Interview with Dean Karlan: US Government Foreign Aid

Back in November 2022, Dean Karlan took the job as the first “chief economist” for USAID. In that position, he had a staff of about 30 whose task was to figure out the benefits and costs of different aid programs, with the goal over time of refocusing aid on problems and situations where the payoff was highest. In February 2025, Karlan resigned his position as USAID when he felt that political opposition made it impossible to do the job for which he had signed on.

Santi Ruiz interviews Karlan in “How to Fix Foreign Aid: USAID’s former Chief Economist reflects on DOGE” (Statecraft, July 31, 2025). Here are a few of the points that caught my eye:

On the role of the Chief Economist at USAID

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. … [T]he 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 things get done — that are changeable? And two, let’s get our hands dirty working with the budget holders who say, `I would love to use the evidence that’s out there, please help guide us to be more effective with what we’re doing.’ There were a lot of willing and eager people within USAID. 

On the challenge of Congressional earmarking

[T]he number that I heard is that something in the ballpark of 150-170% of USAID funds were earmarked. … Congress double-dips, in a sense: we have two different demands. You must spend money on these two things. If the same dollar can satisfy both, that was completely legitimate. There was no hiding of that fact. It’s all public record, and it all comes from congressional acts that create these earmarks. … There’s an earmark for Development Innovation Ventures (DIV) to do research, and an earmark for education. If DIV is going to fund an evaluation of something in the education space, there’s a possibility that that can satisfy a dual earmark requirement. That’s the kind of thing that would happen. One is an earmark for a process: “Do really careful, rigorous evaluations of interventions, so that we learn more about what works and what doesn’t.” And another is, “Here’s money that has to be spent on education.” That would be an example of a double dip on an earmark.

How the Department of Government Efficiency (DOGE) intervention operated

There was not really any looking at any of the impact of anything. That was never in the cards. There was a 90-day review that was supposed to be done, but there were no questions asked, there was no data being collected. There was nothing whatsoever being looked at that had anything to do with, “Was this award actually accomplishing what it set out to accomplish?” There was no process in which they made those kinds of evaluations on what’s actually working. You can see this very clearly when you think about what their bean counter was at DOGE: the spending that they cut. … Throughout the entire government, that bean counter never once said, “benefits foregone.” It was always just “lowered spending.” Some of that probably did actually have a net loss, maybe it was $100 million spent on something that only created $10 million of benefits to Americans. That’s a $90 million gain. But it was recorded as $100 million. And the point is, they never once looked at what benefits were being generated from the spending. What was being asked, within USAID, had nothing to do with what was actually being accomplished by any of the money that was being spent. It was never even asked.

Francisco Flores also interviewed Karlan for the Economics that Really Matters (ETRM) website in “ETRM Interview Series – Dean Karlan”  focused on “the future of research in development economics, and for their advice to young researchers.” Here’s Karlan on the topic of broad political support for foreign aid:

[H]onestly, I’m not convinced that a lack of evidence is the main reason [foreign] aid isn’t more supported. It’s a bit of an oversimplification to say, “People don’t see the benefits, so they don’t support it.” There are many things governments do that only benefit a small segment of the population—like specific research initiatives or industry subsidies—and yet we still do them. If our standard were that every policy has to directly benefit 51% of people to be justified, we’d hardly get anything done. So, I don’t think that’s a fair criticism of foreign aid.

Also, the best evidence we can provide is about whether aid is effective—not whether it tangibly benefits, say, a middle-income family in Kansas. Sometimes there are material connections—like if USAID buys wheat from Kansas and a local farmer benefits—but those are exceptions. Most aid programs don’t have a direct economic payoff for Americans. Instead, the benefit is about soft power, about global leadership, and most importantly, about doing the right thing.

And that moral stand—that’s something a lot of Americans already live by. Most Americans donate to charity. Most care about others. We talk about ourselves as a generous, giving nation. So what’s wrong with living up to that identity as a country? Why shouldn’t our foreign policy reflect those values? … So I don’t think we need to show a financial return on foreign aid to justify it. And I don’t think a lack of direct benefit to Americans is the reason it sometimes loses support. 

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