Concerned about global poverty? Winners of Nobel Prize 2019 for Economics show how it can be tackled
On 14th October 2019, three economists, the couple Abhijit Banerjee and Esther Duflo, and Michael Kremer were awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Customarily known as the Nobel prize, the trio received the award for their contribution to development economics, the field that deals with the developmental process of economic, fiscal, and social conditions in developing countries.
While the couple Abhijit Banerjee and Esther Duflo are at Massachusetts Institute of Technology, Cambridge, Michael Kremer is at Harvard University, also in Cambridge. Further, Esther Duflo is the only woman among other Nobel Prize winners of 2019, which is significant in the significance of gender equity. The three economists shared the Nobel Prize 2019 for Economics. In addition, the trio, together, received Nobel Prize money of 9 million Swedish kronor, which equals $9,10,000.
Drastic numbers of world poverty — food for thought
According to the 2019 Global Multidimensional Poverty Index (MPI), 23.1% of the world population that equals 1.3 billion people across 101 countries are multidimensionally poor.
They live on less than $1.25 per day.
Multidimensional poverty means poverty resulting from various deprivations such as hazardous living areas, lack of education, poor healthcare, lack of work opportunities, and violence.
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The trio’s contribution to development economics
Among other things, development economics also investigates the causes of global poverty and finds ways to combat it. However, theory only gives the picture of the issue at hand to design policies that can combat the challenge but it doesn’t guarantee the effectiveness of a specific policy in real-time practice. Only practical study is capable of showing the significance and urgency of addressing a problem at hand, and poverty being a long-time, massive global issue, is certainly not something you can solve through outdated and failed theoretical policies in the short-term
This inspired the three economists to take an experimental approach to find practical measures that can eradicate poverty over time. They conducted on-the-field research on the life and behaviour of the poor to find reasons for their unfortunate situation and accordingly formulated practical policies that worked in improving their lifestyle. Their experiments have had far-reaching impacts and improved education and health in developing economies such as India and Kenya. The Nobel Prize Committee thus acknowledged their contribution to enhancing the ability to alleviate global poverty and rewarded them with Nobel Prize
Overview of the experimental approach of research
The approach adopted by the laureates is used to solve a massive problem by dividing it into smaller, attainable questions — for instance, finding ways to improve the working conditions, encourage education or offer quality healthcare services. This method, the trio believe, helps in finding practical solutions for a massive issue by employing carefully designed experiments on the affected population. Riding on this idea, the trio conducted randomized controlled trials to find ways to tackle global poverty and improve health.
Randomized controlled trials, which are applied in the medical field, involve studying random groups — one group receives an ongoing, regular treatment and the other receives a particular social intervention such as food subsidy and free vaccination.
The results of the study conducted on both the groups are then compiled, compared and used to draw a conclusion based on which practical polices to tackle the issue are developed. Hungry for more? Continue reading here.
