Co-Founder of USAID’s Development Innovation Ventures Program Receives 2019 Nobel Prize in Economics
Award recognizes experimental approaches to alleviating global poverty
Nobel Week in Stockholm, Sweden, was an exciting and proud moment for USAID. Why you may ask?
Michael Kremer, co-founder and scientific director of USAID’s Development Innovation Ventures program accepted the 2019 Nobel Prize in Economic Sciences in Memory of Alfred Nobel alongside MIT professors Esther Duflo and Abhijit V. Banerjee for their experimental approach to alleviate world poverty. The trio spearheaded the use of Randomized Controlled Trials (RCTs) to solve global development challenges.
“We need innovation in funding institutions.”
— Michael Kremer, Nobel Laureate
Members of the Nobel Prize Committee explained their decision in the official announcement: “This year’s Laureates have introduced a new approach to obtaining reliable answers about the best ways to fight global poverty. In brief, it involves dividing this issue into smaller, more manageable, questions — for example, the most effective interventions for improving educational outcomes or child health. They have shown that these smaller, more precise, questions are often best answered via carefully designed experiments among the people who are most affected.”
On Dec. 10, Michael presented his Nobel prize lecture as part of the Nobel week lectures series.
“DIV is deliberately open across sectors and geographies, and to innovations intended to scale either commercially or through developing country governments or donors. We complement this openness with a tiered evidence-based approach to funding. DIV makes small investments to pilot and rigorously test promising ideas and larger ones to help innovations that are supported by rigorous empirical evidence to transition to scale.”
— Michael Kremer, Nobel Laureate
As a co-founder of DIV, Michael helped USAID build a program that turns bright ideas into global solutions.
DIV tests and scales creative solutions to development problems in any country where USAID works, and provides funding to promising projects through three different “tiers”: piloting innovative but unproven solutions, building evidence to demonstrate what works, and transitioning effective solutions to scale. Anyone, anywhere can apply at any time.
Since 2010, DIV-supported innovations have directly impacted millions of lives by investing in more than 200 innovations across 46 countries. Approximately half of these innovations had never received USAID funding before and several of the best are now being adopted across the Agency, partner governments, and other donors.
“We recently analyzed DIV’s early portfolio. The social benefit of just four of DIV’s first forty-three investments were five times as large as the cost of the entire portfolio. We also found that innovations involving development economics researchers were six times more likely to reach more than 1 million users as those without. Our results suggest that there’s potential for this type of open-tiered, evidence-based innovation fund to deliver high returns for society. They also suggest that social science researchers accustomed to the experimental approach have a place alongside social entrepreneurs, technologists and others in developing and scaling innovations.”
— Michael Kremer, Nobel Laureate
DIV in Action
This year, DIV Innovation Keheala showcased groundbreaking evidence that their digital tuberculosis adherence platform improves health outcomes for patients. Each year, 22 million people die from treatable diseases like tuberculosis (TB), HIV, diabetes, and cardiovascular disease. One reason is that patients often do not stick to their treatment plans because it is a burden to take a pill that can cause some uncomfortable side effects daily. Keheala, a basic feature phone based-system draws on behavioral science to increase accountability, eliminate excuses, communicate norms, and motivating patients to complete their treatments.
A randomized control trial in Kenya supported in part by a DIV grant showed that it is working. In the 1,200-patient trial at 17 clinical sites, 96 percent of Keheala’s patients achieved successful outcomes. Keheala has received two grants totaling $700,000 from DIV in 2015 (Stage 1) and 2017 (Stage 2). The New England Journal of Medicine published the results of the RCT in September 2019. Today, the Keheala team is focused on scaling their innovation.
To support the next generation of development economic researchers, Michael and his co-recipients will donate the prize money to the Weiss Fund for Research in Development Economics, administered by Harvard University. The $916,000 prize money donation will also supplement $50 million from Child Relief International to support development economics research which Michael advanced in DIV.
USAID is honored and proud of Michael’s remarkable achievement, his contributions to the Agency, and groundbreaking work in international development.
To learn more about DIV, visit www.usaid.gov/div.
About the Author
Kathy Pierre is a communication specialist at the Global Development Lab.
