Nobel-winning research brings scientific rigor to development policies

By Yilin Wang

November 10, 2019

WASHINGTON, D.C. – This past October, three development economist were awarded the 2019 Nobel Prize in Economic Sciences for their “experimental approach to alleviating global poverty.” In past years the Nobel Committee has predominantly favored theoretical breakthroughs in academia. However, this year’s prize-winning economic research features on-the-ground trials and practical solutions to real-world problems. The winners, Dr. Abhijit Banerjee, Dr. Esther Duflo, and Dr. Michael Kremer, spent twenty years conducting experiments in developing countries to examine the effectiveness of different intervention measures aimed at addressing challenges in education and public health sectors. The group studied questions related to poverty alleviation in the same manner as scientists running clinical trials in the laboratories, revolutionizing the landscape of development economics. 

“I think this is an empirical revolution and not just a causal revolution because, for a long time, development economists were mostly theorists,” said Sam Asher, Assistant Professor of International Economics at Johns Hopkins SAIS. “In fact, two out of the three Nobel laureates this year started out as theorists. There has been and will continue to be a move towards more empirical work, more original data collection, and more researcher time spent in the field,” Asher added.

This Nobel-winning research will spark a “renewal of interest in macro development,” remarked Professor Ritam Chaurey, also an Assistant Professor of International Economics at Johns Hopkins SAIS. Chaurey also added that with the usage of randomized control trials (RCT), a research method that ensures treatments are randomly assigned, in macro development researchers see, “a possibility of taking causal estimates from small programs and scaling up to yield an aggregate result. This is something that has not happened in the last twenty years.” 

Indeed, the “Nobel trio” moved away from theoretical predictions as to how a policy may make the poor better off and instead sought to observe how the policy played out on the ground. One of their many projects included an investigation in India designed to uncover the reason why the majority of villagers in a region seemed to have given up on free vaccinations that could protect their children from fatal diseases. Traditional analyses may have pointed to a lack of proper provision of healthcare services or insufficient parental knowledge of vaccination as causes of the problem. By randomly dividing nearby villages into three groups and providing two of them with different “treatments” while leaving the third as a control group, the Nobelists identified inconvenient locations of the vaccination sites as the primary factor discouraging villagers from seeking the vaccinations. Following the construction of conveniently located stations, the region witnessed a sharp increase in vaccination coverage. While their research approach may be considered simplistic as compared to other technical and theoretical studies in economics, it has proven to be exceptionally effective in terms of tackling real-world problems. 

Throughout their research, the group engaged local policymakers as well as citizens in order to practically evaluate local conditions. Speaking during a panel held by the SAIS International Economics program on October 23, Professor Seema Jayachandran from Northwestern University commented, “The shift toward RCTs has dramatically changed the amount of time researchers and graduate students are now spending on the ground. It is always important to know which policies work and which don’t so that policymakers can make better use of their limited budgets, spending more on the worthwhile causes instead of pursuing policies that are theoretically or anecdotally reasonable but not actually useful.”

While further incorporation of scientific methods such as RCT into policy design is a promising idea, the results of  this process are largely ambiguous. “Research methods like the RCT can take a huge amount of time and effort, especially when researchers have to collect their own data,”said Professor Jishnu Das from Georgetown University, speaking at the SAIS panel. “Meanwhile, there is massive demand from governments for policy advice. Imagine if the government asks you for advice and you respond that you would need five years and one million dollars, they may well laugh you out of the room…We need to think carefully about what the right way is for researchers to help governments maximize benefits.”

Caveats aside, it is generally agreed that continuous dialogues between the policymakers and experienced researchers are conducive to well grounded, effective policies. “With all the time [the Nobelists] have spent on the ground, it is true that they now have a seat at the table with the policymakers,” Professor Chaurey observed. In a broader context, the opportunity to conduct solid, on-the-ground research has attracted many non-academics to the practice. Professor Asher finds that today there are an increasing number of people within  organizations or government trained to think harder about collecting and using data to improve policy design. Increasingly, methods such as RCT are being used not only for academic research but to provide faster and cheaper answers to specific policy questions.

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