Nobel Prize in Economic Sciences 2019: fighting poverty on site

Nobel Prize in Economic Sciences 2019: fighting poverty on site

October 24, 2019

Nobel Prize in Economic Sciences 2019: fighting poverty on site

The Royal Swedish Academy of Sciences has bestowed this prestigious award on three economists who, through their work, have redesigned research in the field of fighting poverty


“For their experimental approach to alleviating global poverty.” With this official motivation, in October 2019, Abhijit Banerjee, Esther Duflo (the second woman to receive this recognition, and the youngest since she was born in 1972) and Michael Kremer were awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, more commonly known as the Nobel Prize for Economic Sciences. Abhijit Banerjee, born in Mumbai (India), and Esther Duflo, born in Paris (France) both have professional experience at the Massachusetts Institute of Technology (MIT) in Cambridge, whereas the American Michael Kremer is employed at Harvard University, also in Cambridge. “Their research has already helped alleviate global poverty and has great potential to further improve the lives of the poorest people on the planet,” the experts of the Royal Swedish Academy of Sciences explained. 

A highly topical prize

The awarding of the prize to the three researchers fits perfectly into the global effort to tackle major sustainability challenges, as demonstrated by the fact that the first of the 17 Sustainable Development Goals set by the United Nations for 2030 focuses precisely on the eradication of poverty, a problem that is far from being solved. 

While some of the data on economic development over the last two decades is encouraging, a more detailed analysis shows that there is still a long way to go. In fact, between 1995 and 2018, the welfare of the poorest countries increased twofold (measured as gross domestic product per capita), infant mortality was halved and the percentage of children attending school increased by 24 percentage points to 80%. However, more than 700 million people still live in extreme poverty and 5 million children die each year before reaching the age of five from easily preventable or curable causes

Asking ourselves the right questions

In this scenario, the innovative idea put forward by the three researchers actually comes from research sectors such as chemistry or biology, which have little to do, at least at first glance, with the economy. In a nutshell, when faced with the important question of how to solve the problem of poverty, randomized studies are used to try to find an answer to more specific and precise questions. Therefore, it is not a matter of seeking new universal macroeconomic laws that can be applied as a global solution, but rather of breaking down the problem into many small parts. The final purpose is essentially to provide an overview of the situation, shedding light on each of its parts, one step at a time. 

According to researchers, this task must necessarily be carried out on site in order to fully understand which are the key questions to be answered and to allow people to be active in their usual contexts, with their needs, possibilities and habits. In this spirit, Kremer began his innovative studies in Kenya in the mid-1990s, trying to understand how to improve the educational performance of children in the region. By working in schools and with local non-governmental organizations, he realized that providing more textbooks or free meals would not have helped children in this respect. As they continued in this direction in India, Banerjee and Duflo discovered that targeted support from trained educators was the answer to the question.

Present goals and future challenges

By conducting many other experiments on site, the three winners have profoundly influenced the way in which research is carried out in development economics, bringing about a change that has already produced tangible results. More than 5 million children in India have benefited from programs supporting education, and funding for specific prevention programs has been introduced in many countries, based on the results of the studies that made it possible for the three experts to receive the Nobel Prize

Subsidies and field studies are certainly not enough to solve the problem of poverty: doubts remain as to whether results obtained in a specific context can actually be exported to other contexts; in addition, many of the factors influencing poverty and economic development are not entirely rational. For instance, in many rural areas of developing countries, small farmers are sometimes reluctant to use new technologies that could improve productivity. It is important to address these issues too in order to bring the circle to a close and actually eradicate global poverty. 

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