2019 Nobel Laureate Dr. Michael Kremer on his inspiration and vision for development institutions
Dr. Michael Kremer is the Gates Professor of Developing Societies in the Department of Economics at Harvard University. In 2010 Dr. Kremer co-founded USAID’s Development Innovation Ventures (DIV) and he serves as DIV’s Scientific Director. In 2019, Dr. Kremer was the co-recipient of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, commonly referred to as the Nobel Prize in Economics.
Last week, we asked Dr. Kremer to reflect on the inspirations behind his approach to research and his vision for the DIV program, as well as how he sees development institutions evolving over the new decade.
In your Nobel speech you described your volunteer work in Kenya as pivotal to your approach to economics. What inspired you to volunteer abroad?
I saw volunteering abroad as a way to make a small personal contribution, while also learning about big picture issues. Being on the ground in Kenya allowed me to learn directly from people. Volunteering abroad provides opportunities to learn and gain a richer perspective on global poverty than one can get in a classroom or government office. That’s why right after graduating from college, I went to Western Kenya and wound up teaching high school.
How do you see those early experiences in Kenya as having informed your work today as an economist?
Teaching and living in Western Kenya had a very direct impact on me both personally and professionally. After teaching in Kenya, I co-founded WorldTeach, a nonprofit that matched people interested in teaching with schools seeking volunteers because I personally found the experience so valuable. USAID Administrator Mark Green and his wife were actually some of our first volunteers in 1987.
After finishing my PhD and getting my first academic job, I made a trip to Kenya to visit the friends I made while teaching. One of those friends, Paul Lipeyah, had just been hired by a non-governmental organization (NGO) focused on education. Conversations with Paul led to our first randomized evaluation of a child sponsorship program, later followed by work on textbook provision, school-based deworming, and many other topics.
However, there was also a broader lesson that extends beyond our work on education. My time teaching and volunteering in Kenya showed me how important it is to be on the ground, where the observations are most relevant and most powerful in terms of their problem-solving potential. Having a deep understanding of context enables us to learn from experiments and inspires innovative and practical solutions. One of the best ways of developing this is working directly with those who have an intimate understanding of the realities of poverty — farmers, teachers, NGO staff, and government officers. Many of the theories and ideas that informed my future work on education came from things I learned in this time.
My time in Kenya also inspired my first paper in economics. In fact, it could have been called “The Toilet Paper Theory of Economic Development.” This paper describes a production function in which many tasks have to be performed correctly for the final product to be valuable. I thought of the idea for the paper when remembering organizing a training for volunteer teachers in rural western Kenya. At one point we realized that we had not made plans to buy toilet paper. Luckily we remembered in time, but there are a lot of situations in which even making a small miscalculation, like not buying enough toilet paper, can create a larger failure. The paper worked out the implications of that type of production process for economic development.
Your vision was instrumental to the creation of USAID’s DIV program in 2010, where you continue to serve as Scientific Director. DIV positions USAID in the role of a social venture fund looking for promising innovations, rigorously testing them and helping the best to scale. What inspired your vision for DIV?
The vision for DIV was inspired by my experience with the scaling up of deworming interventions in Kenya. In the late 1990s, Edward Miguel (now an economist at UC-Berkeley) and I used the roll-out of a school-based deworming program to examine its educational impact. We found that the program reduced school absences by roughly a quarter. It wasn’t just children who were dewormed who benefited. Other children in the same school and even in nearby schools also had better educational outcomes because of reduced disease transmission. Follow-up studies showed that the program increased students’ future the fraction of girls entering secondary school and increased students’ future earnings enough to pay for the cost of the program one hundred times over.
The paper was published well, covered in the New York Times, and discussed in the Economic Report of the President and in the World Bank’s World Development Report. We had a chance to talk to the permanent secretary in the Kenyan Ministry of Education about it, and I think he was sincerely excited about the idea. But this randomized control trial (RCT) evidence in strong support of school-based deworming’s cost-effectiveness wasn’t enough to take the intervention to scale. Actually moving this forward required a ton of leg work to figure out which regions in Kenya had worms, how many pills would be needed, how they could be procured, how training cascades could be organized, how to arrange cooperation between the Ministry of Education and Ministry of Health, and many other elements.
To move this forward a group that had been invited to the World Economic Forum’s Young Global Leaders program, including Esther Duflo, Gary Edson, Kristen Forbes, and I formed an NGO called Deworm the World, and raised some money which was used to second people from the NGO to the Ministry of Education to work with them to help figure out all these details. This played a catalytic role in leading the Kenyan government to develop and implement a national program.
Rigorous testing can play an important role in innovation, but before ideas can be rigorously tested, it makes sense to first pilot and refine them, and after they have been tested, a major effort is typically needed to adapt them and transition them to scale. DIV was designed to support all stages of the innovation process. It makes small investments to pilot and test promising ideas. Larger ones to help bring innovations that are supported by rigorous empirical evidence to scale, because bridging the gap between evidence and implementation requires time and effort, and there are often constraints that prevent innovations from receiving the sustained resources required to develop operational models that function at scale, are financially sustainable, or are compatible within government systems.
In your Nobel speech, you mentioned the need for innovations in institutions. How would you like to see development institutions evolving in the future?
USAID is now focusing on helping developing countries on the Journey to Self-Reliance. At DIV, we’re testing innovations that leverage new technologies such as cashless or electronic distribution systems to support improving tax collection. In Côte d’Ivoire, DIV is supporting a project that will test a digital, cashless tax collection system in partnership with local governments, to improve the country’s fiscal system.
Another project in Indonesia is working to strengthen the world’s largest in-kind safety net program directly by helping the government move from in-kind distribution of rice to electronic distribution of rice vouchers. Both projects have research teams supported by DIV that will evaluate the rollout, help partners experiment with the parameters of the reform, and advise the government on the results. By building fiscal capacity and reducing waste and leakage in government programs in partner countries, these types of investment brings us closer to the day when development assistance is no longer necessary.
About Dr. Michael Kremer:
Dr. Kremer was co-awarded the 2019 Nobel Prize with Abhijit Banerjee and Esther Duflo for their work on the experimental approach to alleviating poverty. The experimental approach is a more iterative and nimble form of development and policy-making. The approach marries the microeconomist’s toolbox with programming and implementation. Where it has been deployed successfully, it has led to new discoveries, identified new development pathways, and helped to create more efficient development programs.
During his career, Dr. Kremer’s work has examined a broad range of development topics, from education, to health, water, finance, and agriculture. He has been instrumental in developing new methods, mechanisms and institutions for promoting social innovation. Notable successes include the Advanced Market Commitment (AMC), which was designed to create market demand for new vaccines, and DIV, which supports the piloting, testing, and scaling of creative solutions to any global development challenge that has the potential to improve the lives of millions of people.
