We’ve covered the US Agency for International Development, or USAID, pretty consistently on Statecraft, since our first interview on PEPFAR, the flagship anti-AIDS program, in 2023. When DOGE came to USAID, I was extremely critical of the cuts to lifesaving aid, and the abrupt, pointlessly harmful ways in which they were enacted. In March, I wrote, “The DOGE team has axed the most effective and efficient programs at USAID, and forced out the chief economist, who was brought in to oversee a more aggressive push toward efficiency.”

Today, we’re talking to that forced-out chief economist, Dean Karlan. Dean spent two and a half years at the helm of the first-ever Office of the Chief Economist at USAID. In that role, he tried to help USAID get better value from its foreign aid spending. His office shifted $1.7 billion of spending towards programs with stronger evidence of effectiveness. He explains how he achieved this, building a start-up within a massive bureaucracy. I should note that Dean is one of the titans of development economics, leading some of the most important initiatives in the field (I won’t list them, but see here for details), and I think there’s a plausible case he deserves a Nobel.

Throughout this conversation, Dean makes a point much better than I could: the status quo at USAID needed a lot of improvement. The same political mechanisms that get foreign aid funded by Congress also created major vulnerabilities for foreign aid, vulnerabilities that DOGE seized on. Dean believes foreign aid is hugely valuable, a good thing for us to spend our time, money, and resources on. But there's a lot USAID could do differently to make its marginal dollar spent more efficient.

DOGE could have made USAID much more accountable and efficient by listening to people like Dean, and reformers of foreign aid should think carefully about Dean’s criticisms of USAID, and his points for how to make foreign aid not just resilient but politically popular in the long term.

We discuss

* What does the Chief Economist do?

* Why does 170% percent of USAID funds come already earmarked by Congress?

* Why is evaluating program effectiveness institutionally difficult?

* Why don’t we just do cash transfers for everything?

* Why institutions like USAID have trouble prioritizing

* Should USAID get rid of gender/environment/fairness in procurement rules?

* Did it rely too much on a small group of contractors?

* What’s changed in development economics over the last 20 years?

* Should USAID spend more on governance and less on other forms of aid?

* How DOGE killed USAID — and how to bring it back better

* Is depoliticizing foreign aid even possible?

* Did USAID build “soft power” for the United States?

This is a long conversation: you can jump to a specific section with the index above. If you just want to hear about Dean’s experience with DOGE, you can click here or go to the 45-minute mark in the audio. And if you want my abbreviated summary of the conversation, see these two Twitter threads. But I think the full conversation is enlightening, especially if you want to understand the American foreign aid system. Thanks to Harry Fletcher-Wood for his judicious edits.

Our past coverage of USAID

Dean, I'm curious about the limits of your authority. What can the Chief Economist of USAID do? What can they make people do?

There had never been an Office of the Chief Economist before. In a sense, I was running a startup, within a 13,000-employee agency that had fairly baked-in, decentralized processes for doing things.

Congress would say, "This is how much to spend on this sector and these countries." What you actually fund was decided by missions in the individual countries. It was exciting to have that purview across the world and across many areas, not just economic development, but also education, social protection, agriculture. But the reality is, we were running a consulting unit within USAID, trying to advise others on how to use evidence more effectively in order to maximize impact for every dollar spent.

We were able to make some institutional changes, focused on basically a two-pronged strategy. One, what are the institutional enablers — the rules and the processes for how thin