The winners of the 2019 Nobel prize in economics
Today, the Royal Swedish Academy of Sciences announced that the 2019 Nobel prize in economics would be awarded to economists Abhijit Banerjee, Esther Duflo, and Michael Kremer “for their experimental approach to alleviating global poverty”.
A good, accessible introduction to the work of Banerjee and Duflo is the 2011 book Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, which will, no doubt, soon be re released. At the time, I wrote the following short review of the book and their work.
This book puts the ‘micro’ into the economics of world poverty.
Banerjee and Duflo go to the slums of India and jungles of Indonesia looking for homo economicus and they find him (and her). This is probably the book’s most controversial idea, that the choices of the global poor can be understood using the standard tools of microeconomic analysis. They examine the constraints – in terms of resources and information – which the poor face that prevent them from moving out of poverty.
The authors pitch themselves very deliberately in between Jeffrey Sachs and William Easterly; they neither believe in the big push nor believe in doing nothing. Instead, inspired by Sunstein and Thaler, they advocate smaller scale ‘nudges’, designed to bump the global poor out of various ‘micro’ poverty traps.
This is a fascinating exercise in practical economics.
These three economists are worthy recipients of today’s award.
John Phelan is an economist at the Center of the American Experiment.