Three economists have won this year's Nobel prize in economics for their work on fighting poverty. In the past two decades, Abhijit Banerjee, Esther Duflo, and Michael Kremer's "experiment-based approach has transformed development economics," according to a statement (pdf) from The Royal Swedish Academy of Sciences.
The professors' research has helped development economics, which focuses on low-income countries, become a "flourishing" field of endeavor, the academy said. Even as wealth has accumulated around the world, more than 700 million people still subsist on extremely low incomes, and every year 5 million children under the age of five die of diseases that could potentially have been cured or prevented. Some 50% of children around the world leave school without basic skills in numeracy and literacy.
Kremer, an American, teaches at Harvard. Banerjee, an Indian-American, and Duflo, a French-American, are both at MIT. Duflo is only the second woman to receive the Nobel for economics, according to NPR. Banerjee and Duflo are married to each other, making them the sixth Nobel-winning couple and the first to win the economics prize.
The trio introduced a new approach to getting answers about how to fight global poverty: Their technique involves breaking substantial issues into more manageable questions, such as researching the most effective ways to improve outcomes for children's health or education. "These smaller, more precise, questions are often best answered via carefully designed experiments among the people who are most affected," the academy wrote.
Banerjee and Duflo authored influential research in 2007 titled "The Economic Lives of the Poor," which surveyed people in extreme poverty who live on only around $1 per day. Kremer and his colleagues in the mid-1990s used field experiments to test ways of improving school results in Kenya, and Duflo and Kremer co-authored research in 2011 that studied fertilizer investment in western Kenya, describing policies that could yield better outcomes.
Banerjee is also known for his research on cash transfers. He has shown that there is "no evidence" that giving cash to poor makes them lazier or less likely to work, he said in a Council on Foreign Relations interview in March. In fact, some of his studies have signaled the opposite-that leisure activity declines and people work more when they receive these transfers. He has also done work on "nudges"-interventions that can help boost immunization rates. Banerjee has found that a small reward can make events like getting an injection for a baby easier to remember, more enjoyable, and therefore more likely to place.
As a result of the professors' research, more than 5 million Indian children have benefitted from more effective remedial tutoring in schools, the academy noted. Larger subsidies for preventative healthcare in many countries can also be traced to their work.
"Their experimental research methods now entirely dominate development economics," the academy said. "The Laureates' research findings-and those of the researchers following in their footsteps-have dramatically improved our ability to fight poverty in practice."
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