What the Randomistas Taught TOMS

You probably know the story of Tom’s shoes (here told by Andrew Leigh):

After a visit to Argentina businessman Blake Mycoskie decided he wanted to do something about the lack of decent footwear in developing nations. A talented entrepreneur, Mycoskie had founded and sold four companies by his thirtieth birthday. Now he was affected by the poverty he saw in villages outside Buenos Aires”… “I saw the real effects of being shoeless: the blisters, the sores, the infections.”

To provide shoes to those children, Mycoskie founded ‘Shoes for Better Tomorrows’, which was soon shortened to TOMS. The company made its customers a one-for-one promise: buy a pair of shoes and TOMS will donate a pair to a need child. Since 2006, TOMS has given away 60 million pairs of shoes.

Perhaps you see where this is going (but don’t be too sure!):

Six years in, Mycoskie and his team wanted to know what impact TOMS was having, so they made the brave decision to let economists randomize shoe distribution across eighteen communities in El Salvador…

The results from the World Bank study were not great:

Results indicate high levels of usage and approval of the shoes by children in the treatment group, and time diaries show modest evidence that the donated shoes allocated children’s time toward outdoor activities. Difference-in-difference and ANCOVA estimates find generally insignificant impacts on overall health, foot health, and self-esteem but small positive impacts on school attendance for boys. Children receiving the shoes were significantly more likely to state that outsiders should provide for the needs of their family. Thus, in a context where most children already own at least one pair of shoes, the overall impact of the shoe donation program appears to be negligible, illustrating the importance of more careful targeting of in-kind donation programs.

In other words, the shoes didn’t add much to health but did increase feelings of dependency. Another bubble punctured by economists. End of story, right? No. To their great credit TOMS took the results to heart. TOMS reevaluated how they give, they made adjustments, they changed. The lead researcher Bruce Wydick wrote:

By our agreement, [TOMS] could have chosen to remain anonymous on the study; they didn’t…For every TOMS, there are many more, both secular and faith-based, who are reticent to have the impacts of the program scrutinized carefully by outside researchers…many organizations today continue to avoid rigorous evaluation, relying on marketing cliches and feel-good giving to bring in donor cash. TOMS is different…

Will TOMS’ new methods work better? Only randomization will tell. Fortunately, TOMS is committed to doing just that.

This is from Andrew Leigh’s excellent new book Randomistas. Leigh tells the story of how randomized controlled trials are being used to improve teaching, crime fighting, charitable giving and more. It’s a good read and even in areas that I know well, such as crime research, I learned new information. Leigh is also careful to point to the studies that didn’t replicate as well as those that did.

By the way, Leigh is a person to keep to an eye on. In 2011, he was awarded the Economic Society of Australia’s Young Economist Award, given to “honour that Australian economist under the age of forty who is deemed to have made a significant contribution to economic thought and knowledge.” As you can see from Google Scholar this was a well-deserved award. Yet even as he received this award, Leigh had already left his position at Australian National University to embark on a second career as a Member of Parliament. Since starting his second career, however, he has published three well received books about politics, economics, and inequality and now the world of randomized controlled trials! Look for Andrew as a future Australian Treasurer and who knows what more.

Comments

'but did increase feelings of dependency'

Well at least the barefoot children were spared such a horrible fate.

This, but unironically. Dependent, impoverished cultures are extremely unhappy and difficult to change or escape.

Imagine that they got the governments of these shit hole countries to be less socialist and more capitalist. Imagine that the citizens had even a little more educational opportunities. Imagine that regulations which hindered entrepreneurship were reduced. Maybe then these people wouldn't be as poor and could buy shoes for themselves and rtheir children.

is that you, John Lennon?

As noted below, the U.S. spent a lot of money and effort in El Salvador ensuring that it would not be socialist, in any way, shape, or form.

You've never heard the "teach a man to fish" aphorism?
Feelings of dependency can be a real problem in escaping poverty.

We are talking about children.

In El Salvador, a place where the U.S. spent a lot of time and effort in the past ensuring that the peasants were more worried about escaping death squads than they were of poverty.

You forgot the part where is said most of these kids already had shoes. I've read the study. Average shoe ownership BEFORE the donation was 1.8. The shoes TOMS donates are better quality but shoes are cheap and available in even the poorest areas.

There are kids without shoes but making sure those kids are the ones getting the shoes is a completely different problem.

What's sauce for the goose is sauce for the gander. If the study is meaningless because the kids already have shoes... then so is TOMS's charity in general, since they're the ones giving all these shoes to kids who apparently already have shoes and the ones who started the charity because they thought the kids didn't have shoes.

Exactly. The story I know from Blake is that he heard from two women in a wine bar in Argentina that giving shoes was a great idea. What kid doesn't like free stuff?!

We assume so little of the poor that we come to ridiculous conclusions because we think "they are poor and desperate so of course they don't have shoes". Sadly far too much work in development falls victim to this.

Amazon's summary on Leigh's book about inequality in Australia: "From egalitarian beginnings, Australian inequality rose through the nineteenth century. Then we became more equal again, with inequality falling markedly from the 1920s to the 1970s. Now, inequality is returning to the heights of the 1920s. Leigh shows that while inequality can fuel growth, it also poses dangers to society. Too much inequality risks cleaving us into two Australias, occupying fundamentally separate worlds, with little contact between the haves and the have-nots. And the further apart the rungs on the ladder of opportunity, the harder it is for a kid born into poverty to enter the middle class."

That pattern for inequality in Australia, rising then falling after the 1920s until the 1970s, is the same pattern as in the U.S. Of course, inequality fell after the 1920s as the result of the financial crisis and great depression (asset prices collapsed, and, the wealthy being the owners of most of the assets, so did inequality). Europe's pattern for inequality was different: rising and then falling, falling not so much due to the financial crisis and great depression, but because of the physical destruction of assets during two major wars (the wealthy being the owners of most of the assets, with their destruction inequality plummeted). Piketty is French, so his perspective on inequality is very much a European perspective. It will be interesting to read Leigh's perspective, his being very similar to ours in the U.S.

So Andrew Leigh has rehashed a story about a failed charity venture.

A minor correction. It is likely that Andrew Leigh will be gunning for the position of Treasurer within the Australian political system, effectively the second highest position within the government. The Secretary to the Treasury is in fact the head of the Department of Treasury. This is a non-political bureaucrat not an elected member of the Australian parliament or part of the government.

Andrew Leigh is also a curious beast in that so many of his political statements as a member of parliament contradict the fi Di gs of his research as an economist. He belongs to a party that is strongly redistributionist and he has regularly called for policies that could be described as “free shoes for all”.

He feels no need to take his own academic findings seriously and is happy to advocate for higher welfare and taxes.

No,

We have the tightest means test in the world downunder.
He is only advocating that taxes as a % of GDP go to levels they were before the GST.
Fell free to give another fact free and ignorant comment however.

So he wants to increase taxes from where they are now.?
Where do we disagree.?

Given they are lower than before the GFC it isn't hard to figure out.

He most certainly is not a free shoes for all person indeed neither major party would support such a position.

Andrew is absolutely correct here. And I wouldn’t give Andrew Leigh much chance of getting the job of treasurer either, he may get the finance minister post if the Labor party wins the next election.

In fact Leigh’s contradictory positions as an academic vs his views as a politician are a major impediment to his career as a politician. He won’t ask questions in parliament because everyone knows if he does, his back catalogue of academic work can be used to contradict his political views.

Well, we have shoes in Brazil, too, but why do I know?

Indeed, why does an accountant in Ohio know?

Because I am a Brziluan in Brazil, not an American in ETHIOPIA. But, anyway, I meant "what do I know?". I don't see the greatness of donkey libraries, having sidewalks and drinking boiling water. Maybe I am the stupid one.

Maybe indeed.

I mean, I am an old hand innblog reading, but maybe I just do not understand what people like to read online. Imwould think donkeys and sidewalks are stupid things, but what do I know, right?

So TOMS is a not for profit company, right? Wrong. It is a for profit company. That model, a for profit company masquerading as a not for profit, is becoming more common, a trend exemplified in Emerson Collective, founded by Steve Jobs’s widow Laurene Powell Jobs; eBay founder Pierre Omidyar’s Omidyar Network; and Mark Zuckerberg and his wife Priscilla Chan’s Chan Zuckerberg Initiative (CZI). Why? “By operating outside the strictures of tax-exempt philanthropy,” author Dana Brakman Reiser writes, “for-profit LLC offers tremendous flexibility, provides its founders a protective shield of privacy, and enables them to retain complete control”. As Brakman Reiser also notes, federal law gives philanthropic LLCs far more latitude than nonprofit private foundations over their (for-profit) investments, asset expenditure, and lobbying; and while a nonprofit must disclose such information as compensation and internal transactions, an LLC’s records are private. But as a number of critics of the model have observed, the LLC approach to philanthropy is far from a social good; it’s an individual investment vehicle and it further privatizes and obscures the distribution of “charitable” funds. To our libertarian friends here at this blog, blurring the line between for profit enterprises and charity may be considered a net plus, but make no mistake: it obscures what is being done in the name of charity.

>masquerading as a not for profit

Yes, that is indeed obscene when that happens.

Hell, the Clinton Foundation calls itself a "not for profit."

He's talking about the tax registration status of an organization, not whether you approve of salaries paid and reported as a part of requirements for organizations which have not-for-profit tax registration status.

Not for profit organizations are permitted to use suppliers who earn profits. If there is reason to believe that there are improprieties in the process, one should not feel shy to share more specifics.

I heard on AM radio a Libertarian proposal concerning incentivizing and facilitating aggregate private charitable donations. Make 100% of charitable donations dollar-for-dollar credits against the individual's income tax liability.

Of course, that will never happen.

Good. It's a stupid idea.

The poster child for a business masquerading as a not-for-profit is IKEA, whose Swedish-Dutch-Luxembourg corporate structure serves as a lesson for capitalists from sanctimonious, hypocritical socialists.

Wow, that's some borderline-scientific-research right there.

Where did this guy come from? Was he kicked out of the global warming community?

He got kicked out the Jordan Peterson fanclub for spewing transgender pronouns among other thoughtcrimes.

He got kicked out of the America First community for supporting Chinese jobs at ZTE.

Leigh had already left his position at Australian National University to embark on a second career as a Member of Parliament.

That's the way it works in the phony democracies, political positions are a career. And his second career as a legislator is an apprenticeship for influence peddling in the lobbying business, like this guy.

If shoes don't do much for health, activity, etc, why am I wearing them? Are they merely a luxury good that clever marketing has turned into a neccesity?

Heh heh heh

Poor kids already have shoes. That's why TOMS donations don't do much for health, school, etc. You can easily find shoes in Africa for $1 or $2. As poor and helpless as you may think people in the developing countries are (as Blake obviously did too) they can afford shoes.

There was a recent MR post about donkey libraries, and it seemed to be a good source to at least look at what kids are wearing on their feet.

Just a glimpse, of course, recognizing that it provides a very small glimpse. About 20% of the kids seem to be barefoot - not saying they don't have sandals to wear (not a single kid seemed to have shoes, but that is a different point - sandals are just fine) and were not wearing them right then, but seeing such video provides another way to look at things.

Especially as the kids in the video were probably not poor kids, by Ethiopian standards - in part, as they had enough free time to be in a video to begin with.

Children is what makes this discussion a bit harder - adults not having shoes is hard to imagine, obviously.

Why wear shoes? Back in February 2000 I asked myself that very question. I had stumbled across a weird website http://www.barefooters.org/ and decided to give it a try.

It appealed to the self-experimenting mad-scientist in me. Perhaps I would discover the drawbacks of being barefoot and go back to wearing shoes. If so, I would have the pleasure of being one of the few to know why we still wear shoes after wheeled transport has become ubiquitous.

18 years on the experiment continues. Apart from a few snow days each winter, I live my life barefoot. I still haven't discovered why we need shoes.

Broken glass comes to mind, as does the temperature of asphalt in the summer. And of course, Western nations are no longer places where animal waste is found along all byways in an urban setting.

Nothing wrong with being barefoot, but shoes do have a function.

The situation with broken glass is really weird. When I started going barefoot I was 39. The skin on the soles of my feet was thin, the muscles atrophied, the circulation poor. I got a little bit of glass in my foot and it got infected and the small pustule was surprisingly painful.

Perversely I kept going. The skin on the soles of my feet has become tough and leathery, the circulation in my feet has improved. My toes have pinked up to match my fingers. There are muscles that work the toes.

But I live in a big city in a country with a drink problem. There is always broken glass on the street and it is not a problem. It is as though we live in a simulation and the module that simulates broken glass cutting feet failed to load at the most recent reboot :-(

The temperature of asphalt in the summer? I live in Scotland. I've no experience with summer.

Ironically, there really is no reason for shoes in developed countries, other than hot asphalt.

And snow

Private Charitable Foundations Give Lavish Rewards to Insiders

https://www.wsj.com/articles/private-charitable-foundations-give-lavish-rewards-to-insiders-1527613467?mod=searchresults&page=1&pos=16

i own a pair of Toms and I was first sad to read this, then happy.

You should be happy. It is not your fault TOMS' charity don't help much. But by buys TOMS you are signaling that you can about the impact of your purchases and sends a signal to the market that a better solution needs to come. This is how the market works. MySpace was crap but it sent the signal there was demand for something better. That's how progress happens and TOMS should be praising for what they have done.

I wonder how different the results would be if you charged a nominal price for the shoes in third-world countries. (Though if you weren't careful with the implementation, I imagine the net effect would be resellers buying up all the $.10 pairs of shoes from Nigeria and reselling them in Rome at a big markup.)

Randomness is good, in more than controlled trials.

After all, it is a safe assumption that nothing in this world is fully optimized.

Andrew Leigh is a member of the lower house from the Australian Capital Territory (Canberra). There is no chance he will ever reach the heights of treasurer because he will lack sufficient factional support. This is similar to the prospect of a DC representative achieving real power in Congress.

If he was from a state such as New South Wales it may be a different story.

When they said they couldn't find statistically significant effects, by how much did they upper bound them? I would imagine these effects are *tiny* even if easily worthwhile. Summarizing them as "negligible" is not very useful unless you have a principled scale for declaring something small enough to be ignorable.

Frankly, I'm stunned that they could see a positive affect on school attendance!

+1

As a suggestion, rather than simply give away shoes, TOMS could make and sell more affordable shoes, possibly using cheap labor in the very same communities where they are sold.
That would reduce feelings of dependency and replace them with a greater sense of self-reliance.
if they want to maintain the charitable aspect, they could say that for every pair of shoes a first world person buys (maybe not the cheap model), they would subsidize the cost of the shoes in the poor communities, not give them away.

TOMS tried to set up a factory in Kenya to do this but it failed. Currently I think 33% of the donated shoes are made in the countries where they are given. This is pretty poor but also goes to show the challenges in getting manufacturing going in many places. Personally, I think the greatest contribution TOMS could make today is if they had more determination about getting manufacturing going in Africa but they don't have the connections nor experience in international development to do this.

You don't get a lot of credit for your benevolence when you open a shoe factory ("sweatshop!") in a third-world country. That may do a lot more good than giving away some shoes, but the obvious moral narrative is that you're an evil exploiting capitalist, rather than that you're making the world a better place.

This.

Exactly. The thought that what you do with profit is more important than making the profit to begin with is ideological cancer.

The thought that giving things away is better than trading something for them is the even deeper cancer.
I would bet that a lot of other cultures would get this. Like if you give a gift in some cultures, it must be reciprocated, or else it is kind of a status statement. Giving things away asserts a higher status and is thus rude. You want to give the other person an opportunity to respond with at least some token contribution, otherwise you are making them feel like they are useless.

This. Sweatshops are a BIG step up on traditional agricultural employment. People forget how terrible subsistence agriculture on smallholdings is.

Yup. Marxist stupidity strikes again. Any time you employ a poor person your exploiting the surplus labor value of the proletariat. Ergo, employing poor people is evil. Better to let them subsist on handouts than give them a job.

In fact, Andrew published ANOTHER book since becoming an MP. It's called "Choosing Openness: Why Global Engagement is Best for Australia", published by Penguin and the Lowy Institute: https://www.penguin.com.au/books/choosing-openness-a-lowy-institute-paper-penguin-special-9780143788317

My mother, who lives in NYC, regularly buys TOMS when she travels to obscure (poor) countries. As an economist and free trader, it makes me laugh that my mom wears the "give away" pairs of TOMS walking the wealthy streets of NYC because whomever received the free pairs has significant gains to trade by selling them to American tourists!

It's fine as long as they don't use taxpayers money or force people to contribute.

Comments for this post are closed