The 2019 Nobel Memorial Prize in Economic Sciences has been awarded to three economists: Abhijit Banerjee, Esther Duflo and Michael Kremer. The first two teach at the Massachusetts Institute of Technology and the last named at Harvard University; both campuses are in Cambridge, Massachusetts and their development economic programmes often share resources and students. They received the award for their contribution to reviving development economics, particularly through the popularisation of “randomised control trials” (RCTs) that break larger questions about policy interventions into smaller, easier to test studies.
The Nobel Committee highlighted how their “experiment-based approach has transformed development economics” over the past decades. They mentioned specifically how, as a result of one such study, “more than five million Indian children have benefited from programmes of remedial tutoring in schools”.
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Banerjee, Duflo and Kremer together have launched a movement within development economics that seeks to ensure that clear, unambiguous answers can be found to the question of whether a particular policy intervention is effective. This is extremely relevant when it comes to framing policy in low- and middle-income countries, where state capacity is quite limited and it is particularly necessary to be able to prioritise more effective policies over less. Duflo and Banerjee’s book, “Poor Economics”, is an argument for such evidence-based policy, particularly in the Indian context.
While Duflo and Banerjee--together with another Indian-origin economist, Sendhil Mullainathan--set up the influential Poverty Action Lab in MIT in the early 2000s, it was Michael Kremer who, with his studies of schools in Kenya, first popularised RCTs. The idea behind such policy trials is to treat an intervention similarly to, for example, a medical treatment or new drug that is being scrutinised. If a particular group can be randomly divided into a control set and an experimental set, and then the latter is the one exposed to the policy treatment, then by comparing the outcomes on the control and experimental group the analyst can be more certain that other factors are not confounding the results. For example, if half the schools in a district are randomly chosen for a special trial — for example, biometric attendance records for teachers — and the other half are not, then comparing school outcomes afterwards makes a pretty unarguable case that such records do (or do not) help improve learning outcomes.
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The effect of such rigour on policy analysis is considerable, and as a consequence the RCT movement has almost taken over the development economics field. This change is not without its critics. Some argue that by reducing problems to manageable sizes for an RCT, the development economics profession is avoiding the really big, hard questions about whether systemic change is needed for growth and development. But for countries like India where resources, particularly in the least developed states and areas, are hard to come by, the results of RCTs are vital input into decisions. They ensure that vital years and budgets are not wasted.
The MIT-based Poverty Action Lab has an India affiliate at the Institute for Financial Management and Research in Chennai. Banerjee and Duflo — who are married to each other — are frequent visitors to India, and the former has also written extensively on the Indian economy’s current problems. He is an alumnus of South Point School and Presidency University in Kolkata, and also did a Masters degree at JNU before his PhD at Harvard.
The Nobel Committee highlighted how their “experiment-based approach has transformed development economics” over the past decades. They mentioned specifically how, as a result of one such study, “more than five million Indian children have benefited from programmes of remedial tutoring in schools”.
ALSO READ: Indian-American Abhijit Banerjee, two others win 2019 Nobel economics prize
Banerjee, Duflo and Kremer together have launched a movement within development economics that seeks to ensure that clear, unambiguous answers can be found to the question of whether a particular policy intervention is effective. This is extremely relevant when it comes to framing policy in low- and middle-income countries, where state capacity is quite limited and it is particularly necessary to be able to prioritise more effective policies over less. Duflo and Banerjee’s book, “Poor Economics”, is an argument for such evidence-based policy, particularly in the Indian context.
While Duflo and Banerjee--together with another Indian-origin economist, Sendhil Mullainathan--set up the influential Poverty Action Lab in MIT in the early 2000s, it was Michael Kremer who, with his studies of schools in Kenya, first popularised RCTs. The idea behind such policy trials is to treat an intervention similarly to, for example, a medical treatment or new drug that is being scrutinised. If a particular group can be randomly divided into a control set and an experimental set, and then the latter is the one exposed to the policy treatment, then by comparing the outcomes on the control and experimental group the analyst can be more certain that other factors are not confounding the results. For example, if half the schools in a district are randomly chosen for a special trial — for example, biometric attendance records for teachers — and the other half are not, then comparing school outcomes afterwards makes a pretty unarguable case that such records do (or do not) help improve learning outcomes.
ALSO READ: REPLUG | We don't ask real questions: Abhijit Banerjee
The effect of such rigour on policy analysis is considerable, and as a consequence the RCT movement has almost taken over the development economics field. This change is not without its critics. Some argue that by reducing problems to manageable sizes for an RCT, the development economics profession is avoiding the really big, hard questions about whether systemic change is needed for growth and development. But for countries like India where resources, particularly in the least developed states and areas, are hard to come by, the results of RCTs are vital input into decisions. They ensure that vital years and budgets are not wasted.
The MIT-based Poverty Action Lab has an India affiliate at the Institute for Financial Management and Research in Chennai. Banerjee and Duflo — who are married to each other — are frequent visitors to India, and the former has also written extensively on the Indian economy’s current problems. He is an alumnus of South Point School and Presidency University in Kolkata, and also did a Masters degree at JNU before his PhD at Harvard.
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