Randomized evaluation tests to fight global poverty
This year’s Nobel Prize in Economics was awarded to Abhijit Banerjee along with his two co-researchers Esther Duflo and Michael Kremer “for their experimental approach to alleviating global poverty”.
In 2003, Abhijit Banerjee founded the Abdul Latif Jameel Poverty Action Lab ( J-Pal) along with Esther Duflo and Sendhil Mullainathan. J-Pal is a global research centre working to reduce poverty by ensuring that policy is informed by scientific evidence. They conduct randomized impact evaluation tests to test and improve the effectiveness of social programs.
Randomized Evaluation?
A randomized evaluation is a type of impact evaluation that uses random assignment to allocate resources, run programs, or apply policies as part of the study design. To put it simply, the main purpose of a randomized evaluation is to answer the question- “Is the program or policy effective?” Impact evaluations measure program effectiveness typically by comparing outcomes of those (individuals, communities, schools, etc) who received the program against those who did not.
How does it work?
In a region with high-incidence of waterborne illness, this technique can help measure the impact of a specific solution such as a chlorine distribution program. To figure out how much healthier people are because of such a program, one needs to simply compare the number of people reported with the illness before and after the program started. It is almost impossible to measure directly how healthy people would have been without the program. It is possible that without chlorine, people would have remained as sick as they were before. Or they might have started boiling their water instead, and so the only thing chlorine did was substitute one technology for another which implies that people are not really healthier because of the chlorine program. Hence the key challenge in impact evaluation is finding a group of people who did not participate in the program but closely resemble the participants had those participants not received the program.
What do they evaluate?
Randomized evaluations at J-Pal are used to measure impact of policies in a wide variety of fields ranging from agriculture, crime, education, environment, finance, gender, health, labor markets and political economy and governance. The finance sector measures the impact of financial services, products, and process innovations, and tries to understand how access to financial services can be used as a mechanism to reduce poverty and spur economic development. They have worked on programs as diverse as agricultural brokerage intervention in Kenya to find missing markets, marketing effects in a consumer credit market in South Africa and measuring the impact of micro-finance in Hyderabad, India.
The Bigger Picture
Randomized evaluations can go a long way towards understanding programs and policies that can help in alleviating global poverty. Starting from grassroot level is the key here as Abhijit Banerjee says, “We must arm ourselves with patience and wisdom and listen to what the poor want. This is the best way to avoid the trap of ignorance, ideology and inertia on our side.”
\\Koushiki Dasgupta Chaudhuri
