Abhijit Banerjee, Esther Duflo, and Michael Kremer just won the Nobel Prize in economics. Like most young(ish) development economists, I am literally and metaphorically jumping up and down.
The Nobel Committee stated that they received the prize for their “experimental approach to alleviating global poverty”—in other words, for introducing randomized evaluations to development economics. By the mid-1990s, randomized evaluations were being used by a number of governments to study the impacts of their policies (for example, the National Job Corps Study in the US or the Mexican government’s evaluation of its PROGRESA conditional cash transfer scheme). Michael convinced the Dutch NGO ICS Africa to use a similar approach to evaluate their interventions in Kenyan primary schools (for example, distributing flipcharts to teachers and providing free medicine to treat intestinal parasites). Abhijit, Esther, Michael, and numerous collaborators (including quite a few soon-to-be-famous-economists PhD students like Pascaline Dupas, Rema Hanna, and Ted Miguel) were soon running randomized evaluations in the health, education, and agricultural sectors in Kenya and India. Abhijit, Esther, and Sendhil Mullainathan launched the Jameel Poverty Action Lab (JPAL) in 2003 with the explicit aim of promoting the use of randomized evaluations in development economics (often working in partnership with Innovations for Poverty Action, a similar organization founded by Dean Karlan in 2002). Over the last fifteen years, Abhijit, Esther, and Michael’s work has truly revolutionized the field of development economics by changing our view of what we know—and what we can know—about when and why some policy interventions work and others do not.
Abhijit, Esther, and Michael are superstars within the profession, but their experimental approach is not without detractors. Some have questioned whether the policy-centric, empirically (rather than theoretically) driven “randomista” approach is even economics (as opposed to public policy). Many argue that RCTs play too dominant a role in development. The Nobel committee alluded to this dominance in their decision, stating that “experimental research methods now entirely dominate development economics.”
Yet, Abhijit and Michael (both non-resident fellows here at CGD) are also two of the most prominent applied theorists working in development, and Esther’s best-cited paper is methodological work on difference-in-difference estimation. All three have been early proponents of behavioral economics as a lens for understanding poverty. They are brilliant minds and methodological innovators on many fronts. However, their advocacy of randomized trials is unique—few if any other methodological innovations in economics have so radically altered the everyday research practices of a field in such a short space of time. Randomized evaluations are now widely used by the World Bank and many NGOs in international development, often in partnership with JPAL, IPA, and their networks of affiliated researchers. We have Michael, Esther, and Abhijit—along with their many collaborators and students—to thank for this.
The prize is also a victory on other fronts. Esther is the youngest recipient of the Nobel Prize in economics, and the first female with an economics PhD to win it (political scientist Elinor Ostrom won in 2009). Esther and Abhijit are married (to each other) with two young children. Michael is also half of a prominent development economics power couple: his wife is DFID Chief Economist Rachel Glennerster, former Executive Director of JPAL. Michael has been commuting between Cambridge (MA) and London since she was appointed in 2017. In a year when the economics profession has been grappling with seemingly intractable problems with gender and diversity, this prize feels like a win for women and for dual-career couples struggling to balance work and family in a profession that has historically been dominated by older men whose wives were at home warming their slippers and typing up their lecture notes.
Nice work, Nobel Committee.
Disclosure: Michael Kremer is my coauthor.