Last year, on a not-so-cold December afternoon in Mumbai, I told economist Abhijit Banerjee that I thought it was only a matter of time before he would win the Nobel Prize. He smiled, and quickly changed the subject. However, by then, there had been a steady buzz in academic circles that he and his wife and colleague, Esther Duflo, were top contenders for the prestigious award. The day has finally arrived, as the couple has won the 2019 Sveriges Riksbank Prize in Economic Sciences (also known as the Nobel Prize for Economics), along with fellow economist Michael Kremer.
It isn’t every day that an economist is a celebrity in India, but today Abhijit rightfully is. Stories of his school and college days are making headlines, his anti-government speeches, and his thoughts on growth and poverty are being culled out of newspaper archives. All these different reports stitched together may give us a glimpse of the Indian-American Nobel Laureate, but to understand the man, and all that he stands for, one has to focus on his work for which he has been awarded the Nobel Prize.
If the measure of an individual’s existence is how many lives he or she had touched for the better, Abhijit and Esther truly have had successful lives. Through their work, they have touched millions of lives – especially those of poor and marginalised individuals, who are often overlooked by the society, and the system. Before Abhijit and Esther, mainstream development economists primarily sat in their ivory towers, and did poverty research by creating grandiose models of growth and development based on which various governments and multilateral organisations spent millions of dollars but did not receive adequate results in curbing poverty. The couple changed this dismal approach by pioneering a different approach altogether, one that is more humane. They introduced field experiments and conducted randomised control trials (RCTs) to scientifically evaluate anti-poverty programmes and learn about poverty from those who perhaps understand it the best: the poor themselves.
Exactly ten years ago, Abhijit won the inaugural Infosys Prize while Esther bagged the MacArthur ‘genius’ Fellowship, followed by the John Bates Clark Medal the year after for this new approach of poverty research. But, despite that, field experiments and the use of RCTs in Economics and social policy were not popular outside of a few economics departments in the United States and Europe. However, all of that started to change after the publication of their book ‘Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty’ in 2011.
The first sentence of the book reads, “Every year, 9 million children die before their fifth birthday.” It hits you hard as a reader and prepares you for the rest of the book. In it, Abhijit and Esther go on to show that there is no single solution to poverty eradication, so we should give up the attempt to find ‘the’ solution. Instead, we should try and understand how we can make each programme, and each policy work better within its local context. Thus, by making each programme work better, we take one step at a time towards solving global poverty. They have demonstrated this in various areas like education, health, gender, family, risk, finance, politics, and institutions. Professor Amartya Sen, therefore, rightly calls ‘Poor Economics’, “A marvelously insightful book by two outstanding researchers on the real nature of poverty.”
Michael Kremer, who shared the Nobel Prize this year, was also one of the pioneers of RCT. As early as in the 1990s, he conducted some of the first RCTs to evaluate policy interventions in developing countries, including the much-celebrated deworming experiment in schools in Kenya. In 2003, Abhijit and Esther, along with Sendhil Mullainathan, founded the Poverty Action Lab at MIT, which was renamed Abdul Latif Jameel Poverty Action Lab (more popularly known as J-PAL) in 2005. The works of Abhijit, Esther, Michael, and others at J-PAL have made the idea of evaluating anti-poverty programmes and policies mainstream around the world. In doing so, their significant methodological contribution is the use of RCTs to identify causality as opposed to mere correlations in the impact evaluation of these programmes. They have successfully brought out the research on RCTs in development economics from university departments to the alleys of policymakers, governments, and NGOs. It is especially relevant in the context of India where so many anti-poverty schemes are implemented at the local, state as well as central level. Therefore, it is not a surprise that J-PAL is currently working with several state governments of India evaluating many of their existing programmes and that J-PAL’s South Asia office is based at the Institute for Financial Management and Research in Chennai with another office in New-Delhi.
The irony is that despite Abhijit and Esther's insightful oeuvre of work that has the power to redefine poverty research in India, most academic institutions in the country do not include them in their curriculum. In the noughties, when their research was already making waves in the academic circles abroad, I was a student of both of Abhijit’s Indian alma maters – Presidency College (now Presidency University), and Jawaharlal Nehru University (JNU) – and in neither of these hallowed institutions were his research formally taught. Abhijit’s research motivated me during my PhD years in the US, when I was introduced to ‘Poor Economics’, and the original research articles on which the book is based. t inspired me to take up development economics as my research area and field experiments as my research tool. I conducted field experiments in rural India and wrote a dissertation on ‘gender and microfinance’, which is another area in which Abhijit and Esther have done pioneering work. They conducted the earliest randomised evaluation of a microfinance programme by the organisation Spandana in Hyderabad to measure its impact on health, education and women’s empowerment.
As an economics faculty in India, I currently teach courses on behavioural and experimental economics and development, where I extensively use their body of research as well as ‘Poor Economics’ as one of the main textbooks. I am always delighted to find how the book makes poverty research come alive in the classroom and spark an immediate interest among students.
On that not-so-cold December afternoon, as it often happens when two Bengali economists meet, the adda with Abhijit veered towards Kolkata and politics, touched on food, and, of course, settled on research. I had told him about a research idea of mine that is based on his seminal work on the randomised evolution of microfinance mentioned above, and he encouraged me to conduct the study. I am currently doing so by carrying out an RCT on microfinance and women's empowerment jointly with Georgetown University.
Over the years, I have learned from Abhijit in various ways. As a young researcher, I have learned to think about poverty research from a different approach and estimate causality using experiments as a research tool. As a teacher, I have learned how to make the economics of poverty and development real and tangible to the students. Finally, as an economist, I have learned to view economics as a more humane science and to work towards a better future continually.
Abhijit and Esther write in ‘Poor Economics’: “It is possible to make the world a better place – probably not tomorrow, but in some future that is within our reach…” This year’s Nobel Prize is a statement that their work is indeed helping the world inch closer to that future, one randomised evaluation at a time.
Dr Shagata Mukherjee is an Assistant Professor at the Meghnad Desai Academy of Economics and an Affiliated Faculty at the Centre for Experimental Social Sciences (CESS), Nuffield (Oxford) – FLAME. He holds a PhD in Experimental and Development Economics from Georgia State University, USA.
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