It must have been around sunrise Monday in Boston, home to Abhijit Banerjee, Esther Duflo and Michael Kremer, when The Royal Swedish Academy of Sciences announced the Nobel Prize for Economic Sciences for 2019 to the three economists “for their experimental approach to alleviating poverty”. Their research has, over the last two decades, helped obtain reliable answers about the best ways to fight global poverty.
While the couple, Banerjee and Duflo, are professors in the department of economics at the Massachusetts Institute of Technology (MIT), Kremer is a professor in the department of economics in Harvard University. Their work has revolved around identifying “low-hanging fruits”, which are often the most effective interventions in improving outcomes in health and education for the poor.
Banerjee, born in Mumbai in 1961, studied at the University of Calcutta and the Jawaharlal Nehru University before receiving his Ph.D from Harvard University in 1988. Kremer, too, obtained his Ph.D from Harvard University in 1992, while Duflo received her doctorate from MIT in 1999.
Banerjee and Duflo are also on the board of directors of the 2003-founded Abdul Latif Jameel Poverty Action Lab, which works to reduce poverty by ensuring policies are informed by scientific evidence. In fact, Duflo is only the second woman in 50 years to be awarded a Nobel in Economic Sciences after Elinor Ostrom in 2009.
In an interview to NobelPrize.org, Duflo said that to devise effective policies to help people get out of poverty, it was important to understand them a little more deeply. “And without spending some time understanding… the intricacy of the lives of the poor and why they make the choice that they make, and why something that might seem at first surprising makes a lot of sense in a particular logic, it is impossible to design the right approach,” she said.
The trio’s work — breaking down the problem of global poverty into a number of smaller and more precise questions at individual and group level — has redefined research in development economics over the last 20 years. “This new research is now delivering a steady flow of concrete results,” stated the popular science background paper made available by the Academy.
Addressing a press conference Monday afternoon at MIT after the announcement, Banerjee said, “It is particularly wonderful because the prize is not for us, but for the entire movement — 400-plus professors associated with J-PAL work.” After the Nobel prize, he said, he hoped to do more of the same. “It is fun, learning new things. We are looking for results from the latest intervention,” he said.
Banerjee was one of the few faces that the Congress tapped ahead of the Lok Sabha elections this year. For the NYAY or minimum guaranteed income scheme, he had suggested a monthly income of about Rs 2,500 to Rs 3,000 to those below the poverty line. This, he said, was keeping in mind the fiscal space available with the government. The programme could always be scaled up in the coming years, he had said. The party had, in its manifesto, announced a monthly income of Rs 6,000 to every BPL family.
Banerjee had also come down heavily on the NDA government’s demonetisation decision and said it would adversely impact the informal sector which undertakes much of its transactions in cash. In a joint paper authored with Harvard University’s Namrata Kala, he said, “Demonetisation seemed more like a one-off penalty on those who were holding large quantities of cash at the time without affecting the future incentives for corruption.”
In May, he signed a letter along with over 100 economists, raising concerns over “political interference” in statistical data. Referring to revisions in base year for GDP growth estimates, the letter said: “In fact, any statistics that cast an iota of doubt on the achievement of the government seem to get revised or suppressed on the basis of some questionable methodology.”
To a question on the Indian economy at the press conference at MIT, Banerjee said, “Doing very badly.” Quoting the National Sample Survey, he said, “The average consumption in urban and rural areas has slightly gone down. This is a glaring warning sign.”
Recently, responding to a talk by former RBI Governor Raghuram Rajan at the OP Jindal Lecture Series at Brown University, Banerjee said, “We (India) are in a crisis.”
Pointing out at that people, on average, are poorer, he said, average consumption expenditure at current prices fell from Rs 1,587 per person per month in 2014 to Rs 1,524 ppm in 2017-18 in rural areas. In urban areas, it has dropped from Rs 2,926 ppm in 2014 to Rs 2,902 in 2017-18. “Over a four-year period, average consumption going down — this hasn’t happened in many years, may be since the seventies,” he said, adding this was “extremely serious”.
The three Laureates worked mostly with local NGOs in countries such as India and Kenya, home to a large number of poor, to perform field experiments to study how individuals behave in their everyday environment. For instance, Kremer studied learning outcomes in two groups, one which received more textbooks and the other which got free school meals. Their objective seemed to be to figure out which interventions increased school outcomes at the lowest cost.
During 2001 to 2004, Banerjee and Duflo along with two other researchers evaluated the Balsakhi Program, a remedial education intervention implemented in 122 public primary schools in Vadodara and 77 schools in Mumbai, in conjunction with NGO Pratham.
In the 2001 school year in Vadodara, approximately half of the schools were given a tutor for grade 3, and the other half for grade 4, while in Mumbai during that same year, approximately half of the schools received a tutor for grade 3, and the other half received a tutor for grade 2 in both cities.
In both Vadodara and Mumbai, the Balsakhi program significantly improved overall test scores. In contrast, there was no measurable impact for their classroom peers, who did not receive remedial tutoring but were treated with smaller class sizes and a more homogenous classroom.
“As a direct result of one of their studies, more than 5 million Indian children have benefitted from effective programmes of remedial tutoring in schools,” the Academy noted in its statement announcing the Nobel.