Three economists who study poverty win Nobel Prize

STOCKHOLM (AP) – Two researchers from the Massachusetts Institute of Technology (MIT) and a third from Harvard University won the 2019 Nobel Prize in economics on Monday for groundbreaking research into what works and what doesn’t in the fight to reduce global poverty.

The award went to MIT’s Abhijit Banerjee and Esther Duflo, and Harvard’s Michael Kremer. The 46-year-old Duflo is the youngest person ever to win the prize and only the second woman, after Elinor Ostrom in 2009.

The three winners, who have worked together, revolutionised developmental economics by pioneering field experiments that generate practical insights into how poor people respond to education, healthcare and other programmes meant to lift them out of poverty.

“Without spending some time understanding the intricacies of the lives of the poor and why they make the choices they make … it is impossible to design the right approach,” Duflo told a news conference held by the Royal Swedish Academy of Sciences, which awarded the prize.

Their work in rural Kenya and in India, for instance, found that providing more textbooks, school meals and teachers didn’t do much to help students learn more.

Making the schoolwork more relevant to students, working closely with the neediest students and holding teachers accountable – by putting them on short-term contracts, for example – were more effective in countries where teachers often don’t bother showing up for work. The winners’ recommended programme of remedial tutoring is now benefitting five million Indian children, the academy said.

Kremer and others found that providing free healthcare makes a big difference: Only 18 per cent of parents gave their children de-worming pills for parasitic infections when they had to pay for them, even though the heavily subsidised price was less than USD1. But 75 per cent gave their kids the pills when they were free. The World Health Organisation (WHO) now recommends that the medicine be distributed for free in areas with high rates of parasitic worm infections.

The winners of the 2019 Nobel Prize in Economics are announced during a news conference at the Royal Swedish Academy of Sciences in Stockholm, Sweden. PHOTO: AP

Banerjee, Duflo and others found that mobile vaccination clinics in India dramatically increased the immunisation rates compared to traditional health centres that often went unstaffed. The immunisation rate rose further if parents received a bag of lentils as a bonus for vacci-nating their children.

Banerjee and Duflo, who are married, also found that microcredit programmes, which provide small loans to encourage poor people to start businesses, did little to help the poor in the Indian city of Hyderabad; studies in Bosnia-Herzegovina, Ethiopia, Morocco, Mexico and Mongolia, produced similar results.

Despite enormous progress, global poverty remains a huge challenge, the academy noted. More than 700 million people live in extreme poverty. Five million children die before age five, often from diseases that can be prevented or cured easily and inexpensively. Half the world’s children leave school without basic literacy and mathematical skills.

Still, Kremer sounded a note of hope.

“It can often seem like the problems of global poverty are intractable, but over the course of my lifetime and career, the fraction of the world’s people living in poverty has dropped dramatically,” he said in a news release from Harvard. “Over the years, we have learned a lot about what works and what doesn’t work, and why. Governments and non-profit organisations have become much more effective in addressing, and there is much wider recognition of how researchers and policymakers can work together in the fight against poverty.”

Duflo and Banerjee told a news conference at MIT they weren’t sure how to react when the Nobel committee woke them with the news of their win.

Duflo said that when the phone rang, she answered and was told it was an important call from Sweden. She said her response was, “Well, since you’ve now woken me up, go ahead.”

Banerjee said the Nobel commit-tee asked about getting one of them on a conference call, but “they said they wanted a woman, and I didn’t qualify” – so he went back to bed.

Kremer, who is in London, said he thought a message over Skype from a friend in Sweden asking to speak urgently was a scam. It was only then that it dawned on him what had happened.

“I’m stunned,” he said.

Colleagues applauded the three winners. “Well deserved!” tweeted French economist Thomas Piketty, author of a bestselling book on inequality.