What Aid can learn from Hollywood
Earlier this week my wife and I were arguing about which movie we should see. I was pushing for Iron Man 2. My position was simple:
1) Robert Downey Jr. rocks, and
2) It had a huge budget.
The first point is utterly irrefutable, but even before the last point was out of my mouth, I knew had lost the argument. But oddly enough, in Hollywood, the second point always wins. The entire movie industry revolves around point #2. It is the fundamental basis of the economic theory that defines Hollywood:
-To make money, make a good movie.
-To make a good movie, spend lots on the budget.
-Therefore, if you want to make more money, spend more on the budget.
So, if you are a movie studio and you want to make a big pile of profit, the path is clear. You secure a big budget, which allows you to hire the best actor (like Mr. Downey Jr.), a brilliant director (like Jon Favreau), a sexy co-star (hello Ms. Johansson) terrific costumes, and then lay on some stunning special effects. Throw some gratuitous skin into the mix and you have a critically acclaimed blockbuster. Simple.
If you graphed “The Theory of Hollywood”, with budget plotted on the x axis, box office on the y axis, and the color of the points representing critical acclaim (let’s say the Rotten Tomatoes score), you would get this:
This shows clearly how a bigger budget gets a you a better movie, which brings in a bigger box office. But let’s look at the reality. I had Kavya-the-intern (she has “mad excel skillz” as the kids say) take a random sample of 50 of the 1000 most expensive movies ever made. She then plotted their budget (inflation adjusted), against their box office return and their Rotten Tomatoes score. This is what she got:
The “Hollywood: The Reality” bears no resemblance to “Hollywood: The Theory”. A bigger budget doesn’t inevitably mean a better or more popular movie because of bad scripts, sunny opening weekends, disastrous location shoots, meddlesome studio heads, temperamental directors, Adam Sandler, and bad luck.
So, since this is supposed to be a blog about development and peacekeeping what happens when we apply the same analysis to aid spending? The simplified theory behind aid, is:
-To improve lives, reduce poverty.
-To reduce poverty, send aid.
-Therefore, if you want to improve lives even more, send more aid.
If you were to get Kavya-the-intern to graph “The Theory of Aid”, with Cumulative ODA per capita plotted on the y axis, Cumulative Increase in GDP per capita on the x axis, and Cumulative Increase in Life Expectancy as the point color, you would get this:
Over time, more aid leads to higher GDP and longer lives. This is the argument used by those who shout out most vociferously for donor governments to spend 0.7% of GDP on development assistance. Don’t believe me? Listen to Jeff Sachs.
But if you were to make the interns work late and ask them to pull ten years of data out of the World Bank website, then reproduce that graph using real data on 20 nations randomly chosen from among the 50 largest aid recipients, you would get this:
The “Aid: The Reality” bears no resemblance to “Aid: The Theory”. More aid doesn’t inevitably mean less poverty or longer lives because of wars, demographic changes, shifting donor priorities, ineffective projects, corruption, natural disaster, poor planning, and bad luck.
The movie going public understands this. This weekend at Cannes, you won’t hear people demanding that Hollywood spend more money on bigger movie budgets. You’ll hear them calling for better movies. Smarter plots. More compelling performances. Improved directing.
Those who care about aid and aid effectiveness could take a cue from their brethren on the French Riviera. We shouldn’t be demanding that governments spend more money on bigger aid budgets. We should be calling for better aid. Smarter metrics. More compelling projects. Improved planning.
And this, dear reader, is what the aid industry can learn from Hollywood.
POST SCRIPT: I recognize that I probably didn’t need to use an entire day of Kavya-the-intern’s time in order to make this point, but it’s important to keep the interns busy. Idle hands are the devil’s plaything, after all.