Dean Karlan gives an online tutorial on the importance of identifying the real counterfactual, in response to the recent controversy about World Vision’s NFL t-shirt donations to Africa
The choice is not between (a) doing nothing — which, critics infer, would leave Africans to produce and sell 100,000 new t-shirts — and (b) shipping 100,000 t-shirts to Africa. Rather, the choice is between (a) selling the t-shirts in the U.S. as rags (or novelty souvenirs for delusional Steelers fans) and then sending to Africa the proceeds plus the money that would have been spent on shipping, or (b) shipping 100,000 t-shirts to Africa.
In other words, the NFL surely isn’t going to pay local producers to make 100,000 t-shirts after the Super Bowl. That option is not on the table. So in the end, the t-shirt migration has one pro and two cons, and we have no real data to tell us what to do. The pro: some people in Africa get some t-shirts, and hopefully those people extract some value from the t-shirts (either by wearing them or by selling them). The first con: market prices for t-shirtsmay go lower in Africa, and this adversely affects some. The second con: there may simply be a better way, such as selling the t-shirts in the US and sending the profits, as in (a) above.
Tom responds here. Also, other posts on this issue here – mostly critical of the view that we can’t be sure if this instance of GIK is good or bad.
My take – its hard to tell anyway, and more so if we get all ideological about it. So to begin with, one must ask the right questions, like what is the real counterfactual?