Three Win Economics Nobel Prize for Revolutionizing Global Poverty Research

Esther Duflo and Abhijit Banerjee are smiling.
Esther Duflo and Abhijit Banerjee arrive to a press conference in Cambridge, Massachusetts, on Monday. Scott Eisen/Getty Images

On Monday, three researchers—Esther Duflo, Abhijit Banerjee, and Michael Kremer—were awarded this year’s Nobel Memorial Prize in Economic Sciences for their work using randomized controlled trials to help the world understand some of the “quick fixes” that could make a dent in alleviating global poverty.

Duflo and Banerjee are co-founders of the Abdul Latif Jameel Poverty Action Lab, known as J-PAL, which conducts randomized controlled trials to measure the effectiveness of tactics to combat poverty. Kremer, a Harvard professor, has co-authored a number of J-PAL’s best-known studies. The trio are considered pioneers of the practice of using experiments to more effectively direct development assistance. Before their methods gained traction, development economists rarely got their hands dirty with the complex work of designing experiments. Western economists at places like the World Bank and International Monetary Fund long had outsize influence in the fates of the developing world, their conclusions driven largely by theory and hunches rather than evidence. The laureates’ work has pushed economists across a range of specialties toward more empirical work.

Duflo, Banerjee, and Kremer’s studies have found that installing cameras in Indian schools reduces teacher absenteeism and leads to higher student test scores, that some types of fertilizer can boost the incomes of farmers in Western Kenya, and that deworming children causes them to miss less school. They’ve also shown that not all well-intentioned development strategies make a measurable difference: They’ve found that entrepreneurship education doesn’t have a big effect on the profits of Peruvian small-business owners and that providing sex education training to teachers in Kenya didn’t lower teen pregnancy or STI transmission rates.

Duflo is the youngest winner to date of the economics prize, which is not officially a Nobel, and only the second ever woman to receive it since it was established in 1968.

“It wasn’t long ago that development econ belonged to the ‘country doctors’ who would fly from country to country making grand pronouncements without much of a sense of what life in poverty meant,” Justin Wolfers, professor of economics and public policy at the University of Michigan, pointed out on Twitter. He added that the trio, who he called the “founders of modern development economics” had completed changed the field.

Some praise Duflo, Banerjee, and Kremer’s approach for its relative modesty. Unlike previous generations of development economists, the trio favor data over “expertise” and have succeeded in building partnerships with local organizations and governments. Bloomberg Opinion columnist Noah Smith celebrated the role the team had played in making the economics discipline more attentive to issues of “poverty and inequality,” and more thoughtful with respective to “empiricism and causality.”

But their work is not without its critics. The debates over their approach speak to the disagreement about what role, if any, Westerners should have in combating poverty across the global south, which continues to grapple with the consequences of colonialism and industries like oil production and mineral mining, believed by some to perpetuate poverty to the benefit of wealthy countries. Some consider the laureates’ approach of looking for narrowly targeted interventions to be unambitious. In the Wall Street Journal, Hoover Institution fellow David Henderson said that Banerjee, Duflo, and Kremer had aimed “too low on global poverty” by asking questions like whether textbooks or flipbooks were more effective at raising the test scores of poor kids, rather than more directly confronting bigger issues like immigration and economic growth. Economists, historians, and theorists on the left and right who look at development through a macro lens frequently agree that wealth gaps can hardly be explained by the types of micro factors that J-PAL researches.

But if Duflo, Banerjee, and Kremer have built a celebrated new approach to development economics, their recognition may pave the way for the next iteration: one driven by the global south itself, equipped to tackle both the shallow and deep contributors to global inequality. We still need to grapple with the reality that 3.4 billion people struggle to meet basic needs, but the Royal Swedish Academy of Sciences is correct to celebrate the role Duflo, Banerjee, and Kremer have played in making some people’s lives better through carefully controlled research.