by Duncan Green
Oxfam, March 23, 2016
The author was struck by the contrast between how quickly Payment by Results (PbR) has spread through the aid world and how little evidence there is that it actually works. The theory was that PbR aligns incentives in developing country governments with development outcomes, and encourages innovation, since it does not specify how to, for example, reduce maternal mortality, merely rewards governments when they achieve it. Those arguments have certainly persuaded a bunch of donors. The UK government website says that this ‘new form of financing that makes payments contingent on the independent verification of results is a cross government reform priority’. Even though the evidence seems pretty thin that introducing PbR achieves improved results, donors are jumping into PbR contracts with gusto. Why is that?