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Abhijit Banerjee, Esther Duflo, Michael Kremer win Nobel Prize for Economics

Abhijit Banerjee (left) and Esther Duflo.  (Photo: The Boston Globe/Getty Images)Premium
Abhijit Banerjee (left) and Esther Duflo. (Photo: The Boston Globe/Getty Images)

  • Abhijit Banerjee and Esther Duflo are with Massachusetts Institute of Technology and Michael Kremer is with Harvard University
  • The Nobel prize committee said the research conducted by this year’s laureates has considerably improved our ability to fight global poverty

NEW DELHI : Nobel Economics Prize for 2019 has been awarded to Abhijit Banerjee, Esther Duflo and Michael Kremer "for their experimental approach to alleviating global poverty".

Indian-origin Abhijit Banerjee and his wife Esther Duflo are with Massachusetts Institute of Technology and Michael Kremer is with Harvard University.

The Nobel prize committee said the research conducted by this year’s laureates has considerably improved our ability to fight global poverty. In just two decades, their new experiment-based approach has transformed development economics, which is now a flourishing field of research.

“This year’s Laureates have introduced a new approach to obtaining reliable answers about the best ways to fight global poverty. In brief, it involves dividing this issue into smaller, more manageable, questions – for example, the most effective interventions for improving educational outcomes or child health. They have shown that these smaller, more precise, questions are often best answered via carefully designed experiments among the people who are most affected," it added.

In mid-1990s, Michael Kremer and his colleagues demonstrated how powerful this approach can be, using field experiments to test a range of interventions that could improve school results in western Kenya.

Abhijit Banerjee and Esther Duflo, often with Michael Kremer, soon performed similar studies of other issues and in other countries. Their experimental research methods now entirely dominate development economics.

The Nobel Committee said the Laureates’ research findings – and those of the researchers following in their footsteps – have dramatically improved our ability to fight poverty in practice. “As a direct result of one of their studies, more than five million Indian children have benefitted from effective programmes of remedial tutoring in schools. Another example is the heavy subsidies for preventive healthcare that have been introduced in many countries," it added.

Some of the most insightful work from Banerjee and Duflo is on the way poor families spend money, according to a Lounge cover on the duo by Niranjan Rajadhyaksha titled “What Really Drives Poor" published in June, 2011. “It is usually assumed that poor families are hungry and will use every extra rupee that comes their way to buy additional calories. Banerjee and Duflo found out in their fieldwork that the poor often prefer to spend their extra money on televisions or festivals or tasty but expensive food," the article noted.

The two MIT economists use field experiments to understand the lives of the poor. Their basic technique is borrowed from the world of medical research, through controlled trials. Two groups of people are selected at random. One group is exposed to a small intervention and the other continues to live its life as before. The MIT team then sees whether the outcome in the first case is large enough to justify spending on it.

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