nobel-prize-in-economics

Why is it in the news ?

The 2019 Nobel Prize in Economic Sciences was awarded to three economists including Abhijit Banerjee, Esther Duflofor and Michael Kremer for their pioneering research into the use of experimental approaches to fight global poverty. 

About their research

  • In the 1990s, Kremer launched a number of field experiments in western Kenya to improve educational results. 
  • Banerjee and Duflo later conducted similar studies, building research methods that “now entirely dominate” development economics, according to the Nobel committee.
  • The three laureates were among the first to attempt to measure the real-world effects of poverty-alleviation efforts in a wide array of areas, including access to credit, preventive health care and the adoption of new technologies.
  • Their research found even small differences in prices can lead to dramatically different health outcomes, particularly in preventive care.
  • Their work adapted the method of randomized control trials (RCTs) to the field of development.

What is the concept of Randomised Controlled Trial ?

  1. It is an experiment that is designed to isolate the influence that a certain intervention or variable has on an outcome or event. 
  2. A social science researcher who wants to find the effect that employing more teachers in schools has on children’s learning outcomes, for instance, can conduct a randomised controlled trial to find the answer. 
  3. Many development economists believe that RCTs can help governments to find, in a thoroughly scientific way, the most potent policy measures that could help end poverty rapidly. 

Are there any criticisms of Randomised Controlled Trials ?

  • Simply choosing samples for an RCT experiment in a random manner does not really make these samples identical in their many characteristics.
  • Randomised controlled trials are more suited for research in the physical sciences where it may be easier to carry out controlled experiments
  • Social science research, including research in the field of development economics, may be inherently unsuited for such controlled research since it may be humanly impossible to control for multiple factors that may influence social events.