Experimental Approach to Alleviating Global Poverty - Economic Sciences Nobel Prize 2019

Research of Nobel Prize Winners

In one widely noted experiment, Duflo and Banerjee found that immunization rates for children in rural India jump dramatically (from 5 percent to 39 percent) when their families are offered modest incentives for immunization, such as lentils.

They have also studied educational issues extensively  uncovering new results about improvements in student achievement (when classes are divided into small groups) and ways to improve teacher attendance.

The topics of research include fertilizer use by Kenyan farmers, physician training in India, HIV prevention in Africa, the effects of small-scale lending programs, and the impact of aid programs in Indonesia.

In one study conducted on three continents, Duflo and Banerjee also reported significant welfare gains from an intervention that helps the poor simultaneously in multiple ways, including job training, productive assets, and health information.

Duflo and Banerjee have published dozens of research papers, together and with other co-authors. They have also co-written two books together, “Poor Economics” (2011) and the forthcoming “Good Economics for Hard Times” (2019).
http://news.mit.edu/2019/esther-duflo-abhijit-banerjee-win-2019-nobel-prize-economics-1014

Abhijit Banerjee Papers - MIT Website
https://economics.mit.edu/faculty/banerjee/papers

Abhijit Banerjee Papers - -NBER Website
https://www.nber.org/people/abhijit_banerjee




PUTTING A BAND-AID ON A CORPSE: INCENTIVES FOR NURSES IN THE INDIAN PUBLIC HEALTH CARE SYSTEM
Abhijit V. Banerjee, Rachel Glennerster, and Esther Duflo
J Eur Econ Assoc. 2008; 6(2-3): 487–500.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2826809/

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019

Abhijit Banerjee
Esther Duflo
Michael Kremer

Press release: The Prize in Economic Sciences 2019


14 October 2019

The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019 to

Abhijit Banerjee
Massachusetts Institute of Technology, Cambridge, USA

Esther Duflo
Massachusetts Institute of Technology, Cambridge, USA

Michael Kremer
Harvard University, Cambridge, USA

“for their experimental approach to alleviating global poverty”



Their research is helping us fight poverty
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.

Despite recent dramatic improvements, one of humanity’s most urgent issues is the reduction of global poverty, in all its forms. More than 700 million people still subsist on extremely low incomes. Every year, around five million children under the age of five still die of diseases that could often have been prevented or cured with inexpensive treatments. Half of the world’s children still leave school without basic literacy and numeracy skills.

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.

In the 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 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.

These are just two examples of how this new research has already helped to alleviate global poverty. It also has great potential to further improve the lives of the worst-off people around the world.

Illustrations
The illustrations are free to use for non-commercial purposes. Attribute ”© Johan Jarnestad/The Royal Swedish Academy of Sciences”

Illustration: Difference productivity (pdf)
Illustration: Improved educational outcomes (pdf)
Illustration: Vaccination rates (pdf)

Read more about this year’s prize
Popular science background: Research to help the world’s poor
Scientific Background: Understanding development and poverty alleviation



Abhijit Banerjee, born 1961 in Mumbai, India. Ph.D. 1988 from Harvard University, Cambridge, USA. Ford Foundation International Professor of Economics at Massachusetts Institute of Technology, Cambridge, USA.

Esther Duflo, born 1972 in Paris, France. Ph.D. 1999 from Massachusetts Institute of Technology, Cambridge, USA. Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at Massachusetts Institute of Technology, Cambridge, USA.

Michael Kremer, born 1964 in New York, USA. Ph.D. 1992 from Harvard University, Cambridge, USA. Gates Professor of Developing Societies at Harvard University, Cambridge, USA.



The Prize amount: 9 million Swedish krona, to be shared equally between the Laureates


The Royal Swedish Academy of Sciences, founded in 1739, is an independent organisation whose overall objective is to promote the sciences and strengthen their influence in society. The Academy takes special responsibility for the natural sciences and mathematics, but endeavours to promote the exchange of ideas between various disciplines.

Nobel Prize® is a registered trademark of the Nobel Foundation.


Press release: The Prize in Economic Sciences 2019. NobelPrize.org. Nobel Media AB 2019. Mon. 28 Oct 2019.
https://www.nobelprize.org/prizes/economic-sciences/2019/press-release/

Related News

MIT Function to felicitate professors Abhijit and Duflo

http://news.mit.edu/2019/esther-duflo-abhijit-banerjee-win-2019-nobel-prize-economics-1014


https://qz.com/1727604/banerjee-duflo-and-kremer-win-2019-nobel-prize-in-economics-for-poverty-research/

https://www.bloombergquint.com/economy-finance/abhijit-banerjee-nobel-laureate-economic-writer-directorand-cook

Neoliberalism - A Review

The term neoliberalism was coined at a meeting in Paris in 1938. Two men who came to define the ideology, Ludwig von Mises and Friedrich Hayek attended the meeting.

In The Road to Serfdom, published in 1944, Hayek argued that government planning, by crushing individualism, would lead inexorably to totalitarian control. The Road to Serfdom was widely read. It came to the attention of some very wealthy people, who saw in the philosophy an opportunity to free themselves from regulation and tax. In 1947, Hayek founded an organisation to spread the doctrine of neoliberalism,  the Mont Pelerin Society. It was generously supported  by millionaires and their foundations.

Hayek created a transatlantic network of academics, businessmen, journalists and activists.  A series of thinktanks came up to refine and promote the ideology. Among them were the American Enterprise Institute, the Heritage Foundation, the Cato Institute, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute. The supporters of neoliberalism financed number of academic positions and departments, particularly at the universities of Chicago and Virginia.

https://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot

Postulates of Capitalism

“Postulate” is a mathematical term.  It is defined by “The Basic Postulates & Theorems of Geometry” Web page as follows: “Postulates are statements that are assumed to be true without proof.”

Postulates of Traditional Marginalism

The first postulate, and perhaps the most important postulate of traditional marginalism, is that “The wage is equal to the marginal product of labour.” “That is,” Keynes explained, “the wage of an employed person is equal to the value which would be lost if employment were to be reduced by one unit (after deducting any other costs which this reduction of output would avoid); subject, however, to the qualification that the equality may be disturbed, in accordance with certain principles, if competition and markets are imperfect.”

The second “postulate” is that “the utility of the wage when a given volume of labour is employed is equal to the marginal disutility of that amount of employment.” It is assumed by the marginalists that no worker really wants to work at all. Performing labor for a capitalist boss is a definite “disutility” from the worker’s point of view. On the other hand, the money that the workers obtain in exchange for their “labor” enables the workers to buy commodities that have a definite utility for them. Indeed, without the “utility” provided by the wage, which the worker can only obtain by selling his or her “labor,” the worker couldn’t live at all.
https://critiqueofcrisistheory.wordpress.com/the-ideas-of-john-maynard-keynes-pt-1/the-ideas-of-john-maynard-keynes-pt-2/

Stiglitz's Plan for Fighting the American and Global Financial Crisis of 2008

Authors

• Narayana Rao

Published

Creative Commons Attribution 3.0 License

Version 2

Last edited: 02 Dec 2008

Exported: 26 Nov 2011

Original URL: http://knol.google.com/k/-/-/2utb2lsm2k7a/542

Stiglitz proposed the following plan in an article in Time dated October 27, 2008, pp. 27-28.

 

The steps

 

1. Recapitalize banks.

 

2. Stem the tide of foreclosures.

 

3. Pass a stimulus that works.

 

4. Restore confidence through regulatory reform.

 

5. Create an effective multilateral agency. 

 

Stigilitz cautions the government not to bail out bondholders of banks. The losses of shareholders and bond holders need not be made good by the government. Government provides for additional capital and gets appropriate equity stake in banks. This equity may be sold by the government when things stabilize later on.

 

Similarly government can support house owners with mortgages. It may provide temporary support to them to tide over the difficulty but devise schemes in such a way that there is a penalty on the house owners for taking loans beyond their ability. Government may take equity in houses which may be sold later on either to the current owner or a to a new owner.

 

Stimulus packages are needed to reactivate the economy in general.

 

The failures of the system that caused the crisis need to be ascertained and new policy and regulation needs to be put in place.

 

As the crisis spread to Europe from USA, multilateral agency is to be created to understand global systemic risks.

 

The interesting idea, that emanates from Stiglitz's proposal is that all persons who made wrong decisions have to be allowed to incur losses due to their extra risk taking and government should not bail any one of them with tax payers' money.

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http://knol.google.com/k/-/-/2utb2lsm2k7a/542

Narayana Rao - 25 Apr 2011