Nobel Prize in Economics Awarded for Work on Poverty

Trio pioneered the testing of policies to improve educational outcomes and health and address problems associated with the very poor

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The Nobel Prize in economics was awarded Monday to a trio of U.S.-based economists—including a married couple—for their “experimental approach to alleviating global poverty.”

Abhijit Banerjee, Esther Duflo and Michael Kremer played a key role in transforming the approach to lessening global poverty, the Nobel committee said.

Starting in the mid-1990s, the trio pioneered the testing of specific policies to improve educational outcomes and health, and address other problems associated with the lives of the very poor.

Economists have been studying poverty since the 19th century, but often by searching for “character traits” that distinguish the very poor from the rest of society, and offering remedies that are based on economic theories about how people should behave in response to incentives, without trying to find out how those incentives would function in practice.

“Often the poor are reduced to caricature,” said Esther Duflo, who is a professor of economics at the Massachusetts Institute of Technology. “What we want to do is try and unpack the problems [they face] one by one and address them as rigorously as possible.”

The Nobel Prize committee said that more than 700 million people subsist on extremely low incomes, while every year, five million children under five die of diseases that often could have been prevented or treated by a handful of proven interventions. While most children in poor countries attend primary school, many leave without proficiency in reading, writing and mathematics.

The experimental approach to examining the causes of and remedies for those failures began in the mid-1990s with a series of school studies in western Kenya that were summarized in a 2003 paper by Prof. Kremer for the American Economic Review, one of the discipline’s most prestigious journals.

Work by his fellow laureates and a growing number of other researchers expanded the approach into a range of fields, including health, the availability of credit, women’s access to political power and farming technologies.

The Nobel committee said their work had led to improvements in the lives of many poor people, noting that as a direct result of one study, five million Indian children have benefited from remedial teaching in their schools, while a number of countries have increased their spending on preventive health care.

Prof. Duflo became only the second woman to have won the prize in economics since it was first awarded in 1969, and is its youngest recipient. She shares the prize, in part, with her husband, Prof. Banerjee, with whom she wrote “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty.”

Prof. Duflo’s award comes at a time when the economics profession has begun to acknowledge problems in its treatment of women, who account for a tiny proportion of its senior ranks.

“We are starting to realize that the way we conduct ourselves is not conducive to a good environment for women,” she told reporters in a conference call. “I hope to inspire other women to continue their work, and men to give them the respect that they deserve.”

Prof. Duflo said the experimental techniques that have been applied to extreme poverty in developing countries could be applied to “people in rich countries who also have difficult lives.”

“We have to do much deeper work to understand the lives of the less fortunate in our societies in the face of all the disruption they face,” she said.

The 2019 prize is the second in five years for work in developmental economics, a field that hadn’t previously received much attention from the committee. In 2015, Angus Deaton received the award for pushing the field toward “microeconomic analysis.”

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