It Takes a Village: What the Nobel Prize means for Development Economics
This post was written by Carson Christiano, Executive Director of the Center for Effective Global Action (CEGA)
Today, the top prize in economics was conferred upon our pioneering colleagues Abhijit Banerjee, Esther Duflo, and Michael Kremer for their “experimental approach to alleviating poverty.” The scientific background and Nobel lectures delivered by the laureates give a rich overview of how development economics has evolved as a field, referencing a number of important studies — including several by CEGA affiliates — that have contributed to its success over the past two decades.
Why is this significant?
First, experiments are still relatively new and somewhat edgy in the world of economics. Traditionally, the science involves proposing theories and testing them with complicated equations using existing datasets. In the “modern wave” of development economics, especially when randomization is involved, researchers must go to the field and collect data directly from the people they are studying (Kremer calls this generating “rich context”). It truly takes a village to carry out this work — an army of researchers, research assistants, survey enumerators, village elders, government officials, teachers, NGO workers, and boda-boda drivers. At one point, the randomized trial I worked on in Western Kenya employed well over 100 people.
To effectively identify the right research questions and study sample, administer surveys, and establish a credible counterfactual by convincing a government, NGO, or enterprise to behave in a way that supports your research design requires patience and grit (thankfully, if the data and study design are good, the math that follows is usually quite simple). The Nobel prize is a nice way of telling the world that all this effort is worth it.
Second, the prize is an acknowledgement that the experimental approach, as Kremer puts it, “is useful both for producing knowledge (understanding the world) and spurring innovation (improving the world).” Beyond contributing to the literature on a given topic, studies carried out in partnership with relatively small and nimble organizations — such as an agricultural extension NGO, mobile health provider, or alternative credit scoring agency—tend to have short-term practical value. Often these studies involve some sort of iterative design process akin to the A/B testing approach ubiquitous within the private sector.
Innovation happens with government partners as well, albeit often on (much) longer time scales. At the beginning of her lecture, Duflo shared a remarkable statistic: that 400 million people have been affected by policies found to be effective by someone in the J-PAL network (she notes this is an under-estimation as it doesn’t consider the millions of people who have benefitted from not being affected policies proven not to work).
Perhaps one of the earliest examples of the experimental approach conducted in close collaboration with a government partner was the 1998 roll-out of PROGRESA, the conditional cash transfer program in Mexico (subsequently Oportunidades and later Prospera). The roll-out was randomized, allowing CEGA affiliates Paul Gertler and Lia Fernald, along with many others, to experimentally study the impacts of the program on beneficiaries — both in the short-term and over the long-term.
What does the prize mean for CEGA?
Several other CEGA affiliates were recognized by the Nobel committee and the laureates as having made important contributions to the experimental approach to fighting poverty (although I note that CEGA is methodologically agnostic; we support research that uses a range of quasi-experimental and non-experimental methods when randomization is not possible).
Kremer’s work with CEGA Faculty Director Ted Miguel in Western Kenya addressed the challenge of securing access to clean drinking water for rural households by evaluating an NGO program to protect springs (ultimately finding a 25% reduction in child diarrhea). Subsequently, they designed and tested alternative approaches to protecting the water collected at the springs from contamination during transit and storage. The installation of chlorine dispensers at water sources increased household water treatment four-fold; with the help of Evidence Action, which scaled the technology based on Miguel and Kremer’s research, dispensers now provide safe water to 2 million people per day across Kenya, Uganda, and Malawi.
Miguel and Kremer are further to credit for tackling the complex challenge of school attendance by collaborating with the Kenyan government to experimentally test a free, school-based deworming program. By randomizing at the village level, rather than the individual level, they were able to measure the direct health and schooling benefits to children who were dewormed, as well as positive spillover benefits for neighboring children. This important work continues today: early results from a recent 20-year follow up suggest that the children from the original deworming sample are now, in their mid-30s, earning 20% more than those who were not part of the original sample.
CEGA affiliate Pascaline Dupas was closely involved in early research with Duflo and Kremer to test a range of interventions after the introduction of free primary education in Kenya. Dupas was also central to research on anti-malarial bednet adoption, which helped to establish consensus around the importance of providing preventive health interventions free of charge. Jon Robinson’s work with Duflo and Kremer drew on insights from behavioral economics and psychology to reveal that time-limited discounts were effective in boosting fertilizer adoption for farmers who otherwise were constrained by their own tendency towards procrastination. Karthik Muralidharan’s work with Kremer highlighted the challenge of teacher absenteeism, documenting an average absence rate of 19% across seven developing economies.
In his lecture, Banerjee cited recent work by CEGA affiliate Supreet Kaur and co-authors disproving the theory that giving poor people money makes them lazy. In fact, the opposite is true — while feeling poor paralyzes people, giving them cash can motivate them to be more productive (Kaur is currently leading an initiative at CEGA on the Psychology & Economics of Poverty to explore how psychological factors affect decision-making and productivity for people living in poverty).
Naturally, the lessons from randomized experiments cannot be fully understood in isolation. According to Kremer, the field benefits from the “accumulated wisdom and insight of a series of papers.” Institutions like J-PAL and CEGA help to move the field forward by coordinating portfolios of research around important topics and synthesizing the results.
What comes next?
Kremer made a very important announcement at the end of his lecture. Highlighting the importance of training the “next generation” of impact evaluation scholars, he shared that the three laureates will donate their $1 million prize — along with $50 million from Andrew and Bonnie Weiss — to the Weiss Fund for Research in Development Economics. The Weiss Fund supports strong graduate students and junior faculty members, including researchers and institutions in low- and middle-income countries, to conduct research that advances the welfare of the world’s poorest. This exceptional commitment speaks to one of CEGA’s core values, which is to democratize the research process by empowering emerging and underrepresented scholars to conduct rigorous evaluations and contribute to important public policy debates (we do this primarily through graduate student research grants and our Global Networks initiative.)
On behalf of all of us at CEGA, we extend a sincere congratulations to the laureates for their instrumental work and for inspiring a vibrant community of experimentally-minded researchers that is right now enjoying a very well-deserved moment in the spotlight.
