Piles of cash and a town of solutions in Kenya, Nigeria (Summer School)

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Summer School Introduction

0:30Welcome back, everyone, to Planet Money Summer School World Tour, the only international economics degree where the invisible hand points to the departure gate. It's the final boarding call. Better run. I'm Robert Smith. This summer, we are on a quest to find lessons we can learn from other countries that just might work back here where we live. In each episode, we'll have fascinating case studies and a hometown tour guide that also happens to have a degree in economics. Our destination today, Kenya, specifically a small town that

1:01taught the world a better way to do economics. We'll also have a stopover in Nigeria where they've come up with a novel way to grow small businesses, free money. It works. Just make sure you take notes along the way. Anything we mention might appear on the final exam, which will allow you, traveler extraordinaire, to get a souvenir diploma festooned with all the passport stamps.

Kenya Economics

1:25Helping us through customs in Nairobi is Tavneet Suri, a professor at MIT's Sloan School of Management. Hi, it's nice to be here. Thanks for having me. You are fifth generation Kenyan? Technically fourth. It depends how you count. You know, my family moved from India in the late 1800s with the British, and the British took a bunch of people to build roads and railways in that part of the world. Always amazes me that when they got done with roads and railways, they asked them, do you want to go back? And they said, no, we'll just stay.

1:58Well, I mean, I've been there. It is a lovely place. It's understandable. But that is not why summer school is stopping in Nigeria and in Kenya. It's stopping there because this is a place where economics isn't just theory. It's real life. There is commerce everywhere. Hundreds of people on each block selling different things. And you must appreciate this as a business school professor. There are so many case studies around. You know, I love being back in almost any African city. I always feel there's a

2:28vibe to them that's quite different. There's people on the streets. There's people trying to sell something. There's people trying to jump on a bus, go somewhere, do something. You can kind of see the entrepreneurship of all of this right in front of you, right? And this becomes so much more important when you realize that, unlike most of the world, places like Nigeria are still rapidly growing in population. I think by 2050, Nigeria will have more people than the United States. So you have this vibrant, growing country with lots of young

3:03people that could become a lot larger part of the global economy. Absolutely. And with their demographics, sort of the number of youth on the African continent is extremely large. By 2050, 35 percent of the youth think 18 to 25-year-olds is going to be in Africa, right? And so it will be a place where there'll be a large labor force at some point. In other words, the perfect place to stop for economics students on a tour. Not only the future

3:33of the global economy, but an incubator for new ideas. That's what we're going to hear about today. Ways to have a richer, healthier population with more businesses and more jobs. Sounds great.

Nigeria Business Program

3:45First up, we will take a look at a program in Nigeria that tries to solve that business part of the equation by creating a mashup of Shark Tank and The Lottery. And we'll have our business school professor break it all down for us after our break.

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U-Win Competition

5:04We are back with Planet Money Summer School on our way to Kenya, but with a stopover in Abuja, Nigeria. Professor Tavneet Suri is along for the ride. Professor, what should our students think about as they listen to this very first case study? Okay. Imagine you're a small business and imagine you have great ideas, but you need a bunch of money to sort of build out these ideas. Who would you go to for that money? Would you go to a bank? Would you go to a venture capital fund? Would you go try and raise money through some other means? How would

5:37you get that money? Great question. And the same question faced by small businesses in Nigeria, where the government came up with a very clever solution. As one economist said, quote, is this the best development program in history? As a student, you decide. Planet Money's Alex Goldmark and Noel King tell us the story. In 2011, Lariat Al-Hasan had a paint business in Abuja, Nigeria. She sold house paint. She sold industrial paint. She sold textured paint. She sold paint that

6:07fills in the cracks in your wall. The paint company was called Lark Lux Paint, and it was really really small. The employee I had was just me. I was the production manager. I was the marketer. I was the delivery person. I was everything except the security. That was the whole company, her and a security guard. And being so small was a problem because customers would try out her paint and they would say, this seems great. I want to place a big order. How about I come down to your

6:40office and we'll sign the papers? Which is where things would get awkward because she didn't have an office. And I kept telling them, no, no, no, you call me whenever you want. I will just be there. I will be there. She just had her car. And when clients would see that, they would say, I'm sorry. And that's when they would back out. She needed the office to keep the clients, but she needed the clients to be able to afford the office. She felt trapped, stuck. And then one day she was at home listening to a little music. Music has a way of helping me a lot. So I had this little radio in

7:16my room then that I would always listen to to help me get over my emotions. It was at my bedside. So I was listening to it and there was this announcement. This ad comes on and it was like the radio was talking right to her. It was an ad for what seemed to be some sort of program to help small businesses grow bigger. It may be small today, but it won't be after you win. The youth enterprise and innovation competition, you win, is a nationwide jobs creation project

7:49organized by the federal government to empower young Nigerians. The government was having a nationwide contest where it would be giving away millions of dollars to people trying to start businesses. No experience necessary, no strings attached. Just go to the website and sign up. Larry had heard this ad and she knew immediately what it was. A scam.

8:13Okay, so that ad, not a scam. I met the person behind it. My name is Ngozi Okonjo-Iwala. She goes by Dr. Ngozi and she was the finance minister for Nigeria at the time. And she looked out and she was facing this big problem, unemployment. There are 8 million young people in Nigeria who need jobs. That's like a quarter of all youth. But the thing about those young people is they are super go-getters, right? Everybody wants to run something and they want to expand their businesses. Some want to create new businesses but don't know how. They're hitting this wall. Money. They need more of it. But the thing is, it's really hard to get a

8:48small business loan in Nigeria. Maybe you go to a bank and you try. But think about it from the point of view of the bank. Most of these businesses are one person. They're really small. And it's hard for a bank to tell a good one-person paint company from a bad one-person paint company. She thought, since what these entrepreneurs need is money, why don't we just give them money? Just find tiny businesses and then hand them piles of cash. What if you gave Lariat, the woman who sells paint, $50,000? That's a lot of money. That's

9:20about 10 times what Lariat would normally make in a year. So Dr. Ngozi takes this idea and she starts shopping it around within the Nigerian government. And right away, some questions come up. How will we monitor these people? How will we make sure they don't fall by the wayside? They just get the money and divert it to some other use. If banks have a tough time handing out the money to small businesses, how is the government going to decide which are the right people to hand it out to? Dr. Ngozi says, don't worry. Don't worry. Here's how we're going to do it. We're going to have a contest, a massive nationwide contest.

9:53Anyone who wants to can submit a business plan, a few sheets of paper with an idea, a budget, a chart or two. And we'll read them. We'll pick out the best ones and we'll hand out those piles of cash. The president of Nigeria, good luck, Jonathan. He liked the idea. And he said, go figure it out. There were a lot of challenges. First off, this is a country where the government has a hard time even keeping the electricity on. And now they're going to vet tens of thousands of business plans. Even people within the Nigerian government were thinking, how are we going to pull this off?

10:24The logistics were going to be one problem, but then there was this other problem, corruption. Corruption is not unheard of in Nigeria. So how do you make sure that the officials running the contest don't just give the money to their connections, to their friends and family? That only people who are connected get a chance and ordinary people will not. That was the even bigger skepticism. They had to figure out a fair way to give out the money and a way that looked fair, too. They found judges outside of the government and outside of Nigeria to do the grading.

10:54And they decided also to take the names off of the application so the judges wouldn't know who was who. But that still left the question, how do you predict which business will succeed? Who do you give the money to? And this is where they brought in David McKenzie. My job, I work in the research group at the World Bank, and so I typically come in when people have got an idea and they want to know, does it work? McKenzie had an interesting idea for how to pick the winners. Just do it randomly. Sure, he said, you can look at their business plans, maybe pick out the few that seem great,

11:27throw out the terrible ones. But after that, just pick at random. So, okay, they decide they're going to pick a lot of the winners at random. They gave the contest a name, the U-Win competition. U-Win exclamation point. And they started to get the word out with ads. They blanketed the country with radio and TV ads. I'm like most entrepreneurs. I dream big, big, but reality, reality. But you know what? The youth enterprise with innovation in Nigeria, U-Win, changed my story.

11:57So those ads are all over the country. And Lariat Al-Hassan, that woman we met earlier who was selling paint out of her car, she's listening to the radio, she's in her bedroom, and she is hearing those ads over and over and over again. I heard it for the first time. I ignored it. I heard it the second time. I ignored it. But the third time, something in me said, Lariat, why don't you pick up this opportunity? Try. Try and see. It

12:31could work out for you. She took out her old laptop, she plugged in her modem, and she went online, and she applied. So did 24,000 other people. And Lariat, she made the first cut. So she and 6,000 other people, they get invited to the next phase. This is where she would have to write that real proper business plan. Lariat got some help with this part. The government called all of the semifinalists together, and they put them through these business trainings. Lariat says hers was like this big packed concert hall. There were all kinds of applicants. There was a baker who didn't have

13:02the right kind of equipment. A chicken farmer who said he wanted to expand into catfish and snail farming. There was a guy running a computer school. There were musicians, dentists, all kinds of people with ideas for all kinds of businesses. Boy, it was intense from morning till evening. Afterward, Lariat went home. She drafted a budget. She made some sales projections. This was a full, comprehensive business plan, just like she learned in the training. And yep, she's the likable character at the start of her show. You knew it had to be coming. She won. I felt I couldn't even control my emotions. And I went jumping on my bed

13:39until my sister would say, what's wrong with you? Have you won? Have you won a lottery? And I said, yes, yes, yes.

13:52Lariat got 10 million naira. That is about $65,000. And this is a huge amount of money. It's like more than 10 times what she would earn in a year. She used it to hire some people. She got some salespeople. She got some marketing people. And she rented a proper showroom. She tricked it out with some furniture she was really proud of. No doubt about it, this changed her business. Yes, yes. Because I can confidently say now, please come to my office. Oh, we are in so, so place. Oh, you can come here. Oh, what time? Oh, yes. I'll be ready for you. Oh, I'll be waiting for

14:27you. Now, you can look at this and say, of course, she was able to do this. She was given $65,000. Not even a loan, just gave her a pot of money. The real question is, how is her business doing a year from now, two years from now? How do all the others do, the dentists and the chicken farmer who wants to expand into catfish? And the World Bank looked at this. Because some of the winners had been chosen randomly, they could evaluate it like a real experiment. They could compare people who got the money to people who didn't. The results were published and they're pretty

14:59remarkable. Chris Blattman is an economist at Columbia University who studies how to get people out of poverty in the developing world. I remember reading it and my eyes kind of popping out of my head and then reading it a little bit more in depth because I thought, no, no, no, this isn't possibly true. And getting into the details and getting so excited, I just shot off a blog post right away. That's how he deals with unexpected joy. Here's what the report said. It looked at Lariat and the 1,200 other winners of the U-Win competition. And it found they had created 7,000 jobs, real jobs that stuck around for years. So the whole thing, it costs $60 million. And that,

15:34through the math, comes out to a cost of $8,500 per job created, which may mean nothing to anybody else. But to people who look at these things and study them, like Chris Blattman, he says that is really impressive. And that is why he picked this as the title of his blog post. Is this the most effective development program in history? Question mark. Blattman said the thing that stood out to him is that the winners, as a group, used the money pretty well, even though a lot of them were these one-person businesses and they got more money than they'd probably ever seen in their whole life. Even though a lot of them were picked kind of at random,

16:07he just expected that a lot more of them would fail. I guess I have this idea that entrepreneurship is a little bit more rare. And yes, they screened people for business plan competitions and there were all these stages. But even so, there wasn't this magical X factor that is really, really rare. It might be something that's a lot more common. So it just struck me that this could apply in a lot of places, possibly. That you could do this kind of program somewhere else. Right.

16:37That story was from 2016, hosted by Alex Goldmark and Noel King. The U-Win contest was eventually shut down in Nigeria. The country changed presidents and you know how that goes. But the program was copied in Kenya and Senegal. The woman who came up with the idea, Dr. Ngozi, is now the director general of the World Trade Organization, the WTO. And laureate's paint business, still running. Although she tells us she still struggles to find financing to grow even bigger.

17:11We have our professor back now with us, Tavneet Suri. Hey, Tavneet. Hi, Robert. One of the things I learned from this case study is that Nigeria and a lot of the other countries in Africa have what is called the missing middle of businesses. There are a lot of entrepreneurs, one-person companies. And then on the other side of the spectrum, there's a lot of large corporations. But there aren't enough mid-sized businesses. That's the missing middle. Why is this gap happening? And what's holding back entrepreneurs like laureate from growing? Yeah, it's a good question. You know, one piece is skills, right? Do you actually know how to run a

17:47business? Do you, you know, are you an entrepreneur? Have you thought of all the pieces? You know, a second is, of course, actual capital, right? If I want to start a business, I need a bunch of money. Where do I get that money? The You Win program was tackling the money problem, one big lottery winning at a time. But I kept thinking, how does this program get bigger? Where are the VC firms or banks that are willing to step in and provide the startup capital that the government is trying to do with this

18:21program? You know, if we think of the mid-sized businesses that we think of elsewhere in the world, a lot of banks do something we call cash flow lending. You show me your cash flow in your business, I see your cash flow and go, okay, I can lend you this much based on your cash flow. In Africa, a lot of businesses don't have a way of showing cash flow, right? I don't keep track. I don't have electronic records. I don't have an Excel spreadsheet to show you my cash flow. A lot of them are informal, so they're not filing taxes. I don't have a tax return to show you my cash flow. So some of it is maybe because banks feel like, I would have to come out and visit the

18:54business to figure this out, and it's very costly to do that process. This goes back to a big thing that we talked about a lot in last year's summer school season, the value of institutions to help businesses. You need a system in place with property rights, accountants, you know, a trusted legal system before you can even start to think about giving loans out as a bank. Yeah, absolutely. So this was kind of a very creative, kind of a little crazy thing to do, right? Where had I wanted to structure that as a loan, I would never give out that amount

19:30as a first time loan to a business, right? So that's the other piece. Like, you know, if you're going to try and do something really big, it's not clear you can even recoup when the legal system doesn't work for you. And there's not clear property rights around what's owned and what's not owned and by who. Which is essential, right? I always say that land surveyors and title insurance companies may seem like the most boring things in the world, but they are in fact the foundation of a successful economy, figuring out who owns what. Up next, we travel halfway across the continent

20:03of Africa to a small town in Kenya that has really become the center of economic research for the world.

Kenya Economic Research

20:09What are the building blocks of health, education, and prosperity for all? We'll figure that out, along with The Economist, after the break.

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Busia Town Study

21:12students getting lost here on the border of Uganda and Kenya. This is the location for our second case study, and it gets to the very core question in economics, and all of science, really. How do we know what we know? What really works, and what doesn't? The show is hosted by Erika Barras and Alex Measi. The place where Carol Nakasa grew up, she says it's not a place she ever expected the rest of the world to care about. I was born and raised in a small town in western Kenya called Busia.

21:44Busia, Kenya. It's right on Kenya's border with Uganda, so it's a busy international crossing point. There's lots of truck traffic hauling things back and forth. It made getting around Busia kind of treacherous when Carol was a kid. We would ride at the back of bicycles. They're called border borders. And all the time we freaked out whenever there was a truck coming because, you know, they're not very safe. Carol eventually left Busia. She studied computers in Nairobi, but her family wanted her to return home, and her father helped her get a computer-related job back in the small town. A group of

22:19economists were doing some sort of study, and they needed someone to help with data entry. So Carol finds herself sitting at a desk and entering the answers to some strange survey questions. How many goats you have? How many TVs? How many bicycles? So all these questions started nagging me, and I was wondering, like, why would you ask someone these types of questions? Carol Nakasa eventually met the man who wanted to know how many goats and bicycles people in Busia had, Michael Kramer, a soft-spoken American with glasses.

22:50So I taught high school not far away from Busia. After that, he went off to get his PhD in economics. He focused on development economics, which deals with all the factors that keep poor countries from growing. So everything from a lack of infrastructure to public health problems. Michael gets his degree, and his thoughts are never far from Kenya. He advises a friend with a project to help kids in Busia, paying school fees, funding school. And Michael suggests that maybe they could

23:21do a sort of experiment to see if the project really helped people. It ends up being too small to draw any conclusions, but the money seemed to help a bit. A couple of years later, Michael's friend's nonprofit is trying to take on a bigger project. They want to give textbooks to students at 100 schools in the region. And Michael, he's ready to try out his experiment idea in a bigger way. He wants to do a randomized controlled trial. Now, randomized trials have been the gold standard in medicine for decades. It's how we tested the

23:51treatment for tuberculosis back in the 1940s, the polio vaccine in the 1950s. You have two statistically identical groups, and you randomly choose one of them to get the treatment, and the other one doesn't. In medicine, it's one of the best ways we have of understanding whether an intervention works. In economics in the early 90s, there had been a few studies based on randomized trials, but it wasn't really how things were done. Randomized trials are expensive. They take a lot of time. So, when Michael sets out to measure the effects of giving out textbooks to school kids in Busia,

24:27he's not only trying to help his friend's nonprofit spend its money effectively. He's also trying out a different way of drawing conclusions in economics. The study he designs takes place over four years, and it includes 100 schools around Busia. Michael and his colleagues randomly assign the schools to different groups. This was often listing the schools in alphabetical order and then going, you know, counting off 1-2-3, 1-2-3, 1-2-3. They want to be sure that these groups are all pretty much the same, that one group isn't an outlier in some way. One

25:02way they do this is by surveying the families. And this is around the time Carol Nikesa was hired. All those questions about goats and TVs and bikes that she was puzzled by, they were meant to check whether some of the students' families were much wealthier than the others. So, the study gets up and running. The first year, only one group of schools gets textbooks. The next year, a second group gets them, until all the groups have gotten them. This goes on for four years. And then, Michael gets the results. And there is a big surprise. He expected that as each group received the textbooks, their test scores would go up. But

25:35instead, he didn't see any difference in average test scores. No difference at all. Even though all these kids now had textbooks. You know, first, I was shocked. That wasn't what I was expecting. Second, I was disappointed. Yeah, I wanted this to work. And I thought it would work. Michael reflects on what he knows about schools in rural Kenya. He knows that many kids fall behind for a whole bunch of reasons. School is taught in English, but most kids don't speak English at home.

26:05There are public health problems like malaria and HIV, which can keep kids out of school. And kids miss school to work or help their families. And as he's thinking about that and looking back at the data, he notices something that didn't initially stand out. The textbooks did help one group, students who had high test scores to begin with. Their scores improved significantly. Eventually, this study led to an important insight. Governments and aid groups were spending millions of dollars on textbooks. But a lot of that money was

26:35wasted. And so education reformers started focusing more on the kids who weren't doing well. They start emphasizing remedial education. For Michael and for Boussia, the textbook study is a turning point. Michael is like, I want to do more studies like this. Randomized trials that can help solve real problems that people face. And other economists get interested too. Some of them were students of Michael's. They'd help out as research assistants, then go on to develop their own projects.

27:06And very, very often, that meant working in Boussia. Because it was a good place to do research. When all of these economists start coming to Boussia, Carol Nikesa has a front row seat. So first, we had one expat house, which was rented specifically for the expats. And then the expats, you know, they continued to increase. So we rented a second expat house. So maybe four, five in a house. Oh, wow. You know, especially the summer, the office would be full of so many white people. I think it'd go

27:41to the point where any white person in town would be affiliated to us. By 2010, the studies that are happening in Boussia are starting to remake development economics. One of Michael's students from Harvard, Ted Miguel, evaluated the benefits of giving school children medicine for parasitic worms for free when a lot of groups were charging for it. It winds up showing that kids are far more likely to attend school if they've been treated. A follow-up study shows that led to better jobs and higher incomes later in life.

28:13Treatment is now standard across Kenya. And the Kenyan staffers who helped run studies in Boussia, some of them realized, this can be my career. Carol was one of them. She started out by just making suggestions to the researchers. Like if I read a proposal and then I think about it, I'm like, oh, how about this? How about this? I feel like it just came naturally. After all, she'd been working on randomized trials for years, pretty much as long as they'd been happening in Boussia. And so the moment someone accepts your suggestion, it's also something that makes you to feel like

28:52sharing more suggestions in future. Of course, yeah. Like Carol tells an economist that there are lots of girls having sex with older men in return for money, which raises their risk for HIV. The economist Pascaline Dupas is like, do they know about the risk? Could we change this behavior? So Pascaline created a curriculum to teach girls that older men have higher rates of HIV. The curriculum went out to dozens of schools, and there was a randomized trial to test the results. For me, her study was awesome in so many ways, because that was a big problem then.

29:28Yeah. Did you feel like you could see it in the data from the study that fewer girls had gone into that kind of dangerous work as a result? Yes, I did. Pascaline's study found that in the schools that got the teaching, fewer girls got pregnant, suggesting there was less unprotected sex. And so the curriculum started to be used more widely. In 2014, almost 20 years after Carol first started working on Michael Creamer's textbook study, she left Boussia to get a master's degree at Harvard.

29:59And when she graduated, she went right back to Kenya, to Boussia, and founded her own research organization, a kind of one-stop shop for any researcher who wants to run a randomized trial in Kenya. Carol Nikesa says she knows this approach to economics has changed lives in developing countries all over the world. When you see something being practiced in other countries, and they tell you it was also as a result of the study that was conducted in Kenya. And when not only Kenya, but in a small town where you come from.

30:36Isn't that not nice?

30:43It is indeed nice. That case study was from 2023 and was hosted by Erika Barris and Alex Mayasi. And a notable follow-up here. Michael Kramer won the Nobel Prize in economics, alongside some of the other researchers who worked in Boussia, Abarji Benerji and Esther Duflo. They won for the idea of using randomized control trials to effectively alleviate global poverty. We return with our Kenyan economist,

Randomized Control Trials

31:09also a business school professor, after the break.

31:17This message comes from Bombas. Comfy footwear is the last thing you want to worry about this summer. Bombas sandals and slides are perfect for beach days, barbecues, and everything in between. Go to bombas.com slash NPR. This message comes from the Sierra Club, fighting to protect America's national parks and forests. These public lands are the nation's legacy, and their future is worth fighting for. Donate at sierraclub.org slash NPR. We are back with our Kenyan economist, Tavneet Suri, who is currently at the MIT Sloan School of Management.

31:55Hey, Tavneet. Hi, Robert. So, in Kenya, do people know this about Boussia? That it is this town of economists beloved around the world? No. My guess would be no. My parents know, but partly because some of those economists have traipsed through our house for dinner. You cannot keep an economist away from free food. When people who are not your parents talk about Boussia, are they proud that Kenya was the center of this randomized control trial revolution?

32:26Or does it feel a little, I don't know, icky to be the world's experimental lab? Yeah, I guess that's a great question, Robert. I think you'll probably get flavors of both people. Some people who think it's cool that there's been knowledge generated. I think others who think this is weird and they don't really think we should be part of experiments. I do think, you know, the one question that a lot of people do ask me is, how does this help all of us, right?

32:57Does it change policy? Does it get implemented? Do we learn stuff that will come back to benefit everybody in some way? And that's a harder question to answer, of course, because we can do the research whether the government listens to the results and reacts is a whole other separate kind of question. So what do you say when they ask this? Is it helping real people in Kenya? I sort of say the direct effect of Kenan policy might not be huge on any given day, but the effect on our global knowledge and how that affects policy more broadly, I think, is quite large.

33:34If you can have policies that encourage less disease, more education, less poverty on a local level, does that build up to make the whole country richer or does that not necessarily follow? I think from what we know, it absolutely follows. I do think that core to the growth of an economy is this thing we call human capital, which is about the education and the health of your population. It's the sort of, in quotes, capital that a human brings to the table.

34:07How do you figure out what the return on the investment in human capital is? What's your variable there? Yeah, so we look at returns to education, for example. There's a large literature on the returns to education. In fact, there's some recent work showing that the growth miracle in Southeast Asia, a chunk of that was education, but an important part of that was higher education, actually, less so primary education. So that's the education piece. And then the health piece, again, we measure the returns to health investments. It's one of the podcast talked about a deworming study that Michael Kramer and Ted Miguel ran that was an investment in health.

34:46And there, it actually also resulted in more education because the kids were healthier and went to school more. And so these two things are actually tied. We call that a positive externality in economics. Why don't you define that for the class? Positive externality is where if I invest in something, it benefits other people. So, an example is if I'm more educated and I am working, the people around me are more productive because I have more education than they would be otherwise.

35:18And the same for them on me. If they're more educated, we can do more stuff together and I become more productive. As an economist, do you ever get frustrated seeing that we know something? We know something from the randomized control trials, but either no one will listen or government chooses to do something different. Do you ever just bang your head against the wall? Oh, absolutely. Every day, Robert. Okay. Would we like people to use research and knowledge more in their decision making? Absolutely. But you can't just bang your head against a wall.

35:49You have to say, well, what can we do about it, right? And so, the same academics have been trying to build sort of, you know, policy relationships to try and change that. And I guess a Nobel Prize doesn't hurt when it comes to convincing governments that they maybe, just maybe want to look at the data. Tavneet, we're asking all of our professors this season one final question. If there is something in the Kenyan economy that we could take back here to the United States that would be useful, what would that thing be?

36:24Well, it's not finance or economics, Robert, but, you know, everybody loves to vote and everybody shows up to vote. In Kenya, really? Not everybody, not everybody, 100%, but voter turnout rates are extremely high. And as you can imagine, people stand in line for hours and hours on end to vote. That enthusiasm is similar to how everyone seems to have their own business. People like to get involved in the civic and business life of the country. I think in general, that's one thing that's true is everybody wants to participate in the economy.

36:59Think of even young people, as I said, right? They're not getting into university and they're frustrated because they want to participate in the economy. The entrepreneurship piece we saw, there's this sort of wanting to participate in the social and economic life in a very deep way, I think. And that's through voting and politics. You see it in that entrepreneurial spirit we talked about. So that piece I find very inspiring. And I think it's up to us to figure out how to deliver on that, right? I think that's a good mission statement for economists everywhere.

37:31Tavneet, there will be a test at the end of the semester of summer school. Maybe you could help us with defining some of the concepts from today's episode. Sure. With one caveat, I don't have to do any of the grading. No, it's all automatic. Everybody passes. Oh, great. Okay. What is this randomized control trial, I should say, Nobel Prize winning randomized control trial that everyone's talking about? A randomized control trial is a way of studying the impact of something, where you basically split a population, a study population, into two groups randomly, and one group gets the intervention and one doesn't.

38:08It allows you to sort of estimate the impact of that program very cleanly. A lot of the randomized control trials we talked about in this episode involved human capital. What is human capital? Human capital is education and health. So think of it as the capital embodied in humans, in people. It's investing in humans instead of investing money, although it does cost money. Correct. Yes. It does cost a lot of money. Finally, we talked about the missing middle as a problem faced by businesses in countries in Africa.

38:43What is the missing middle? So the missing middle is where I don't have businesses that are middle-sized in terms of their employees. I have lots of very small businesses with, you know, one or two employees. I have a bunch of big businesses that are in the hundreds of employees, but I'm missing this middle set of businesses that have kind of 5, 10, 15, 20 employees. Tafneet Suri from the MIT Sloan School of Management. Thank you so much for coming in and for talking with us.

39:14You're very welcome. It's been a pleasure. I had fun talking with you, too. When are you next going to Kenya? Your parents want to know. August. Nice. As you travel with us around the world for summer school, you might want to bring along a guidebook to the economy. Luckily, we wrote one. Planet Money, a guide to the economic forces that shape your life. It's like a podcast, but with beautiful, full-color illustrations. It's always in my carry-on. And, hey, if you have lived in some country with a smart economic idea the rest of the world should know about,

39:46please tell us, and you might be featured in our graduation episode. Perhaps you know a different way to do taxes, a mega project that came in under budget, somewhere where rent is cheap. Huh. Get in touch now. Email us at planetmoneyatnpr.org and put summer school in the subject. Summer School is produced by Sophia Polizakar and edited by Alex Goldmark. It's fact-checked by Leila Doss. This show is engineered by An-Li Huang. I'm Robert Smith. When I'm not summer schooling, I'm also the host of the new podcast, Business History.

40:20It's a show about the history of business. This is NPR. Thanks for listening.

40:29We have now started boarding our Planet Money flight. Group 1, Business Premium Elite, which, of course, includes all Planet Money listeners. Get over to our gate for early boarding. And a glass of champagne. Our flight to Oslo, Norway is now boarding. Get ready to learn how Norway beat the resource curse, a.k.a. the Paradox of Plenty. Take off as usual next Wednesday.

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