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The Nobel Prize-Winning Economists Fighting Global Poverty

Abhijit Banerjee, Esther Duflo and Michael Kremer won the Nobel Prize for their "experimental approach to alleviating global poverty."

17.10.2019 | by Reve Fisher
Photo by NobelPrize.org
Photo by NobelPrize.org

MIT economists Esther Duflo and Abhijit Banerjee along with Harvard University professor Michael Kremer have been awarded the Nobel Prize for their “experimental approach to alleviating global poverty.”

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019 was announced on 14 October. The trio will split the prize of 9 million Swedish krona evenly (slightly more than $928,000).

“The research conducted by this year’s Laureates has considerably improved our ability to fight global poverty,” the Swedish Academy of Sciences wrote in a press release. “In just two decades, their new experiment-based approach has transformed development economics, which is now a flourishing field of research.”

Duflo worked with Kolkata-born Banerjee, her husband, following up experiments done by Kremer, to create novel investigatory methods to address poverty throughout the developing world.

In the mid-1990s, Kremer and his colleagues used field experiments to test interventions to improve children’s learning results in western Kenya. He often works with nonprofit organisations and government agencies to develop innovative policies in education, healthcare and microfinance.

“The field of development economics has really undergone tremendous growth in the past few decades,” Kremer told The Harvard Crimson. “We’re bringing in a lot of perspectives not to replace but to complement the standard analytic approaches that economists have.”

Throughout the past few decades, all three researchers have laboured to view poverty through a more holistic lens and remove the attitudes, stereotypes and failed incentives that have been imposed upon the poor.

“This urge to reduce the poor to a set of clichés has been with us for as long as there has been poverty,” Banerjee and Duflo wrote in Poor Economics, as quoted by BBC. “The poor appear, in social theory, as much as in literature, by turns lazy or enterprising, noble or thievish, angry or passive, helpless or self-sufficient.

“It is no surprise that the policy stances that correspond to these views of the poor also tend to be captured in simple formulas: ‘Free markets for the poor,’ ‘Make human rights substantial,’ ‘Deal with conflict first,’ ‘Give more money to the poorest’, ‘Foreign aid kills development’ and the like.”

Determined to examine the true nature of poverty, Banerjee and Duflo founded the Abdul Latif Jameel Poverty Action Lab at MIT in 2003 to study poverty worldwide, aiming to “take the time to really understand their lives, in all their complexity and richness.”

After participating in over 70 studies in the developing world, the duo noticed a variety of trends in different countries. They observed factors such as nutrition, children’s health and education and leisure activities.

In an 18-country data set on the lives of the poor, Banerjee and Duflo found that food represented 36 to 70 percent of the consumption of the extremely poor living in rural areas and 53 to 74 percent living in urban areas. They also observed that those in impoverished communities tend to spend their money on “better-tasting, more expensive calories” instead of micro-nutrients, implying that government and institutional food policy programmes should focus on nutrients rather than calories.

“It is probably not enough just to provide the poor with more money, and even rising incomes may not lead to better nutrition in the short run,” the couple explained. “As we saw in India, the poor do not eat any more or any better when their income goes up; there are too many pressures and desires competing with food.”

By examining the effects of poverty on education, Banerjee and Duflo uncovered crucial elements that helped fight the low learning outcomes of impoverished children.

“We ran experiments where you change a bunch of inputs, like changing the way the teaching happens or change the books or change the timing,” the duo wrote. “And it turns out that what’s really critical is that the kids should have some time when they can catch up with the material they have missed, something that is excluded from most school systems in the developing world.”

Over five million children in India have benefited from remedial tutoring as a result from one of their studies, the Swedish Academy of Sciences explained.

Duflo, at the age of 46, is the second woman and the youngest person to ever win the Nobel Prize in economics.

“Showing that it is possible for a woman to succeed and be recognised for success I hope is going to inspire many, many other women to continue working and many other men to give them the respect they deserve,” she proclaimed.

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