The Nobel Prize in Economics was Awarded to Trio for Their Work on Poverty. One was the Youngest Recipient Ever.

By Teodor Teofilov

Three economists were awarded the Nobel Prize in Economics on October 14 for their work on alleviating global poverty by the Royal Swedish Academy of Sciences.

Abhijit Banerjee, a professor at the Massachusetts Institute of Technology, Esther Duflo, also a professor at the Massachusetts Institute of Technology, and Michael Kremer, a professor at Harvard University, pioneered an approach to reduce poverty, based on carefully designed experiments that aimed to answer specific policy questions, according to the prize committee.

Duflo is the youngest person and second woman to be awarded the prize. Her and Banarjee are married.

“This year’s Laureates have introduced a new approach to obtaining reliable answers about the best ways to fight global poverty,” the Royal Swedish Academy of Sciences said in a statement. “In just two decades, their new experiment-based approach has transformed development economics, which is now a flourishing field of research.”

The three researchers have been studying interventions in a range of areas in tackling global poverty — direct cash transfers to the extremely poor, policing drunk driving, studying the effects of access to textbooks on students, combating teacher absenteeism and more.

Their research has had a focus on randomized controlled trials, where the intervention is delivered in one area but not a control area, which enables them to identify which effects are because of the intervention. Their work has been extremely influential, pushing others in the field to conduct higher-quality studies.

It’s not an overstatement to say that their research has been vital in finding ways to reduce global poverty. In the 1990s, Kremer showed how powerful dividing poverty into smaller, more manageable, questions can be. He used field experiments to test a range of interventions to see how school results could be improved in Western Kenya. Kremer broke down the questions he was interested in until concrete policy proposals rose and tested them to determine which ones worked.

The approach has been expanded and refined, and has transformed the field. The methods and tools that Duflo, Banerjee and Kremer established has been used by hundreds of researchers, governments and NGOs all over the world to make policy decisions — how to improve education, assist the poorest citizens, make public health intervention work and more.

Duflo said in a news conference after the announcement that it “really reflects the fact that it has become a movement, a movement that is much larger than us.”

The Nobel committee highlights a few examples of the research that was particularly impactful and important. First, a series of randomized control trials on schooling in Kenya by Kremer and co-authors in the mid 1990s. Second, work by Duflo and Banerjee on variation in productivity within poor countries, which has implications for why they stay poor And third, work on improving the experimental methods and figuring out how the results of the studies conducted can be generalized to other areas.

While new innovations and methods will undoubtedly be needed to continue to fight against poverty in the future, the impact of Kremer, Duflo and Banerjee’s work has been huge.

“The Laureates’ research findings — and those of the researchers following in their footsteps — have dramatically improved our ability to fight poverty in practice,” the committee wrote. “As a direct result of one of their studies, more than five million Indian children have benefitted from effective programmes of remedial tutoring in schools.”

Jakob Svensson, member of the Prize Committee for Economic Sciences, told freelance journalist Fanny Härgestam that “this research could reduce global poverty.”

The Nobel Prize in Economics — technically called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, wasn’t established by Alfred Nobel in his will in 1895, but was created in 1968 by a donation from Sweden’s central bank and is awarded with the other Nobel Prizes.

Kremer, Duflo and Banerjee will share the prize worth 9 million Swedish kronor, or about $900,000.

For more information on their research, click here.

You can watch the announcement ceremony below.

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