Banerjee, Duflo and Kremer introduced a paradigm shift in approach to alleviating poverty.
The Nobel Prize in Economics for 2019 has been awarded to Abhijit Banerjee, Esther Duflo and Michael Kremer for “their experimental approach to alleviating global poverty”. The approach, popularly known as Randomised Control Trial (RCT), has been the buzzword among development economists for almost two decades. Banerjee, Duflo and Kremer have used this technique (inspired by the use of RCTs in medical science) to test the effect of small interventions on individual behaviour.
Most of these interventions carried out under the aegis of Abdul Lateef Jameel Poverty Action Lab (J-PAL), co-founded by Banerjee and Duflo, in Africa and Asia, have produced evidence on the response to a particular intervention by the poor using these randomised trials. The approach basically examines the impact of these micro interventions by treating one set of individuals/households and comparing the outcome with another set of individuals/households, which are similar in all other respects but have not been treated with the intervention. India has been among the biggest laboratories of these experiments with several experiments on diverse themes such as literacy, nutrition, health, micro-finance and so on.
The RCT approach has its share of supporters as well as critics. While it has enamoured a large number of development economists for its simplicity, where inferences on what works or not are drawn from field experiments, it has also been criticised for reducing the study of poverty to small interventions unconnected to the lived experiences of the poor. The discomfort among many established scholars is that this fashionable trend has made the historical, institutional and social structures of the persistence of poverty less relevant to understanding why the poor continue to remain poor. Others have picked holes in the methodology. However, it has not deterred development economists from using this approach for designing experiments and conducting them to understand how the lives of poor people change as a result of these micro interventions. There have been questions about whether the results can be replicated in different societies, as well as on the ethics of some of the experiments, which have been conducted in collaboration with participating governments. It is also worth pointing out that the method is as good as the range of interventions that can be undertaken.
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