Esther Duflo is something of a rarity in her field, and not just for being the youngest ever recipient of the Nobel Prize in Economics, or the second only female winner. Her pioneering research also sets her apart. Eschewing the grand theory model favoured by her contemporaries, Duflo has carved out her own academic path, pursuing a rigorous analysis of - in her own words - ‘the pieces that comprise the whole’. In practice, this has found form in painstakingly carried out field experiments, primarily in the third world, that have focused on microeconomic issues like household behaviour, access to finance, and education. Her motivation: a long-held commitment to the alleviation of poverty.
‘Instead of relying on our intuition, or that of others, we set up large-scale, rigorous randomised controlled trials to understand what works, what does not work, and why. We are not alone: this movement has taken hold in economics’
She’s not wrong. Randomised Controlled Trials (RCTs), whose popularisation she’s helped spearhead, have changed the face of development, in two very different ways. The first is practical: they’ve simply become the new norm. As put by the Royal Swedish Academy of Sciences, RCTs now ‘dominate development economics’, and are riding the wave of methodological supremacy. Originally borrowed from medicine, their premise is easily understood. Researchers assess the effect of a ‘development intervention’ by dividing participants into groups, with only some being subjected to said intervention. The outcomes of each group are then measured against each other, and the efficacy of any intervention is thus determined. Through the Abdul Latif Jameel Poverty Action Lab, which Duflo co-founded with her husband and fellow economist Abhijit Banerjee in 2003, over a thousand of these experiments have been conducted across the developing world, studies ranging from levels of immunisation in India to primary school standards in Kenya. In RCTs, Duflo saw an apt way of identifying - if present - causal relationships between intervention and outcome, while simultaneously guarding against the chronic problem that blights much development policy - selection bias. Especially in development, but also across economics more broadly, the method has been readily accepted.
The second change Duflo has spurred has been in her discipline's reputation, for her commitment to RCTs is rooted in humility - a sentiment that elsewhere in economics often appears conspicuously absent. In explanation, she likened her work to plumbing: ‘we solve problems with a combination of intuition grounded in science, some guesswork aided by experience and a bunch of pure trial and error’. Such breezy admission of fallibility is unusual, and situates Duflo worlds away from the unwavering and cocksure man that ‘the economist’ has become in the public’s collective consciousness. In contrast, and without abandoning her idealism, she has remained eminently likeable, willing to recognise both the power and weaknesses inherent in economic study. And if ever economics was in need of a progressive, humble, and pragmatic figurehead to help repair its damaged, post-crash reputation, it’s now.
Her approach also helps address something economics has long failed to do: it humanises the poor. Again, it’s her words that capture this best: ‘we have to abandon the habit of reducing the poor to cartoon characters and take the time to really understand their lives, in all their complexity and richness.’ Awareness of this kind not only imbues her research with nuance and thus precision, it gives it morality too - an appreciation and respect of the human subjects at the centre of her work.
Duflo’s recent Nobel Prize is testament to a young career that has reminded people of the insights mainstream economics can yet yield, delivered, of course, with characteristic modesty. Indeed, the line that concludes her book Good Economics for Hard Times encapsulates her well, the instruction that : ‘economics is far too important to be left in the hands of economists’. It’s a mindset many could learn from.
2016 Nobel Prize in Economics awarded to Oliver Hart and Bengt Holmström
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2014 Nobel Prize in Economics Awarded to Jean Tirole
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