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The youngest Nobel Laureate in Economics: Esther Duflo’s experimental approach to poverty alleviation

Amongst the three Nobel Laureates in Economic Sciences last year, French American economist Esther Duflo easily arrests attention. At the age of 46, she is made the youngest and second female recipient of the prestigious Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, imparting extra significance to the remarkable feat.

Duflo, her husband Abhijit Banerjee (both of them professors at the Massachusetts Institute of Technology; MIT) and Harvard professor Michael Kremer shared glory at the 2019 Nobel Prizes “for their experimental approach to alleviating global poverty”.

The three Nobel Laureates in Economic Sciences 2019 (Photo: Official website of the Nobel Prize)

What exactly, then, is their experimental approach? The keyword is randomised controlled trials, or RCTs, commonly employed in the medical field to test new drugs or therapies. The three scholars drew on this method to evaluate the effectiveness of poverty relief measures and propel changes from evidence to policy (E2P), that is, prompting governments or organisations to calibrate their policies or poverty-relief programmes.

Research to community on a multinational scale

This Prize is the embodiment of over 20 years of unrelenting effort in development economics from the trio and their teams. Duflo and Banerjee founded the transnational Abdul Latif Jameel Poverty Action Lab (J-PAL) in as early as 2003, while Kremer is J-PAL’s long-time research affiliate, as well as co-founder of Precision Agriculture for Development.

J-PAL plays a crucial part in scrutinising the effectiveness of poverty-alleviation policies in multiple countries and bringing forth changes. With around 500 researchers and 400 staff, the organisation works with professors from 62 universities across the globe on research topics ranging from education, violence and conflict, to agriculture, environment and hygiene in Asia, Africa and Latin America etc.

Contrary to being purely academic, J-PAL is an organisation with a well-defined “value chain”. It collaborates with various governments, NGOs and corporates, sending researchers to perform field experiments for their projects, and scales up actions proven effective by data and evidence. Simply put, it’s the E2P model in action.

▼ Esther Duflo shares her two decades of experience.

Decoding human behaviour

Since earning a place in the Nobel Prize hall of fame, Duflo found her phone buzzing endlessly with interview requests. To the economist, poverty elimination is a vast topic that should be deconstructed into smaller ones, to which solutions are mooted. Then, using RCTs, researchers would make bold assumptions and verify with care. She underlined the importance of “what makes us human” in experiments – welfare projects that, for instance, neglect people’s identity, are often doomed to fail.

Her research outputs serve as a wake-up call that certain “sound” concepts are worth revisiting. Take the raging xenophobia across Europe and the US as an example. Duflo raised that most of the poor, even given a choice, would not opt for emigration. Even in countries with a higher proportion of immigrants, ample research found that salary levels remain unscathed. In fact, quite the opposite – employment for local women has boomed.

Duflo describes her job as getting to the bottom of human behaviours based on evidence. She encourages youngsters interested in joining the field to voyage more, volunteer overseas or join NGOs to gather first-hand experiences.

Born in Paris, Duflo and her Indian-born husband are both US immigrants. Now, her gender and youth set Duflo under the spotlight – after all, female economists are a rare “species”. What got her into this sphere of expertise?

▼ Duflo and husband Banerjee sharing their reactions to receiving news of the Prize. Duflo encourages youngsters from affluent countries to venture into underprivileged regions, while Banerjee advises to “do what you love and love what you do”.

Inspiration from world’s largest country

Duflo grew up in a middle-class family, with a physician mum and a professor dad. Nevertheless, her mum lived through narrow circumstances and isolation in Argentina as a child. The experience impelled her to volunteer every year with NGOs in areas of conflict after moving to France. Her stories and encounters opened Duflo’s eyes to her own fortune and nurtured in her a sense of caring for the world. Still, her moment of enlightenment came during an overseas trip.

Duflo majored in history at first, with plans to become a civil servant after university graduation. She later took a break for 10 months in Russia as a research student. Back then, in the early 90s, the USSR just dissolved, and the country went down to ground zero. She saw how politicians took heed of advice from foreign economists and realised – that was precisely what she wanted to do. Returning home, she switched gears to economics, eventually earning her PhD at MIT. The University hired her right away as an assistant professor; in 2002, the then-29-year-old already secured her tenured position.

This begs the question: why not join the government from the start to devise evidence-based policies? In an interview with the BBC, Duflo declined the possibility, “When I was about 20, I considered…becoming a civil servant…What stopped me at that time is I didn’t want to be in a situation where I had to make a lot of decisions under pressure, knowing well that these might not be the best decisions.” Rather than becoming a politician that often entails going against her own wishes, Duflo is more than happy to continue her pursuit of impactful research.

By Kary Wong@ORKTS
English translation by Cathy Wong@ORKTS

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