Social Experiments to Alleviate Poverty

Abhijit Banerjee, Esther Duflo, and Michael Kremer
Level: advanced
Exploring Economics, 2019
Perspectives: Behavioral Economics, Neoclassical Economics
Topic: Development
Format: Multimedia Dossier
Link: https://www.youtube.com/watch?v=Nd4BQE3K0SQ

We collect material summarizing the insights and achievements of the works awarded with Sveriges Riksbank Prize in Economic Sciences. Besides giving you an overview of the laureates we want to provide you with  critical & plural perspectives on the respective theories and methodologies.

Overview: Other Nobel laureates in Economics

 

The 2019 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to Abhijit Banerjee, Esther Duflo and Michael Kremer “for their experimental approach to alleviating global poverty.” This lecture by Esther Duflo (only the second woman to win this prize!) and Abhijit Banerjee summarizes their research. A shorter version is provided in this TEDtalk by Esther Duflo (Social experiments to fight poverty).

They use a methodological tool called Randomized Control Trials (RCTs), which are supposed to provide evidence-based answers for policy-making. As you can see in the graphic below, RCTs are based on a selection of a ‘random’ or unspecified distribution of e.g. communities who are subjected to a trial or an experiment. This then measures the impact of certain development policies. It is supposed to attribute a causal relationship between the policy and its outcomes when compared to a ‘control group’ who are not included.

The technique is founded on behavioural economics and experimental design. It also stems from the trend in Economics to use econometric methods and computing power for increasingly large amounts of data.

Some critical perspectives:

RCTs are supposed to provide a better scientific base for poverty-alleviating policies. In reality, however, they have some important limitations. We have listed some critical perspectives on the 2019 prize below1:


 

1 Inspired by a great Twitter thread by Ingrid H. Kvangraven (@ingridharvold).

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