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Discussion of unintended consequences as a battle over defaults

I’ll try to clarify my recent entry on unintended consequences by focusing on a less politically-loaded example.

Millions of people in south Asia are exposed to high levels of arsenic in their drinking water. It’s a natural contaminant (something to do with the soil chemistry) but it’s become an increasingly important problem in the past decades because people have been digging millions of deep (~ 100 feet) tubewells. The background is that the surface water is often contaminated, and international organizations have been encouraging the locals to dig these tubewells which draw clean water from hundreds of feet below ground. Unfortunately, some of that water is contaminated with arsenic. A true unintended consequence. But what to do next?

There are various solutions out there, including a low-cost device for purifying surface water. My connection to this is that I’ve been involved in a project to give information to people in Bangladesh about where and how deep to dig to find arsenic-free deep water. In some places you have to drill hundreds of feet deep, and this can be expensive (relative to Bangladeshis’ incomes). So we’re setting up an insurance system for people there, so they can pay a little bit more but be assured of eventually getting a safe well, or their money back. The idea is to provide incentives for well-drillers also, to set up an ongoing system where there is trust and so that safe wells can be installed.

More unintended consequences?

Two concerns about unintended consequences arise. First, on the physical level, there is a concern that, if people build wells taking clean water from deep aquifers, they’ll start using that water more and more (just as we in the developed world flush our toilets with fresh water, etc), leading to changes in the water flow that might bring arsenic down there or have other bad consequences. I don’t know enough to evaluate this concern so I’m just trusting my colleagues on this.

The second concern is something I mentioned to my collaborators the other day: should we really be offering this insurance scheme at all? The goal of the program is to get people to dig deeper wells than they otherwise would’ve done, by setting up incentives for customers and well-drillers to get together. (I should explain that this is intended to be a revenue-neutral, “at cost,” system: not a subsidy for Bangladeshis to dig wells, but not a moneymaker for us, either. The money would be made by the drillers, and this would provide an incentive for the program to continue.)

Anyway, I asked my collaborators whether maybe we shouldn’t be doing this program at all, since we’re trying to get people to do something they wouldn’t do themselves.

One of my colleagues replied that, no, it was a good idea, and for us not to do it would be “paternalistic” in that we’re saying that we know what’s best for the locals. We can offer the insurance and they can decide. But, wait! I said. If we really want to be non-paternalistic, we wouldn’t get involved at all, right?

Defaults

It seems that these debates come down to the choice of the default. If the default is to do our insurance program, then it’s paternalistic to consider not doing it. But if the default is for us to stop messing around in Bangladesh, then it’s paternalistic to try to motivate them to dig deep wells. (The unintended consequence of the mid-1990s intervention–encouraging moderately deep tube wells–is cautionary, but it’s not clear that this should be a message that we shouldn’t get involved.)

7 Comments

  1. derek says:

    It sounds like the problem you're having isn't with the word "unintended" but with the word "consequence". It seems to me that once you learn of a situation and can anticipate a future or futures, anything you decide to do has as a consequence whatever comes after, including nothing.

    There is literally nothing you can decide to do that will not have a consequence you have to take responsibiity for; you were trapped in the system as soon as someone told you what was happening.

    I'm sure there's some way to tie that idea in to Bayesian statistics and causal inference, but I'm not enough of a statistician to find it :-)

  2. ZBicyclist says:

    Derek makes an excellent point, along the lines of "not to decide is to decide".

    It seems to me that a likely consequence of the insurance program is insurance fraud (see: US medical system). That's unintended, but predictable.

    Deep wells are expensive. If they are guaranteed, what's to prevent the well-driller from insuring, doing a cheap/inadequate job but getting paid for the whole job, with the villager collecting the insurance money (posssibly with the inclusion of some kickback), so that in the end villager has more money, well-driller has more money, insurer has less money, and nobody has any better water?

  3. Andrew says:

    Derek,

    Your idea indeed ties into Bayesian statistics. We call it the "loss of innocence principle": once you consider including a piece of information into a model, you _have_ to include it or else your estimate isn't right since it's not conditional on all the available information (or else it's using an a priori ridiculous prior distribution that assumes that the new beta is exactly zero).

    Z,

    I'm not sure about this–I'm more on the statistical end of the problem–but since the insurance system is to be set up in an at-cost manner, I don't think people will be able to use it as a money pump. At least, they wouldn't be able to do so for long.

  4. Jonathan says:

    If there is enough diversity in uncertainty (many different aquifers with different probabilities and concentration of arsenic) then the villagers could insure themselves. Indeed, by running a noprofit insurance program you are doing nothing more than two things: (1) solving transaction cost problems (if any) involved in pooling risks and (2) giving access to capital markets at possibly lower rates owing, once again, to transaction cost problems. thus, it doesn't sound like you're doing anything more than the villagers could, in a less frictional economy, do for themselves. And there's nobody to speak up for friction, other than possibly some for-profit intermediaries.

  5. Asif Dowla says:

    The problem of arsenic is the unintended consequences of an earlier intervention. Diarrhoeal disease was the main cause of child mortality in Bangladesh. Diarrhoea was caused by drinking unsafe surface water. So, Unicef and Bangladesh Government spend money to put in tubewell all over the country. Now we find that acqufier are contaminated by arsenic.

    Andrew, is there a weblink where I can find more information about your insurance plan. By the way, I am originally from Bangladesh.

  6. Michael Slattery says:

    While I am all for the foward-thinking use of statistics, what I don't hear in this discussion of arsenic-laden water is any geology or geochemistry. Arsenic in groundwater is a redox element, and is mobilized to groundwater (or not) based on first priciples: source term (is it present at that location?) and redox chemistry. A nod to the main players would seem appropriate here ?!

    OTOH, I like your blog a lot!!

    Mike Slattery

  7. Andrew says:

    Mike,

    The leader in the project is Lex van Geen (see here), an earth scientist who's all about that redox chemistry. The only reason I'm involved in this at all is because Lex thought that some statistical analysis could be useful, beyond the labwork and fieldwork they're already doing here and in Bangladesh.