Lukas Neville

Assistant Professor of Organizational Behaviour, Asper School of Business, University of Manitoba

How should you allocate aid payments? — August 31

How should you allocate aid payments?

What makes communities in the developing world satisfied with the allocation of aid funds?  If you said fair distribution, you’d be right.  But fairness isn’t just about equitable distribution.   It’s about a transparent process that allows for meaningful input and voice:

“MIT researchers in a recent study looked at two alternative methods for establishing who needs assistance. For 640 villages in Indonesia, they told the communities to figure out for themselves who their neediest families were, and those people would be given aid. They compared this to a survey of household assets including homes, assets, and the level of education of the head of household. The results suggest that community selection, rather than screening based on objective measures of household wealth or consumption, was slightly less accurate relative to matching aid to incomes, but provided much greater satisfaction in the community compared to the empirical measurements…

There was only a minor difference in accuracy between the two methods, but the researchers found the community approach led to 60% fewer complaints, and far fewer difficulties distributing funds, compared to objective methods in the villages. And awarding aid according to measured assets proved less effective than the judgment of the community when selections made adjustments for life circumstances such as widowhood, disability, and serious illness.”