Abhijit Banerjee, Esther Duflo and Michael Kremer have been awarded the Nobel Prize for Economics. Discuss how their study has transformed development economics.
The 2019 Nobel Prize for economics was jointly awarded to Abhijit Banerjee, Esther Duflo and Michael Kremer for their experimental approach to alleviating global poverty.
How their study transformed Developmental Economics?
- The research of the Nobel Laureates has considerably improved the world’s ability to fight global poverty. The laureates bemoaned how the debates on poverty “tend to be fixated on the ‘big questions’: What is the ultimate cause of poverty? How much faith should we place in free markets? Is democracy good for the poor? Does foreign aid have a role to play? And so on”.
- They did not get stuck with these big questions. Instead, they emphasized on breaking down a problem, study its different aspects, conduct various experiments and, based on such “evidence”, decide what needs to be done.
- Their studies look at the various dimensions of poverty .i.e. poor health, inadequate education, etc. They then drill down further on each of these components. Within poor health, for instance, they look at nutrition, provisioning of medicines, and vaccination, etc. Within vaccinations, they try to ascertain “what works” and “why”.
- They undertook the study through the use of tool Randomised Control Trials (or RCTs).
The laureates firmly believed that people have reduced the poor to caricatures without understanding the roots of their problems. Their study tries to unpack the problem and analyse each component scientifically and rigorously.