Nobel Prize in Economics Awarded for Experimental Approach to Combating Poverty

The Nobel Week 2019 was closed by the Nobel Memorial Prize in Economics, which was received by three scientists - Americans Michael Kremer (Harvard) and Abhijit Banerjee (MIT), as well as Frenchwoman Esther Duflo (MIT) - for "an experimental approach to the fight against poverty." The new approach allows dividing the global problem of poverty into smaller ones that are easier to solve, the committee said.

Ideas. It is the innovative approach of the laureates that has caused the explosive growth of experimental work in the field of developing economies over the past 20 years, becoming dominant, writes the Nobel Committee. The essence of this approach is to look for measures that are relatively cheap and effective to equalize labor productivity in countries where it is low.

• In the early work, scientists figured out how to improve the quality of education in India - to give more textbooks, school meals, or help the lagging behind. They applied all three options to randomly selected schools and found that only the third was effective. Then they expanded the methodology to health care, lending and the introduction of new technologies.
• Among the socially significant fundamental results: free distribution of medicines is many times more effective than selling even at a symbolic price; temporary subsidies are more effective than permanent ones when introducing new practices and technologies; even the successful development of microcredit has little effect on the “big” economy.

Find out more. Here is what economist Konstantin Sonin writes about the winners on Econs.online.

An important detail. Duflo is the second woman in the history of the economics prize (the first was political scientist and economist Elinor Ostrom in 2009). She is the youngest economic Nobel laureate in history - she is 46 years old. She also received a chair at MIT very early, at the age of 29.

• Banerjee is Duflo's supervisor and husband. They jointly conducted several classic studies and wrote papers on them.
• Duflo's Ph.D. work has already yielded a fundamental result - the first ever evidence of a causal relationship between improved education and higher wages in developing countries (based on Indonesia in the 1970s).
• In 2003, Duflo co-founded the Poverty Action Lab at MIT. The Center has conducted hundreds of field studies and trained thousands of specialists. The center's programs have affected at least 400 million people.

The Alfred Nobel Memorial Prize in Economics was established by the Bank of Sweden and has been awarded since 1969.

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