A Nobel for the Fight Against Global Poverty

On Monday, October 14, The Nobel Prize in Economics was awarded to Abhijit Banerjee and Esther Duflo of MIT and Michael Kremer of Harvard, experts in the fight against global poverty. Their experiment-based approach to development economics research has expanded our understanding of what works to alleviate poverty; development organizations, including PSI, have used the insights from their research to develop and improve their programs.

Banerjee, Duflo and Kremer’s work has been instrumental in changing PSI’s policies around product distribution. Research first released in 2011 identified that charging fees, however small, drastically reduces the uptake of life-saving preventive products among the poor. PSI has incorporated these findings in its work, most significantly around the distribution of bed nets aimed at reducing malaria cases. As a result, in the past 10 years, PSI has distributed more than 300 million bed nets.

Before the Nobel Laureates’ work came to the fore, development programs and policies were frequently designed around untested assumptions about what consumers in the developing world needed to lift themselves out of poverty. The Laureates’ approach allowed international development practitioners to put their assumptions to the test with the randomized control trial (RCT), a practice common in the medical community. To test if an intervention works, researchers randomly choose who among their target population gets the intervention (the “intervention group”) and who does not (the “control group”). The random placement of interventions ensures that both the intervention group and control group have similar characteristics at the start of the experiment. This enables researchers to attribute any changes observed at the end of the experiment to the intervention.

The Laureates’ work fueled the movement for the use of RCTs in fields as diverse as gender, corruption, finance and elections. The key to this movement was the Abdul Latif Jameel Poverty Action Lab, or J-PAL. This network of researchers, many of whom were students of the Laureates, have conducted almost 1000 RCTs across international development.

PSI congratulates Banerjee, Duflo and Kremer for their success, a prize that puts the spotlight on the use of data in the fight against global poverty.

Banner image: (c)PSI/Marcie Cook

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