or laptops don't seem to have much impact by themselves, we found large positive effects of customized learning software called MindSpark in India that was able to tailor instruction to every kid in the class. And so now, in that same eighth-grade class, you've got kids at completely different levels

but who are being taught at a level that's right for them, and the results were stunning. We saw among the largest gains in any education study done in developing countries, and in four months of the program, they gained about a full year of learning. OK? So that's the case to be optimistic. The

But this is TED, and so before we think that technology will replace the teacher, here's another tale of caution. During COVID, we ran another randomized control trial that gave a large number of kids free tablets with MindSpark that we know works, and we gave it to them to use at home when schools were shut down. And unfortunately, the impact was exactly zero. OK? And we know why, because you can track the usage,

and you see that without the adults supporting the child, there is no engagement and no learning. OK? So put together, what this tells us is that technology has the potential to be transformative, but it's not a silver bullet by itself. But if you use the data and the evidence to iterate the solution, you can use technology to transform education at scale.

In other cases, completely low-tech interventions can be highly effective, such as remedial after-school tutoring programs, often run by high school graduates with no formal teacher training. In another recent study, we studied the impact of one of the world's largest COVID remediation education programs run by the Indian state of Tamil Nadu.

So in this program, the government hired about 200,000 young women with a high school degree to provide 60 to 90 minutes of remedial instruction after school. And it reached over three million students. And the program was highly effective, improved equity, and was about 10 times more cost-effective than business-as-usual education spending. But that program would have been discontinued

if we didn't present that study to the government leadership, because they would have thought, it's one year after COVID, we don't need this. Now, this pattern of 10x ROI investments is not restricted to education. In sector after sector, ranging from education, early childhood development, welfare programs and even justice, the research over the past decade

has identified a series of 10x ROI opportunities. Now, if you're a private-sector investor and I'm offering you a 10x ROI, you'd be clamoring to put as much money to work as possible in that opportunity. But governments often don't act on these ideas due to a combination of inertia, risk aversion and lack of political and bureaucratic incentives to act. As an economist, I don't worry about how Toyota produces its cars,

because you face market prices for inputs and market prices for outputs. And if you're not efficient, there's competitive pressure to get you there. about how Toyota produces its cars, because you face market prices for inputs and market prices for outputs. And if you're not efficient, there's competitive pressure to get you there. In contrast, governments can spend taxpayer money badly and leave hundred-dollar bills lying on the sidewalk for a really long time because they don't face a market test for their actions and don't get the feedback on the effectiveness or lack thereof

of their spending. And that's why research and evidence is especially important for guiding effective public spending, way more so than in the private sector, where you have the incentives that push you there. Now, it's going to be easy to think that governments are these big lumbering beasts, which they are. But there is absolutely no getting away

from the centrality of improving government effectiveness for global development. And that's because the problems of development are concentrated among the poor, and markets will typically not cater as much to the poor. Markets are wonderful things and provide the incentives for the innovation and the dynamism needed to power modern economies.

But markets don't care for you if you don't have purchasing power. And so the basic tension here is that the democratic ideal is one person, one vote, whereas the market values you on a one-dollar, one-vote principle. And that's why there's no getting away from building effective public systems to make sure that we can get the benefits of innovation to the poor at scale, who otherwise would not be able to afford them.

This is how... (*Applause*) This is how we managed to substantially reduce infant mortality in the 20th century. It was not enough to have public systems that could take that new knowledge and deliver that at scale and reach the poor who otherwise would not be able to access these benefits. So, to summarize, in a world of slowing economic growth,

climate change, wars and scarring from pandemics, the world is now at a time where we can't afford to be so dependent on the world. And we can't afford to be so dependent on the world. So to summarize, in a world of slowing economic growth, climate change, wars and scarring from pandemics, there's a very real risk that progress in global development slows down or even reverses. But we have reason to be optimistic

that there is a huge free lunch on the table that we can act on by using data and evidence to improve the effectiveness of public spending. But just because it's free does not mean it is easy. It is free because you can achieve a lot more by spending smarter rather than spending more. But it is not easy because that requires us to work with governments and patiently build the public systems

to improve the effectiveness of public expenditure that can reach the poor at scale. This is increasingly what I've been working on, and I'm incredibly encouraged by my engagements and interactions with many outstanding government officials in India and around the world who want to do exactly this. And that's why I'm optimistic that we can sharply accelerate global development.

Thank you. Support for this show comes from Airbnb. If you know me, you know I love staying in Airbnbs when I travel. They make my family feel most at home when we're away from home. As we settle down at our Airbnb during a recent vacation to Palm Springs, I pictured my own home sitting empty. Wouldn't it be smart and better put to use welcoming a family like mine by hosting it on Airbnb? It feels like the practical thing to do, and with the extra income I could save up for renovations to make the space even more inviting for ourselves and for future guests. Your home might be worth more than you think.

Find out how much at airbnb.ca slash host. That was economist Karthik Muralidaran speaking at TED 2024. If you're curious about Ted's curation, find out more at ted.com slash curation guidelines. And that's it for today. Ted Talks Daily is part of the TED Audio Collective. This episode was produced and edited by our team, Martha Estefanos, Oliver Friedman, Brian

Green, Autumn Thompson, and Alejandra Salazar. It was mixed by Christopher Faisy-Bogan. Additional support from Emma Taubner and Daniela Ballarezo. I'm Elise Hue. I'll be back tomorrow with a fresh idea for your feet. Thanks for listening.